Dorsey Health Law

There are now less than three months until changes to the federal physician self-referral law (“Stark Law” or “Stark”) group practice definition special compensation rule go into effect on January 1, 2022.  As we wrote about here, these changes include revisions to the rule related to overall profits to prohibit pooling and distributing profits from designated health services (“DHS”) on a service-by-service basis, which is sometimes referred to as “split pooling.”  As of that date, profits from all the DHS of the practice, or a component of the practice that consists of at least five physicians (a “5+ physician pod”), must be aggregated before distribution.  Group practices that use split pooling need to modify their compensation methodologies to account for this change by January 1.  Because of the time and effort involved in modifying physician compensation methodologies, now is the time for physician practices to evaluate whether any modifications to their compensation methodologies are needed in order to comply with this change. For a detailed summary of the Stark regulatory changes and their implications, please see the article we wrote earlier this year available here.

The Centers for Medicare & Medicaid Services (“CMS”) released Advisory Opinion No. CMS-AO-2021-01 in June 2021, which gave the requestor the green light to provide designated health services (“DHS”) through wholly-owned subsidiaries while the parent and subsidiaries could qualify as a “single legal entity” under the “group practice” definition of the federal physician self-referral law (or “Stark Law”). As a result, the requestor is eligible for the in-office ancillary services (“IOAS”) exception to the Stark Law. This opinion is notable because CMS issues advisory opinions infrequently and, particularly given recent changes to the CMS advisory opinion regulations (as we wrote about here), other entities may use this opinion as guidance in forming similar arrangements. As background, under the IOAS exception, a physician practice may make referrals for DHS within the practice, but only if it qualifies as a group practice.  The term “group practice,” defined in the Stark regulations, requires, among other things, that the practice is a “single legal entity” that operates “primarily for the purpose of being a physician group practice.”  Accordingly, a “single legal entity” does not include physicians who are only informally affiliated for the purpose of sharing profits from referrals, but a single legal entity may itself own subsidiary entities.  The recent advisory opinion focuses on whether a physician practice with wholly-owned subsidiary physician practices qualifies as a “single legal entity” for the purposes of the IOAS exception. The Advisory Opinion In short, the advisory opinion allows for a group practice with wholly-owned subsidiaries to provide services through those subsidiaries, even if the subsidiaries do not themselves qualify as group practice. The group practice and the subsidiaries, for purposes of the IOAS exception, qualify as a single legal entity. The Arrangement The requestor (“Group Practice”), was the sole owner of two subsidiary physician practices (the “Subsidiaries”). Group Practice was looking to provide services, including DHS, to patients, both directly and through the Subsidiaries. Group Practice attested that, while the Subsidiaries would retain their own Medicare enrollment and use billing numbers assigned to them to bill Medicare for items and services they furnish to beneficiaries, the material assets and business functions of the Subsidiaries would be transferred to Group Practice or the practice’s management company. The management company would provide non-clinical services to both Group Practice and the Subsidiaries. The revenue and expenses of the Subsidiaries would be attributed to Group Practice. Furthermore, the clinical employees and contractors of the Subsidiaries would become employees and contractors of Group Practice, and the patients served by the Subsidiaries would be considered patients of Group Practice. Group Practice certified that it met all requirements of a group practice itself and that the arrangement with the Subsidiaries would meet all other requirements of a group practice, such as having centralized decision-making. The Subsidiaries did not qualify as group practices on their own, and Group Practice specifically sought to determine if it, in its arrangement with the Subsidiaries, could qualify as a “single legal entity” for the purposes of the group practice definition, thus meeting this requirement of the IOAS exception. CMS Analysis CMS found that Group Practice and the Subsidiaries would qualify as a single legal entity. In concluding this, CMS focused heavily on two aspects of the relationship: (1) the revenue and expenses of the Subsidiaries would be attributed to Group Practice, and (2) the clinical employees and contractors of the Subsidiaries would become employees and contractors of Group Practice. CMS found the first factor to be adequate even though the Subsidiaries maintained their own Medicare enrollments and payor contracts separate from Group Practice. What This Means for Physician Practices Reliance on Advisory Opinions On January 1, 2020, the Stark regulations regarding advisory opinions were revised.  Prior to this revision, only the entity requesting the advisory opinion and others who were parties to the specific arrangement could rely on the opinion.  Under the revised advisory opinion regulations, the Secretary of HHS will not pursue sanctions against other entities who did not make the request for the opinion and who are not parties to the specific arrangement, as long as their arrangement is ”indistinguishable in all its material aspects” from an arrangement which received a favorable advisory opinion from CMS.  See our detailed analysis of the revised advisory opinion regulations here. This means that other physician practices outside of Group Practice and the Subsidiaries can make referrals to wholly-owned subsidiaries if such arrangements are indistinguishable in all material aspects from the one described in the opinion and otherwise meet the requirements of the group practice definition and IOAS exception.  Below is a brief list and description of factors that would likely be considered material to this arrangement, and thus necessary for physician practices seeking to rely on Advisory Opinion No. CMS-AO-2021-01. Referrals to Subsidiaries Parent-Subsidiary Relationship The parent-subsidiary relationship is a key factor in the “single legal entity” analysis. As stated above, physicians that are only informally affiliated do not qualify as a group practice. Further, the advisory opinion expressly states that Group Practice and the Subsidiaries qualify as a single legal entity “provided that [Group Practice] is the sole owner of the Subsidiaries.” However, it is not necessary for the subsidiary physician practice itself to qualify as a group practice. Below are two diagrams: Diagram 1 illustrates affiliated entities that do not qualify as a group practice, and Diagram 2 illustrates the parent-subsidiary relationship that CMS deemed appropriate in the advisory opinion. Revenue and Expenses Attributed to Parent Given the emphasis CMS put on the framework of Group Practice and the Subsidiaries’ revenue and expenses, this element would likely be considered material. Therefore, subsidiary revenue and expenses should be attributed to the group practice if the entities are looking to qualify as a single legal entity. However, as mentioned above, it is not necessary for a subsidiary physician practice to bill Medicare under the parent. A subsidiary may have its own Medicare number and bill separately from the parent, as long as the revenue and expenses of the subsidiary are ultimately attributed to the parent. Employees and Contractors are Those of the Parent Similarly, if a subsidiary’s employees and/or contractors are not considered to be the employees and/or contractors of the group practice, it is unlikely that the arrangement would fall within the exception, because this, too, was a focus of the opinion and thus is likely material from CMS’s point of view. Conclusion Following issuance of Advisory Opinion No. CMS-AO-2021-01 and recent regulatory changes regarding reliance on advisory opinions, parent physician practices may make referrals for DHS to wholly-owned subsidiary practices as a single legal entity if all other elements of the group practice definition and IOAS exception are met. This advisory opinion only addresses the definition of a single legal entity. Entities must ensure that the other elements of the group practice definition and IOAS exception to the Stark Law are also met if they choose to form a parent/subsidiary referral relationship. Please contact the authors or your regular Dorsey attorney with any questions. Summer Associate Hannah McCallum provided substantial assistance in the drafting of this article.    

On January 1, 2022, changes to the federal physician self-referral law (“Stark Law” or “Stark”) group practice definition special compensation rule go into effect.  Among other things, these changes revise the rule related to overall profits to prohibit pooling and distributing profits from designated health services (“DHS”) on a service-by-service basis, which is sometimes referred to as “split pooling.”  As of that date, profits from all the DHS of the practice, or a component of the practice that consists of at least five physicians (a “5+ physician pod”), must be aggregated before distribution.  Group practices that use split pooling need to modify their compensation methodologies to account for this change by January 1.  Because of the time and effort involved in modifying physician compensation methodologies, now is the time for physician practices to evaluate whether any modifications to their compensation methodologies are needed in order to comply with this change. Physician practices also need to be aware of important commentary from the Centers for Medicare & Medicaid Services (“CMS”) on the special rule that clarifies CMS’s intentions regarding permissible DHS profit sharing and additional revisions to the regulation text that impact profit sharing, which may also necessitate (or, in some cases, permit) changes to certain group practice compensation methodologies. These changes and commentary, which are described in detail below, are part of a sweeping set of final rules issued last fall by CMS to revise the Stark regulations, which were part of the “Regulatory Sprint to Coordinated Care” (the “Final Rules”).  This white paper summarizes the Final Rules, and more information about the Regulatory Sprint can be found here.  Most of the Final Rules went into effect on January 19, 2021, but changes to the group practice definition will not become effective until January 1, 2022.  The revised version of the group practice definition that will be in effect as of January 1 is available here, and a redline comparing the version that is currently in effect to the revised version is available here. Read more here.

In 2018, the U.S. Department of Health and Human Services (“HHS”) launched the “Regulatory Sprint to Coordinated Care” to accelerate a transformation of the healthcare system, with a focus on removing “unnecessary obstacles” to coordinated care (the “Regulatory Sprint”). Several HHS agencies requested comments and information from the public and have published new or proposed regulations as part of the Regulatory Sprint on areas that have historically been viewed as barriers to innovative care coordination arrangements—namely, healthcare fraud and abuse and health information privacy. On November 20, 2020, the HHS Office of Inspector General (“OIG”) and Centers for Medicare & Medicaid Services (“CMS”) each issued a sweeping set of final regulations that introduced significant new value-based terminology, safe harbors and exceptions, as well as clarifications of existing requirements, under the federal anti-kickback statute (“AKS”) and federal physician self-referral law (“Stark Law”), respectively. Additionally, the OIG issued final regulations related to modernizing the civil monetary penalty law governing inducements provided to Medicare and Medicaid beneficiaries (the “CMPL”).  The final OIG and CMS rules are effective on January 19, 2021, with the exception of changes to the Stark “group practice” definition, which do not go into effect until January 1, 2022.  There are hundreds of pages of preamble guidance and revised regulation text setting forth these sweeping changes to the Stark Law, AKS and CMPL regulations from CMS and OIG.  To help you digest these materials, a team of attorneys from Dorsey & Whitney’s Healthcare Transactions and Regulations Practice Group has published two white papers, which are available at the links below.  In addition, we have posted at a link below the playback of a webinar we hosted about the final rules on January 6, 2021.  The white papers and webinar playback provide an in-depth summary of the changes to these regulations, including key provisions from CMS and OIG preamble guidance.  Finally, we have posted below redlines comparing the existing Stark Law, AKS and CMPL regulations to the revised version of each of these regulations in the final rules. With respect to health information privacy, the HHS Office for Civil Rights (“OCR”) issued a Notice of Proposed Rulemaking (“NPRM”) on December 10, 2020 which proposes changes to the Health Insurance Portability and Accountability Act (“HIPAA”) and to the Health Information Technology for Economic and Clinical Health Act (“HITECH”) Privacy Rule.  Additionally, the HHS Substance Abuse and Mental Health Services Administration (“SAMHSA”) published final rules to revise regulations related to the privacy of substance use disorder treatment records in July 2020. These changes in federal regulations are anticipated to make a significant impact on healthcare providers and other stakeholders that may have been reticent to initiate certain care coordination arrangements because of perceived regulatory barriers and lack of regulatory clarity.  In addition, clarifications to existing regulations impact stakeholders beyond their involvement in care coordination arrangements. The team of attorneys in Dorsey & Whitney’s Healthcare Transactions and Regulations Practice Group will continue to closely monitor these changes, and post updates and analysis below as new information becomes available.   Stark Regulatory Changes Effective January 1, 2022 Require Modifying Certain Group Practice Compensation Methodologies | News & Resources Webinar Playback: Final Stark and Anti-Kickback Statute Rules: What You Need to Know White Paper: Understanding the Final Rules to Revise the Stark Law Regulations White Paper: Understanding the Final Rules to Revise the Anti-Kickback Statute and Beneficiary Inducement Civil Monetary Penalty Regulations The Regulatory Sprint Catches up to HIPAA: New Proposed HIPAA Rules Redline of Final AKS Regulatory Text Redline of Final CMP Regulatory Text Redline of Final Stark Regulatory Text effective 1.1.2022 - 411.352(i) only Redline of Final Stark Regulatory Text effective 1.19.2021 Much-Anticipated Final Rules to Revise Stark Law, Anti-Kickback Statute, Beneficiary Inducement CMP Regulations Released under “Regulatory Sprint to Coordinated Care” CMS Finalizes Changes to the Stark Advisory Opinion Regulations; 2020 DHS Code List and CPI-U Updates Sweeping Proposals Issued by CMS to Revise Stark Law Regulations  Sweeping Proposals Issued By OIG To Make Changes To The Anti-Kickback Statute Safe Harbors And Add An Exception To The Civil Monetary Penalty Law Governing Beneficiary Inducements A Massive Number of New Health Law Regulatory Proposals as Part of the “Regulatory Sprint to Coordinated Care”: Proposed Changes to the Stark Law, Anti-Kickback Statute, Beneficiary Inducement CMP, Privacy Laws Governing Substance Use Disorder Records, and the Stark Law Advisory Opinion Process CMS "Actively Working" on Stark Law Reforms to be Issued Later this Year; "Regulatory Sprint to Coordinated Care" Continues OIG Seeks Public Input on Anti-Kickback Statute and Beneficiary Inducements CMP as part of the “Regulatory Sprint to Coordinated Care” Calls for Modernizing the Stark Law Continue; CMS Seeks Public Input on Stark Law Reforms

In just two weeks, on January 19, 2021, a sweeping set of changes to the federal physician self-referral law (or “Stark Law”) and anti-kickback statute (“AKS”) regulations go into effect.  These changes, which are part of the U.S. Department of Health and Human Services (“HHS”) “Regulatory Sprint to Coordinated Care,” are the most significant changes to the Stark Law and AKS in a decade.  There are hundreds of pages of preamble guidance and revised regulation text setting forth these sweeping changes from the Centers for Medicare & Medicaid Services (“CMS”) and HHS Office of Inspector General (“OIG”). To help you digest these materials, a team of attorneys from Dorsey & Whitney’s Healthcare Transactions and Regulations Practice Group has published two white papers, which are available at the following links: White Paper: Understanding the Final Rules to Revise the Stark Law Regulations White Paper: Understanding the Final Rules to Revise the Anti-Kickback Statute and Beneficiary Inducement Civil Monetary Penalty Regulations These white papers provide an in-depth summary of the changes to these regulations, including key provisions from CMS and OIG preamble guidance.  Please contact the authors or your regular Dorsey attorney if you would like assistance with understanding how the final rules impact your organization.

On November 20, 2020, the Centers for Medicare & Medicaid Services (CMS) and the Department of Health and Human Services (HHS) Office of Inspector General (OIG) each released their much-anticipated final rules to revise the federal self-referral law (or “Stark Law”) regulations, the safe harbors under the federal anti-kickback statute (AKS), and regulations under the beneficiary inducements civil monetary penalty law (CMP).  The final rules are part of HHS’s “Regulatory Sprint to Coordinated Care,” which seeks to remove regulatory obstacles to care coordination and a value-based healthcare delivery system. The public inspection copy of the final CMS rules is available here, and the CMS fact sheet on the final rules is available here.  The public inspection copy of the final OIG rules is available here, and the OIG fact sheet on the final rules is available here.  Both rules will be published in the Federal Register on December 2, 2020. For our prior posts on the Regulatory Sprint to Coordinated Care, see here. We are reviewing the final rules and will post an in-depth analysis in the coming weeks.

As we explained in our prior blog post, on March 30, 2020, the Centers for Medicare & Medicaid Services (“CMS”) issued certain blanket waivers of sanctions under the federal physician self-referral law (or “Stark Law”) for “COVID-19 Purposes” (the “Stark Blanket Waivers”), which are available here. On April 21, 2020, CMS issued explanatory guidance, available here, on the scope and application of the Stark Blanket Waivers to certain financial relationships (the “Explanatory Guidance”). In addition to answering a variety of questions raised by the initial announcement of the Stark Blanket Waivers, the Explanatory Guidance provides an important reassurance to stakeholders. CMS states: “The Secretary will work with the Department of Justice to address False Claims Act relator suits where parties using the blanket waivers have a good faith belief that their remuneration or referrals are covered by a blanket waiver.” Despite this reassurance, however, it is crucial that parties seeking to rely on a Stark Blanket Waiver ensure that their arrangement, in fact, relates to “COVID-19 Purposes” (as defined in the Stark Blanket Waivers document), falls within the parameters of a specifically enumerated waiver within the Stark Blanket Waivers document, and that all non-waived requirements of an applicable Stark Law exception are met. We also note that, as CMS reminds parties in the Explanatory Guidance, relying on a Stark Blanket Waiver may not be necessary for certain arrangements related to COVID-19 Purposes, if these arrangements satisfy the requirements of an existing Stark Law exception. The following information summarizes the Explanatory Guidance. A. Compliance with Non-Waived Requirements of an Applicable Exception Many of the Stark Blanket Waivers eliminate or alter some, but not all, of the existing requirements of particular Stark Law exceptions. CMS warns that financial relationships or referrals must satisfy all non-waived requirements of an applicable exception in order to avoid implicating the Stark Law’s referral and billing prohibitions. We note that this includes, for example, meeting the “set in advance” requirement of applicable compensation exceptions, as this requirement is not waived by any of the Stark Blanket Waivers. B. Amendment of Compensation Arrangements The Explanatory Guidance clarifies when parties may modify the remuneration terms of an existing arrangement during the COVID-19 emergency period, and whether such terms can be amended during the emergency period and again at the conclusion of the emergency period to return to the original terms. This guidance applies when parties are relying on a compensation exception that has both a one-year term requirement and a “set in advance” requirement (such as the personal services arrangements exception). CMS points to the preamble guidance in the Fiscal Year 2009 Inpatient Prospective Payment System final rule (“FY 2009 IPPS Rule”), which CMS interprets as allowing for a second or subsequent amendment of the compensation terms of an arrangement, even within the first year of an initial amendment of those terms, as long as each time those terms are amended, “all requirements of an applicable exception are satisfied, the amended remuneration is determined before the amendment is implemented, the formula for the amended remuneration does not take into account the volume or value [of] referrals or other business generated by the referring physician, and the overall arrangement remains in place for at least 1 year following the amendment.” CMS reiterates that if parties amend a compensation arrangement during the emergency period, all non-waived requirements of an applicable exception must be met. The compensation terms of the arrangement may again be amended after the public health emergency is over. This further amendment may restore the original terms of the arrangement or make additional changes, as long as each of the criteria from the FY 2009 IPPS Rule (described above) are met. Finally, CMS points out that a modification of an existing arrangement could instead be analyzed as an additional compensation arrangement, for which the parties could use the Stark Blanket Waivers (if all applicable requirements are met). C. Applicability of Blanket Waivers to Indirect Compensation Arrangements The Explanatory Guidance states that the Stark Blanket Waivers do not apply to indirect compensation arrangements, and only apply to direct compensation arrangements. Parties can, however, seek an individual waiver of sanctions related to indirect compensation arrangements. The Explanatory Guidance goes on to note that many compensation arrangements that may appear to be indirect may be analyzed as direct compensation arrangements under the “stand in the shoes” provisions of the Stark Law. D. Repayment Options for Loans between a DHS Entity and a Physician (or the Immediate Family Member of a Physician) Two Stark Blanket Waivers (waivers #10 and #11) involve remuneration in the form of a loan with an interest rate below fair market value or on terms that are unavailable from a lender that is not in a position to make referrals to or generate business for the party making the loan. CMS states that these waivers do not require cash payments to the lender to satisfy a borrower’s debt. Loans may be repaid through in-kind payments, as long as the aggregate value of the in-kind payments is consistent with the amount of the loan and the arrangement is commercially reasonable. CMS provides that an example in-kind payment could be the maintenance of a medical practice and continuing to serve patients in the community where the entity is located. E. Repayment of Loans, Rent Abatement, or Other Amounts Due Following the End of the Emergency Period CMS clarified that, if parties use the Stark Blanket Waivers such as the loan arrangements described above, repayment obligations do not need to be completed prior to the termination of the Stark Blanket Waivers (which will be at the end of the public health emergency that was declared related to the COVID-19 outbreak). Many parties expressed concern that, after the termination of the Stark Blanket Waivers, the compensation arrangements entered into would no longer satisfy the requirements of an applicable exception because the interest charges or other charged amounts would not be consistent with the fair market value of the remuneration provided. The Explanatory Guidance provides that appropriate repayment terms agreed to before the termination of the Stark Blanket Waivers may continue beyond the termination of the waivers. However, disbursement of loan proceeds or additional remuneration after the termination of the Stark Blanket Waivers must satisfy all requirements of the applicable Stark exception. F. Restructuring of Existing Recruitment Arrangements with Income Guarantees CMS also responded to inquiries about the extension or restructuring of existing physician recruitment arrangements, such as whether a hospital could extend an income guarantee to address a recruited physician’s medical practice interruption due to the COVID-19 pandemic. The Explanatory Guidance states that CMS maintains its position that, under the Stark Law exception for physician recruitment, the terms of a recruitment arrangement cannot be altered once the physician has relocated their practice. Some Stark Blanket Waivers, however, may be available for remuneration from a hospital (or other entity) to assist a relocated physician whose medical practice is disrupted due to the pandemic in order to maintain the availability of medical care and related services for patients and the community. * * * For help determining whether an existing or proposed arrangement complies with a Stark Blanket Waiver and/or for inquiries regarding individual waiver requests, please contact the authors of this post or your regular Dorsey attorney. We continue to closely monitor the legal landscape related to the COVID-19 pandemic. You can access Dorsey’s health law blog providing health law updates, available here. You can also access Dorsey’s coronavirus resource center, containing a wide variety of legal resources related to the coronavirus outbreak, available here.

The U.S. Department of Health and Human Services Office of Inspector General (“OIG”) has taken numerous steps to minimize regulatory burdens for providers who need to make their primary focus delivering patient care during the COVID-19 national emergency. These steps, along with recent steps taken by other agencies to provide temporary regulatory flexibility, provide further welcomed relief to providers who are facing a tremendous burden during this time. 1. AKS Administrative Sanctions Not Imposed for Remuneration Covered by Stark Blanket Waivers related to “COVID-19 Purposes” As we wrote about in our prior blog post, on March 30, 2020, the Centers for Medicare & Medicaid Services (“CMS”) issued 18 blanket waivers of sanctions under the federal physician self-referral law (or “Stark Law”) for remuneration and referrals related to “COVID-19 Purposes” (the “Stark Blanket Waivers”). Then, on April 3, 2020, the OIG issued a Policy Statement notifying interested parties that it “will exercise its enforcement discretion not to impose administrative sanctions under the Federal anti-kickback statute [(“AKS”)] for certain remuneration related to COVID-19” that is covered by certain of the Stark Blanket Waivers. As the OIG explained in this Policy Statement, ordinarily, some financial relationships that implicate the Stark Law may also implicate, and may potentially violate, the AKS. In the Policy Statement, the OIG stated that it will not impose sanctions with respect to remuneration covered by the first 11 of the Stark Blanket Waivers, provided that all of the conditions and definitions within the Stark Blanket Waivers are met. This includes certain remuneration to or from a physician that is above or below fair market value and remuneration to a physician in the form of medical staff incidental benefits or non-monetary compensation that exceeds the limits set forth in applicable Stark exceptions (when specified requirements are met). Note that the remainder of the 18 Stark Blanket Waivers relates to referrals rather than remuneration. In the Policy Statement, the OIG specified that parties can submit questions via email to OIGComplianceSuggestions@oig.hhs.gov related to the application of the OIG’s administrative sanctions for remuneration associated with referrals described in items 12-17 of the Stark Blanket Waivers. (The OIG did not mention the 18th Stark Blanket Waiver, which relates to compensation arrangements that do not satisfy the writing or signature requirements of an applicable Stark exception, even though various AKS safe harbors also have writing and signature requirements. Presumably, parties can also submit questions to OIG about such arrangements, although many such arrangements may not implicate the AKS based on a facts and circumstances analysis outside of safe harbor protection.) The OIG stated that its purpose in issuing the Policy Statement was to avoid the need for parties to undertake a separate legal review under the AKS for arrangements that are covered by the Stark Blanket Waivers. The OIG cautioned, however, that the Policy Statement does not have any bearing on arrangements that are not covered by the Stark Blanket Waivers. This would include, for example, arrangements between a manufacturer and a physician, and arrangements that do not involve a physician (or immediate family member of a physician). The Policy Statement applies to conduct occurring on or after April 3, 2020, whereas the Stark Blanket Waivers were retroactive to March 1, 2020. The Policy Statement terminates the same day that the Stark Blanket Waivers terminate (i.e., the end of the Public Health Emergency (“PHE”) that was declared related to COVID-19). 2. Other Recent OIG Initiatives In addition to the Policy Statement described above, the OIG has undertaken other notable initiatives lately related to COVID-19. Specifically: The OIG issued a “Message from leadership on minimizing burdens on providers” on March 30, 2020, in which it stated: “For any conduct during this emergency that may be subject to OIG administrative enforcement, OIG will carefully consider the context and intent of the parties when assessing whether to proceed with any enforcement action.” On April 3, 2020, the OIG posted a FAQ website about the application of OIG’s administrative enforcement authorities (specifically, the AKS and beneficiary inducements civil monetary penalty) to arrangements connected to the COVID-19 PHE. This website sets forth instructions for submitting questions and limitations on the FAQs, including how this informal feedback during the unique circumstances of the PHE differs from the legally binding OIG advisory opinion process (which remains available to interested parties). Thus far, the FAQ website has one FAQ posted, in which the OIG responded to a question about whether health care providers/practitioners can furnish services for free or at a reduced rate to assist long-term care providers facing staffing shortages. The OIG stated: “In the unique circumstances resulting from the COVID-19 outbreak, we believe that these scenarios likely would present a low risk of fraud and abuse under the Federal anti-kickback statute and the Beneficiary Inducements CMP provided the services being offered are (i) necessary to meet patient care needs as a result of staffing shortages directly connected to the COVID-19 outbreak; (ii) provided for free or at a reduced cost only when necessary as a result of the COVID-19 outbreak; (iii) limited to the period subject to the COVID-19 Declaration; and (iv) not contingent on referrals for any items or services that may be reimbursable in whole or in part by a Federal health care program, either during or after the COVID-19 Declaration period.” The OIG has a “COVID-19 Portal” website, which includes a link for submitting questions regarding OIG’s authorities during the COVID-19 PHE, as well as links for information about other news and resources regarding OIG’s COVID-19 initiatives. On April 3, 2020, the OIG published a report based on brief phone interviews (or “pulse surveys”) that it conducted from March 23 to March 27, 2020 from a random sample of 323 hospitals across the country on challenges the hospitals are facing in responding to COVID-19, strategies used to address those challenges, and how the government can provide support. A summary of the report can be found here, and the complete report can be found here. Finally, while not related to easing provider burdens during the COVID-19 PHE, we note that on March 23, 2020, the OIG alerted the public about new fraud schemes related to COVID-19. In addition, a number of recently added OIG work plan items relate to COVID-19 response matters. * * * For assistance in determining whether an existing or proposed arrangement meets the criteria for waiving AKS administrative sanctions under the OIG Policy Statement described herein, or for any other questions regarding recent OIG initiatives related to COVID-19, please contact the authors or your regular Dorsey & Whitney LLP attorney. Dorsey is closely monitoring the rapidly evolving legal landscape related to the COVID-19 pandemic. You can access Dorsey’s health law blog related to health law updates, available here. You can also access Dorsey’s coronavirus resource center, which contains a wide variety of legal resources related to the coronavirus outbreak, available here.

The COVID-19 pandemic has led to rapid and drastic changes to health care delivery in the United States, including as it relates to arrangements between health care providers and physicians that may implicate the federal physician self-referral law, or “Stark Law.” On March 30, 2020, the Centers for Medicare & Medicaid Services (“CMS”) issued much-anticipated nationwide blanket waivers of sanctions under the Stark Law for “COVID-19 Purposes” (the “Stark Blanket Waivers”), which are available here. The Stark Blanket Waivers have a retroactive effective date of March 1, 2020 and will continue through the end of the Public Health Emergency (“PHE”) that was declared related to the COVID-19 outbreak. The Stark Blanket Waivers, which were issued under Section 1135 of the Social Security Act, permit numerous flexibilities to ensure that: “(1) sufficient health care items and services are available to meet the needs of individuals enrolled in the Medicare, Medicaid, and CHIP programs; and (2) health care providers . . . that furnish such items and services in good faith, but are unable to comply with one or more of the specified requirements of [Stark] as a result of the consequences of the COVID-19 pandemic, may be reimbursed for such items and services and exempted from sanctions for such noncompliance, absent the government’s determination of fraud or abuse.” These flexibilities provide welcome relief for health care providers that are facing much uncertainty and overwhelm in this time of rapid and drastic change. Stark is a strict liability law with very significant civil penalties and prohibitions on billing the Medicare program associated with its violation. However, during the PHE, CMS will reimburse for services provided pursuant to referrals that would otherwise violate Stark, and will not impose penalties, as long as the Stark Blanket Waivers are followed. It is important to keep in mind that each Stark Blanket Waiver is limited to the specific circumstances described in the waiver. Health care providers are required to satisfy every condition of the Stark Blanket Waiver in order to take advantage of it, so special attention should be paid to the requirements. CMS cautioned that any remuneration described in the Stark Blanket Waivers must be directly between the entity and: (1) the physician or the physician organization in whose shoes the physician stands under 42 C.F.R. § 411.354(c); or (2) the immediate family member of the physician. Further, CMS cautioned that the remuneration and referrals described in the Stark Blanket Waivers must be solely related to “COVID-19 Purposes.” CMS specifies that “COVID-19 Purposes” means, for purposes of the Stark Blanket Waivers: Diagnosis or medically necessary treatment of COVID-19 for any patient or individual, whether or not the patient or individual is diagnosed with a confirmed case of COVID-19; Securing the services of physicians and other health care practitioners and professionals to furnish medically necessary patient care services, including services not related to the diagnosis and treatment of COVID-19, in response to the COVID-19 outbreak in the United States; Ensuring the ability of health care providers to address patient and community needs due to the COVID-19 outbreak in the United States;  Expanding the capacity of health care providers to address patient and community needs due to the COVID-19 outbreak in the United States; Shifting the diagnosis and care of patients to appropriate alternative settings due to the COVID-19 outbreak in the United States; or Addressing medical practice or business interruption due to the COVID-19 outbreak in the United States in order to maintain the availability of medical care and related services for patients and the community. There are eighteen Stark Blanket Waivers. It is critical to know that each waiver is specific in its requirements and application, so health care providers should not rely on this summary in order to use a Stark Blanket Waiver. Instead, providers should carefully review the details of each waiver prior to making a decision to proceed with an arrangement in reliance on a waiver. A few of the Stark Blanket Waivers are briefly summarized as follows: Remuneration to a physician that is above or below fair market value for services personally performed by the physician. Rental charges paid to a physician that are below fair market value. Remuneration to a physician in the form of medical staff incidental benefits or non-monetary compensation that exceeds the limits set forth in applicable Stark regulations. Loans to a physician with below fair market value interest rates or on terms that are not available from a traditional lender. Referrals by a physician owner of a hospital that temporarily expands its facility capacity above its baseline number without prior application and approval of the facility expansion as required under Stark. Referrals by physicians in a group practice in a location that does not qualify as the “same building” or “centralized building” as typically required under Stark. Referrals by a physician to an entity with which the physician has a compensation arrangement that does not satisfy the writing or signature requirements of the applicable Stark exception, as long as all of the other requirements of the exception are met (unless the other requirements have been waived under one or more of the Stark Blanket Waivers). While no data or notification is required to be submitted to CMS in order to use the Stark Blanket Waivers, parties seeking to utilize the Stark Blanket Waivers should develop and retain records related to the use of the waivers in order to support the fact that the decision to use the waivers was for COVID-19 Purposes, and to document that each requirement of the waiver was satisfied. These records must be made available to the Secretary of the Department of Health and Human Services upon request. At the end of the document setting forth the Stark Blanket Waivers, CMS provided two pages of examples of the application of the Stark Blanket Waivers. CMS clarified that unless a Stark Blanket Waiver expressly applies only to a specific type of entity (e.g., a home health provider), then the examples that CMS provided which reference a hospital would apply to any entity that furnishes designated health services. Finally, CMS provided the email address for individuals to use to submit inquiries about the blanket waivers, available here: 1877CallCenter@cms.hhs.gov. We note that individual waivers of sanctions under the Stark Law are still available and may be granted upon request submitted to the email address noted above. Such individual waiver requests are a good option for a party to consider if an existing or proposed arrangement does not appear to qualify for a Stark Blanket Waiver (or an existing Stark exception). * * * For assistance in determining whether an existing or proposed arrangement complies with a Stark Blanket Waiver and/or for inquiries regarding individual waiver requests, please contact the authors or your regular Dorsey & Whitney LLP attorney. Dorsey is closely monitoring the rapidly evolving legal landscape related to the COVID-19 pandemic. You can access Dorsey’s health law blog related to health law updates, available here. You can also access Dorsey’s coronavirus resource center, which contains a wide variety of legal resources related to the coronavirus outbreak, available here.

On March 30, 2020, the Centers for Medicare & Medicaid Services (“CMS”) published a compilation of COVID-19 Emergency Declaration Blanket Waivers for Health Care Providers (each, a “Blanket Waiver”). Section 1135 of the Social Security Act gives CMS the authority to issue waivers that ease requirements for providers affected by an emergency if: (1) the President makes an emergency declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121-5207 (the “Stafford Act”); and (2) the Secretary of the Department of Health and Human Services declares a Public Health Emergency (“PHE”), both of which have now occurred in light of COVID-19. CMS is permitted to issue both blanket waivers and provider/supplier requested waivers on a case-by-case basis. Blanket waivers apply to all applicable providers and suppliers, while individual waivers apply only to the requesting provider or supplier. A provider or supplier need not request a provider/supplier-specific waiver of a requirement if CMS has issued a blanket waiver addressing the same requirement. It is important to note that 1135 waivers apply solely to federal requirements and do not apply to state licensure or other requirements. Any applicable state requirements (e.g., licensure) must also be addressed with the relevant state agency. Another important note of caution is that these 1135 waivers often include specific details and requirements. It is critical for health care providers to review the waivers carefully before taking action under them. To that end, providers should visit the CMS Coronavirus Waivers & Flexibilities website, here, to locate the specific guidance and requirements from CMS about the type of program waiver(s) being sought. CMS has provided numerous Frequently Asked Questions (“FAQ”) documents and provider-specific fact sheets that detail the details about and limits of the available waivers and flexibilities for each type of provider (hospital, skilled nursing facility, physicians, laboratories, home health providers, etc.). Additionally, this website contains links to all of the waivers provided in each state. The following is a summary of the Blanket Waivers CMS has made available to providers and suppliers on March 30, 2020. These Blanket Waivers are retroactively effective back to March 1, 2020 and will continue through the end of the emergency declaration. I. Hospital Waivers The Blanket Waivers include significant regulatory relief for hospitals. The following is a summary of the hospital-specific Blanket Waivers, and here is a CMS Fact Sheet that was published for hospitals to further explain these specific Blanket Waivers: a. Temporary Expansion Sites (a.k.a. Hospitals Without Walls) Under this Blanket Waiver, hospitals are permitted to offer health care services in locations that are not currently part of the hospital. Previously, hospitals would have been required to meet Life Safety Code and other regulatory provisions and obtain approvals to provide services in a new location. This waiver will help hospitals set up temporary expansion sites to offer inpatient services (e.g., nursing, room and board) in locations such as shell space in a hospital, parking structures, dormitories and the like – as long as the hospital exercises control and oversees the services provided at the location, and as long as the location is approved by the state (to ensure safety and comfort for patients and staff). CMS is also allowing currently enrolled ambulatory surgery centers (“ASCs”) to temporarily enroll as hospitals by calling the COVID-19 Provider Enrollment Hotline to complete and sign an attestation form in order to enroll and provide services during the PHE as a hospital. CMS also encourages other entities (e.g., freestanding emergency departments which are not currently allowed to enroll in Medicare) to call the COVID-19 Provider Enrollment Hotline to complete and sign an attestation form in order to enroll and provide services during the PHE. Further, CMS is allowing hospitals to change their provider-based locations to address patient needs, as well as allowing additional flexibilities related to inpatient services furnished under arrangements. Moreover, hospitals are permitted to screen patients at locations off of a provider’s campus, in order to avoid the spread of COVID-19. Further, for surge facilities in off campus departments, CMS is waiving the requirements to have policies and procedures for evaluating emergencies so these facilities do not need to focus time on drafting policies and procedures but rather can focus on patient care needs. b. Relaxed Paperwork, Policies, Cost Reporting, Filing Deadlines and Enrollment Requirements For hospitals that are impacted by a widespread outbreak of COVID-19, the timeframes for providing patients a copy of their medical records are waived, as are the requirements related to visitation and seclusion. Additionally, CMS is granting a 30-day post-discharge requirement to complete medical records, CMS is waiving medical records department staffing requirements, and also waiving specific requirements for the form and content of the medical record and the medical record completion requirements. Further, verbal orders can be authenticated more than 48 hours after the fact (although read-back verification is still required). CMS is also waiving requirements to provide information about advanced directives to patients. Further, To ensure that hospitals and critical access hospitals focus on patient care and ensuring patients are discharged in an appropriate setting, as opposed to focusing on the paperwork and other regulatory obligations, CMS is waiving the detailed regulatory paperwork and other requirements related to discharge planning. For example, CMS recognizes that during the PHE, hospitals may not be able to use specific quality metrics and other data, or a comprehensive list of nursing homes in the area, to select a nursing home or home health agency. However, hospitals are still required to work with families to ensure that the discharge meets patients’ care needs. Further, CMS is waiving the entire condition of participation related to utilization review plans and committees, nursing care plans, having available a current therapeutic diet manual, developing and implementing emergency preparedness policies and procedures and communication plans, as well as waiving the detailed provisions governing a hospital’s quality assessment and performance improvement program (although hospitals must still have such a program in place). CMS has established a toll-free hotline for all providers as well as significant flexibilities in provider enrollment. See here for additional information from CMS on provider enrollment relief, as well as our previous blog post on this topic, available here. Further, CMS is waiving the signature and proof of delivery requirements for Part B drugs and durable medical equipment (although the delivery and the fact that a signature could not be obtained due to COVID-19 should be documented in the record). Additionally, CMS is delaying the cost-report filing deadlines until June and July, and CMS is extending the data submission deadlines for hospitals on the reporting of occupational mix of employees until August 3, 2020. Further, Medicare Administrative Contractors (“MACs”), Qualified Independent Contractors (“QICs”), and Independent Review Entities (“IREs”) are allowed to grant extensions to providers on appeals and are permitted to offer other flexibilities on filings and deadlines. c. Critical Access Hospitals (“CAHs”) Without Walls CAHs are now permitted to exceed their 25 bed limit and the 96 hour length of stay limit. CMS is also permitting CAHs to treat patients in urban areas (they typically must be located in a rural area) as needed in order to establish surge locations. Further, CMS is waiving the restrictions on CAHs’ ability to establish off campus provider based locations, and to establish the normally restricted co-location arrangements with other providers. CMS is waiving the minimum personnel qualification requirements at CAHs for clinical nurse specialists, nurse practitioners and physician assistants, and CMS is deferring to the state for the requirements of staff licensure, certification or registration, which will allow more flexibility to CAHs in states where federal requirements are more stringent. d. Distinct Part Units CMS is also now allowing hospitals to house acute care patients in excluded distinct part units (as long as the unit’s beds are appropriate for acute inpatients). Hospitals are permitted to bill for the care provided in the distinct part unit under the Inpatient Prospective Payment System. Providers should annotate in the medical record to explain that the care was provided in the distinct part unit due to capacity issues related to the PHE. Hospitals are also now permitted to provide care in acute care beds and units for patients who would normally be treated in distinct part psychiatric units or distinct part rehabilitation units, as long as the acute beds and units are appropriate for such patients. Hospitals should continue to bill under the Inpatient Psychiatric or Inpatient Rehabilitation Prospective Payment System for those patients, and annotate in the medical record to explain that the care was provided in the acute care unit due to capacity issues or other exigent circumstances related to the PHE. e. Telemedicine CMS is waiving telemedicine restrictions on hospitals and CAHs to make it easier for these providers to provide telemedicine for their patients through agreements with off-site hospitals, in order to improve access to specialty care. f. Workforce CMS is waiving the sterile compounding requirements to allow the re-use of face masks. CMS is also waiving the 2-year reappointment period for medical staff re-credentialing, the requirement that patients in a hospital be under the care of a physician (to allow other practitioners like physician assistants and APRNs to be used to the fullest extent possible), and CMS is waiving the requirement for CRNAs to work under the supervision of a physician. Further, CMS has stated that Hospitals do not have to designate in writing the personnel qualified to perform specific respiratory care procedures or the amount of supervision required for personnel to carry out those procedures. II. Long-Term Care, Skilled Nursing Facilities, and Nursing Facility Waivers The Blanket Waivers provide a number of flexibilities related to nursing services. See here for the CMS fact sheet published specifically for long term care facilities. CMS is waiving the 3-day prior hospitalization requirement for coverage of a skilled nursing facility (“SNF”) stay, waiving the timeframe requirements for certain data submission for SNFs and long-term care (“LTC”) facilities, and allowing nursing homes to suspend pre-admission screening and annual resident review assessments. Certain physical environment requirements are now waived, allowing for expanded use of non-SNF buildings or non-resident rooms in a LTC facility for patients in certain emergency circumstances. To promote social distancing: requirements that residents participate in-person in resident groups are waived; requirements related to room-sharing and moving a resident’s room are waived for the purpose of grouping or separating residents with respiratory illness symptoms and/or residents with a confirmed COVID-19 diagnosis from residents without these symptoms or diagnosis; and physicians and non-physician practitioners may conduct visits through telehealth options when previously the visits were required to be in-person. CMS is also partially waiving training and certification requirements required for nurse aids employed for longer than four months at a facility in order to assist with potential staffing shortages. CMS has waived certain resident transfer and discharge requirements in particular circumstances, though advance notification and receiving facility agreements are generally still required, and related care planning requirements are also waived in certain circumstances. Additionally, CMS is delaying the cost-report filing deadlines until June and July, and CMS is extending the data submission deadlines for hospitals on the reporting of occupational mix of employees until August 3, 2020. Further, Medicare Administrative Contractors (“MACs”), Qualified Independent Contractors (“QICs”), and Independent Review Entities (“IREs”) are allowed to grant extensions to providers on appeals and are permitted to offer other flexibilities on filings and deadlines. III. Home Health, Hospice, ESRD, and DMEPOS Waivers CMS has provided FAQ documents on these waivers for home health, here; for hospice, here; for ESRD Facilities, here; and for DME Suppliers, here. Under the Blanket Waivers, CMS provided extensions for home health, hospice, and ESRD providers to complete certain assessment required for Medicare reimbursement. CMS also waived certain home health, hospice and ESRD in-person assessment, visit, and supervision requirements to reduce the need for ordinary course check-ins and to allow for greater use of telehealth. In addition, hospices are relieved of the requirement to provide non-core hospice services, such as physical therapy, occupational therapy, and speech-language pathology. In providing additional flexibility in timing and in-person visits, CMS’s goal is to support containment efforts for at-risk populations and to free up professional resources to focus on treatment of those infected with coronavirus and to focus on operations related to the pandemic. In addition, CMS is waiving certain routine audits, maintenance, and certification requirements for ESRD Facilities and ESRD Facility staff. Again, CMS is attempting to free up resources and provide flexibility to support providers’ focus on pandemic-related efforts. CMS authorized the establishment of Special Purpose Renal Dialysis Facilities (“SPRDF”) to mitigate transmission among the at-risk population. Such facilities do not require a federal survey to be completed before providing services. CMS is allowing physicians that are appropriately credentialed at a certified dialysis facility to provide care at a “designated isolation location” such as a SPRDF without separate credentialing. Dialysis services may now also be provided in nursing homes and SNFs, so long as the services and necessary equipment and supplies are provided by personnel of the resident’s usual Medicare-certified dialysis facility. In an effort to expedite supply of and reimbursement for DMEPOS, CMS is waiving the replacement requirements (such as the face-to-face requirement, a new physician’s order, and new medical necessity documentation) for DMEPOS that are lost, destroyed, irreparably damaged, or otherwise rendered unusable. DMEPOS suppliers must still provide a narrative description about why the equipment must be replaced. IV. Practitioner Licensure, Provider Enrollment, Appeals, and Medicaid/CHIP Waivers CMS has provided a specific fact sheet describing the waivers and flexibilities available for physicians and other clinicians, available here. The Blanket Waivers are intended to ease the burden on the health system in order to allow providers to focus on patient care. To that end, CMS is temporarily waiving the Medicare reimbursement requirements that out-of-state practitioners be licensed in the state in which they are providing services when they are licensed in another state when the following four conditions are met: The practitioner must be enrolled in Medicare; The practitioner must have a valid license to practice in the state which relates to his or her Medicare enrollment; The services must be furnished, whether in-person or remote via telehealth, in a state in which the emergency is occurring in order to contribute to relief efforts in his or her professional capacity; and The practitioner must not be excluded in any state that is part of the PHE. Please note that the foregoing Medicare reimbursement waiver for licensure does not waive state or local licensure requirements. As a result, providers must review the state licensure requirements in each jurisdiction prior to delivering telehealth to patients in that location. Please see the blog post we published on this topic of telehealth opportunities here. Additionally, CMS has taken a number of steps to ease the provider enrollment requirements. See here for additional information from CMS on provider enrollment relief, as well as our previous blog post on this topic, available here. CMS has set up a hotline for physicians and non-physician practitioners to enroll and receive temporary Medicare billing privileges. Additionally, CMS has taken the following steps to facilitate the enrollment of providers in the wake of the COVID-19 outbreak, including: Waiver of certain screening requirements, including application fees, background checks, and site visits; Postponement of revalidation actions; Allowing licensed providers to render services outside their state of enrollment;  Expediting pending or new applications;  Easing telehealth restrictions; and Allowing physicians and non-physician practitioners to terminate opt-out status early and enroll in Medicare. Regarding appeals, the new waivers grant broad powers to MACs, QICs, and IREs to relax the requirements of federal regulations regarding the appeals process in FFS, and Parts C and D. MACs, QIEs, and IREs are instructed to allow extensions to file an appeal and to permit the waiver of requests for timeliness requirements for additional information to adjudicate appeals. MACs, QICs, and IREs are now allowed to process an appeal even with incomplete Appointment of Representation forms as outlined in federal regulations. Additionally, MACs, QICs, and IREs can now process appeals that do not meet the required elements of those same federal regulations. MACs, QICs, and IREs are given broad flexibility with respect to other parts of the appeals process so long as good cause requirements are satisfied. Finally, regarding Medicaid and CHIP, the new waivers permit states to request approval that certain statutes and implementing regulations be waived under section 1135. To request such an approval, states may submit an 1135 waiver request directly to their Center for Medicaid and CHIP Services (CMCS) state lead or Jackie Glaze, Acting Director, Medicaid and CHIP Operations Group, Center for Medicaid and CHIP Services at CMS by e-mail (Jackie.Glaze@cms.hhs.gov) or by letter. CMS sets forth a number of examples of the kinds of requests that states can make under this waiver, including: Waiver of prior authorization requirements for FFS programs; Waiver of out-of-state requirements for providers to provide care to another state’s Medicaid enrollees impacted by COVID-19; Temporary suspension of provider enrollment and revalidation requirements to increase access to care; Temporary waiver of state licensure requirements; Temporary suspension of requirements for pre-admission and annual screening requirements for nursing home residents. CMS encourages states to assess their needs and take advantage of these waivers. To assist states with the waiver request process and provide additional guidance, CMS released the Medicaid and CHIP Disaster Response Toolkit, which can be found here. Further, the CMS Coronavirus Waivers & Flexibilities website, here, contains a link to each state’s request for waivers and the responses from CMS. V. Stark Waivers On the same date, CMS also issued much-anticipated Blanket Waivers of sanctions under the federal physician self-referral law, or “Stark Law,” for “COVID-19 Purposes.” These Blanket Waivers are set forth here. Please see our separate post, available here, with detailed information about these Stark Law Blanket Waivers. * * * If you have questions about the new CMS waivers, please contact the authors or your regular Dorsey & Whitney LLP attorney. Dorsey is closely monitoring the rapidly evolving legal landscape related to the COVID-19 pandemic. You can access Dorsey’s health law blog related to health law updates, available here. You can also access Dorsey’s coronavirus resource center, which contains a wide variety of legal resources related to the coronavirus outbreak, available here.

The Centers for Medicare & Medicaid Services (“CMS”) recently posted two annual updates related to the physician self-referral law (“Stark Law” or “Stark”) on its Stark website: (1) CPI-U updates related to the nonmonetary compensation exception and medical staff incidental benefits exception; and (2) CPT/HCPCS codes used to identify certain categories of Stark designated health services (or “DHS”).  These updates are important for stakeholders to be aware of as they seek to ensure continued compliance with Stark Law requirements. CPI-U Updates As per usual, the CPI-U Updates page of the CMS Stark website, found here, was updated before the end of the year to reflect the new compensation limits (based on inflation) for the nonmonetary compensation exception (at 42 C.F.R. § 411.357(k)) and medical staff incidental benefits exception (at 42 C.F.R. § 411.357(m)).  For calendar year 2020, the non-monetary compensation limit is $423 (up from $416 for calendar year 2019) and medical staff incidental benefits must be less than $36 per occurrence (up from $35 in calendar year 2019). DHS Code List Updates As we explained in our blog post here, in the calendar year 2020 Medicare physician fee schedule final rule (“PFS”), CMS finalized changes to the advisory opinion process under the Stark Law, and also included the annual update to the list of CPT/HCPCS codes used to identify certain categories of DHS (the “Code List”).  As we also explained, the Stark Law regulations at 42 C.F.R. § 411.351 specify that the following four categories of DHS are defined by reference to the Code List: (1) clinical laboratory services; (2) physical therapy, occupational therapy, and outpatient speech-language pathology services; (3) radiology and certain other imaging services; and (4) radiation therapy services and supplies.  The Code List is updated annually to reflect changes in the most recent CPT and HCPCS Level II publications. Further, items and services that may qualify for either of two Stark Law exceptions—the exception for preventive screening tests, immunizations and vaccines at 42 C.F.R. § 411.355(h) and the exception for EPO and other dialysis-related drugs at 42 C.F.R. § 411.355(g)—are identified by reference to the Code List.  The Code List included the annual updates to the codes eligible for the preventive screening tests, immunizations and vaccines exception.  However, as in previous years, the Code List does not include any codes eligible for the EPO and other dialysis-related drugs exception (for reasons explained by CMS in the rule).  The PFS rule includes tables showing the additions and deletions to the Code List. As per usual, the complete Code List was posted before the end of the year to the CMS Stark website dedicated to the Code List, found here.  The new list is effective January 1, 2020.

Following the passage of the Affordable Care Act (“ACA”), which placed new limits on physician-owned hospitals, St. Luke’s Health System (“System”) took action to change one of its hospital’s ownership structures through a buy-out of the physicians’ partnership interests pursuant to the Texas Securities Act (“TSA”). The TSA allows rescission for the original price paid for a security, plus interest, in exchange for a release of potential liability under TSA. Three of the physician-owners, who resisted the System’s attempt to rescind their ownership interests, sued the System and other defendants in connection with the buy-out alleging state-law violations and violations of the Anti-Kickback Statute, and by extension, the False Claims Act. To read the full article, view our FCA Now blog, linked here:  

In the calendar year 2020 Medicare physician fee schedule final rule (“PFS”), which was published in the Federal Register on November 15, 2019 (available here), CMS finalized changes to the advisory opinion process under the federal physician self-referral law (“Stark Law” or “Stark”).  CMS also published its annual update to CPT/HCPCS codes used to identify certain categories of Stark designated health services (or “DHS”).  These regulatory changes and annual code update both go into effect on January 1, 2020. Finalized Changes to Stark Advisory Opinion Regulations Under the CMS advisory opinion process, the regulations for which are found at 42 C.F.R. §§ 411.370–389, parties can seek an advisory opinion from CMS as to whether a referral for DHS (other than clinical laboratory services) is prohibited under the Stark Law.  CMS determines in the opinion whether an arrangement constitutes a “financial relationship” that would implicate the Stark Law’s referral prohibition and whether the arrangement or the referred service qualifies for a Stark Law exception.  CMS issued a Request for Information (“RFI”) in June 2018 as part of the “Regulatory Sprint to Coordinated Care” about ways CMS could modify the Stark Law regulations in order to reduce barriers to patient care coordination and value-based arrangements and to reduce the regulatory burden of complying with the Stark Law generally, which we wrote about here.  CMS did not specifically solicit comments regarding the Stark advisory opinion process in the RFI, but CMS received a number of comments about ways that the Stark advisory opinion process could be improved.  CMS explains in preamble to the PFS that it “undertook a fresh review” of the advisory opinion process in light of the comments it received to “identify limitations and restrictions that may be unnecessarily serving as an obstacle to a more robust advisory opinion process.” CMS also recently issued sweeping proposed Stark Law regulatory changes as part of the Regulatory Sprint to Coordinated Care on topics related to the RFI, which we wrote about in a white paper available here.  While the changes to the advisory opinion regulations do not directly relate to the shift to a value-based health care delivery system, CMS acknowledges in preamble to the PFS that “a faster and more robust advisory opinion process facilitates the shift to value-based care arrangements by providing more guidance for parties trying to understand how the physician self-referral law applies in an evolving and innovative marketplace. This will help to reduce provider burden by providing insight into what does and does not comply with the law, which encourages innovation.” Since the initial advisory opinion regulations were issued in 1998, CMS has only issued 16 advisory opinions, which are available here.  (CMS also issued 15 advisory opinions from 2004-2005 during the 18-month moratorium on physician ownership and investment interests in specialty hospitals that was in effect at that time, which are available here.)  In contrast, the Department of Health and Human Services (“HHS”) Office of Inspector General (“OIG”), which has a separate advisory opinion process for the federal anti-kickback statute (“AKS”) and certain other laws, issued 14 advisory opinions in calendar year 2018 alone (available here).  In preamble to the PFS, CMS recognizes the importance of an accessible advisory opinion process and acknowledges that the current advisory opinion process has not been widely used.  An accessible advisory opinion process is particularly important in the context of the Stark Law, since it is a strict liability statute, and there is a great need for certainty because, as CMS acknowledges, “parties that act in good faith may nonetheless face significant financial exposure if they misunderstand or misapply the law’s exceptions.” We anticipate that the changes to the advisory opinion process may indeed help to make the process more meaningful and accessible to entities that are seeking to understand if their arrangement complies with the Stark Law, particularly due to CMS’s broadening of how advisory opinions can be relied upon (as described below).  If you are interested in submitting an advisory opinion request, or for advice on whether and how you can rely on a published advisory opinion in assessing an arrangement for compliance with the Stark Law, please contact the authors or your regular Dorsey attorney. The most notable changes to the advisory opinion regulations in the PFS are the following: Reliance on an Advisory Opinion: Under existing Stark regulations, only the individual or entity that requested the advisory opinion may rely on the opinion. In the PFS, CMS finalizes revisions to regulations to specify the following: An advisory opinion is binding on the Secretary of HHS, and a favorable advisory opinion means that sanctions will not be imposed under the Stark Law with respect to individuals/entities that are parties to the arrangement upon which the opinion was issued (as well as the individuals/entities that requested the opinion). The Secretary of HHS will not pursue sanctions under the Stark Law “against any party to an arrangement that CMS determines is indistinguishable in all its material aspects from an arrangement with respect to which CMS issued a favorable advisory opinion.” Parties can submit an advisory opinion request to determine whether CMS would view their arrangement as “indistinguishable in all material aspects” from another arrangement that has received a favorable opinion, which will be issued by CMS on an expedited basis (as explained below). Individuals/entities can rely on advisory opinions “as non-binding guidance that illustrates the application of the physician self-referral law and regulations to the specific facts and circumstances described in the advisory opinion.” CMS acknowledges that stakeholders already use advisory opinions to inform their decision-making, and this change is intended to make clear that “such reliance is permissible and reasonable.” Timeline for Issuing an Advisory Opinion: Under existing regulations, CMS currently has a 90-day timeframe to issue an advisory opinion. CMS finalizes its proposed changes to the regulatory text to shorten this to 60 “working days” (where “working day” excludes weekends and holidays) after the request has been formally accepted.  CMS maintains the discretion it has in existing regulations to extend this time period when a request involves “complex legal issues of first impression or highly complicated fact patterns” and to suspend the time period in certain circumstances. CMS finalizes revisions to regulations to provide for expedited review of advisory opinion requests that relate to whether an arrangement is “indistinguishable in all material aspects” from an arrangement that was the subject of a favorable advisory opinion. The expedited review period will be 30 working days. Fees for the Cost of Advisory Opinions: CMS finalizes revisions to regulations to revise the fee structure for advisory opinions. Specifically, the $250 initial fee is removed and a $220 hourly rate is implemented. In the PFS, CMS also finalizes its proposed changes to the advisory opinion regulations in the following areas (among others): Matters Subject to Advisory Opinions: CMS finalizes revisions to regulations to allow CMS to consider advisory opinion requests that “relate to” existing or planned arrangements, rather than requests that “involve” them, which is intended to capture the scope of appropriate advisory opinion requests. CMS explains that it remains its position that advisory opinion requests cannot be regarding only “hypothetical facts or general questions of interpretation,” but must be about a specific referral, physician, financial relationship and facts/circumstances. CMS does acknowledge, however, that there is some confusion over what is a planned arrangement versus a hypothetical arrangement, so is removing this language from the advisory opinion regulations.  It also revised the regulatory text to reflect its view that a request for an advisory opinion would not be accepted if the claim could not be billed to Medicare for some reason unrelated to the Stark Law. CMS finalizes revisions to regulations to allow CMS more flexibility related to advisory opinion requests that involve conduct that is “substantially similar to conduct that is under investigation or is the subject of a law enforcement proceeding.” Certification Requirement: CMS finalizes revisions to regulations to allow for any authorized officer of the corporation to sign the certification statement, in addition to the Chief Executive Officer. Rescission: CMS finalizes revisions to regulations related to when CMS may rescind an advisory opinion, which is when CMS determines that there is good cause to do so. “Good cause” exists when “(i) there is a material change in the law that affects the conclusions reached in an opinion; or (ii) a party that has received a negative advisory opinion seeks reconsideration based on new facts or law.”  CMS declines to adopt a minimum wind-down period in regulatory text for arrangements that are the subject of a rescinded advisory opinion, and states that it will work with parties affected by a rescinded opinion to determine a reasonable wind down period.  CMS also finalizes regulatory changes to provide for an advance notice to the requestor and the public of a rescinded opinion. 2020 DHS Code List and CPI-U Updates The PFS also includes the annual update to the list of CPT/HCPCS codes used to identify certain categories of DHS (the “Code List”).  As we explained in prior posts (such as this one), the Stark Law regulations at 42 C.F.R. § 411.351 specify that the following four categories of DHS are defined by reference to the Code List: (1) clinical laboratory services; (2) physical therapy, occupational therapy, and outpatient speech-language pathology services; (3) radiology and certain other imaging services; and (4) radiation therapy services and supplies.  The Code List is updated annually to reflect changes in the most recent CPT and HCPCS Level II publications. Further, items and services that may qualify for either of two Stark Law exceptions—the exception for preventive screening tests, immunizations and vaccines at 42 C.F.R. § 411.355(h) and the exception for EPO and other dialysis-related drugs at 42 C.F.R. § 411.355(g)—are identified by reference to the Code List.  The Code List included the annual updates to the codes eligible for the preventive screening tests, immunizations and vaccines exception.  However, as in previous years, the Code List does not include any codes eligible for the EPO and other dialysis-related drugs exception (for reasons explained by CMS in the rule).  The PFS rule includes tables showing the additions and deletions to the Code List.  We expect that, as per usual, the complete list will be posted before the end of the year to the CMS Stark website dedicated to the Code List, found here. We also expect that the CPI-U Updates page of the CMS Stark website, found here, will be updated before the end of the year to reflect the new compensation limits for the nonmonetary compensation exception (at 42 C.F.R. § 411.357(k)) and medical staff incidental benefits exception (at 42 C.F.R. § 411.357(m)), which are both updated annually for inflation.

Today, the Centers for Medicare & Medicaid Services (CMS) and the Department of Health and Human Services (HHS) Office of Inspector General (OIG) each released their long-anticipated proposed rules to revise the federal self-referral law (or “Stark Law”) regulations, the safe harbors under the federal anti-kickback statute (AKS), and the civil monetary penalty law (CMP) for beneficiary inducements.  The proposed rules are part of HHS’s “Regulatory Sprint to Coordinated Care,” which seeks to remove regulatory obstacles to care coordination and a value-based healthcare delivery system. The HHS press release regarding the proposed rules is available here,  and includes links to each of the CMS and OIG proposed rules.  For our prior posts on the Regulatory Sprint to Coordinated Care, see here and here. Relatedly, the Substance Abuse and Mental Health Services Administration (SAMHSA) published proposed rules to revise privacy rules for substance use disorder records on August 26, and CMS published proposed rules to revise the Stark Law advisory opinion regulations on August 14 (as part of the Medicare Physician Fee Schedule proposed rule). We are reviewing the proposed rules and will post an in-depth analysis shortly.

The Centers for Medicare & Medicaid Services (CMS) is “actively working” on updates to regulations under the federal physician self-referral law (or “Stark Law”), according to CMS Administrator Seema Verma during a March 4, 2019 speech. Verma stated that the updated regulations will be issued later this year, and “will represent the most significant changes to the Stark law since its inception.” Verma explained in her remarks that the Stark Law, when enacted in 1989, made sense in a fee-for-service context, but as health care transitions to a value-based system where providers take on risk and payment is for outcomes rather than individual services, “we don’t have nearly as much need to interfere with who’s getting paid for what service.” According to Verma, CMS hopes that Stark Law regulatory changes “will help spur better care coordination and help support our work to remove barriers to innovation while continuing to provide appropriate safeguards for our programs.” Verma stated that the updated regulations will include “clarifying the regulatory definitions of volume or value, commercial reasonableness and fair market value; addressing issues such as lack of signature, incorrect dates or other areas of technical noncompliance; and updating the regulation to address a world in which there are cybersecurity and electronic health records requirements.” These Stark Law regulatory reforms are part of the “Regulatory Sprint to Coordinated Care” launched by the Department of Health and Human Services (HHS). Under this initiative, various HHS agencies have issued requests for information (RFIs) to solicit feedback from stakeholders on removing regulatory obstacles to care coordination. CMS published an RFI on June 25, 2018 soliciting comments regarding Stark Law reforms (as we described in our post here), which received 392 comments before the close of the comment period. We anticipate that CMS will summarize and respond to many of the comments that it received in preamble to the proposed Stark Law regulations to be issued later this year, as well as incorporate suggestions from stakeholders in the proposed regulations themselves. Also as part of the Regulatory Sprint, the HHS Office of Inspector General (OIG) published an RFI on August 27, 2018 soliciting comments on reforms to the anti-kickback statute and beneficiary inducements civil monetary penalty (as we described in our post here), which received 359 comments before the close of the comment period. Additionally, the HHS Office for Civil Rights (OCR) published an RFI on December 14, 2018 soliciting comments on reforms to the Health Insurance Portability and Accountability Act (HIPAA) privacy and security regulations, on which the comment period closed last month. The fourth and final area of focus of the Regulatory Sprint (according to an HHS press release) is 42 CFR Part 2, which relates to the confidentiality of substance use disorder patient records. An RFI under the Regulatory Sprint for this regulation has not been published by the Substance Abuse and Mental Health Services Administration (SAMHSA, which is the agency that administers this regulation). We will provide information about regulatory reform developments under these other areas of the Regulatory Sprint as they become available.

The Department of Health and Human Services’ (HHS) Office of Inspector General (OIG) has identified the anti-kickback statute (AKS) and beneficiary inducements civil monetary penalty (CMP) as potential barriers to arrangements that could promote better patient care coordination and value-based arrangements.  On August 27, 2018, the OIG published a Request for Information (RFI) seeking input from industry stakeholders on how the agency could modify existing or add new safe harbors to the AKS and exceptions to the beneficiary inducements CMP definition of “remuneration” in order to “foster arrangements that would promote care coordination and advance the delivery of value-based care, while also protecting against harms caused by fraud and abuse.”     The RFI describes how transforming the healthcare system into one that better pays for value is a key priority for HHS, and that HHS has launched what it calls a “Regulatory Sprint to Coordinated Care” to accelerate this transformation, with a focus of removing “unnecessary obstacles” to coordinated care. This OIG RFI is part of HHS’s Regulatory Sprint. As we described in our blog post here, the Centers for Medicare & Medicaid Services (CMS) also recently published an RFI related to reforms to the federal physician self-referral law (or “Stark Law”) as part of HHS’s Regulatory Sprint. Comments are due from stakeholders to the OIG RFI by 5 PM on October 26, 2018. Specifically, OIG is seeking input on the following topics: Promoting Care Coordination and Value-Based CareThe OIG would like information about potential arrangements that the healthcare industry is interested in pursuing, which may implicate the AKS and CMP, such as care coordination arrangements, value-based arrangements, alternative payment models, arrangements involving innovative technology and other novel financial arrangements.  The OIG requests a detailed explanation of the proposed structure and terms of the arrangements, and a description of how the arrangement promotes care coordination or value-based care.  The description should also include an explanation of how the proposed arrangement prevents potential harms such as increased costs, inappropriate utilization, poor quality of care and distorted decision-making.  For each detailed description, the OIG requests that stakeholders describe the new or modified AKS safe harbors or exceptions to the beneficiary inducements CMP definition of “remuneration” that may be necessary in order to protect the described arrangement.  The OIG is also seeking input on several key definitions that are used in the regulatory provisions related to health care delivery reform, payment reform and the AKS, such as the definition of coordinated care, care coordinator and care coordination services. Beneficiary Engagement, including Beneficiary Incentives and Beneficiary Cost-Sharing Obligations  The OIG is seeking feedback on the types of incentives that providers, suppliers and others want to provide to beneficiaries.  For each incentive, the OIG wants to know how providing the incentive would contribute to or improve quality of care, care coordination and patient engagement (including adherence programs).  The OIG published several specific questions in the RFI such as whether beneficiary incentives connected to medication adherence and medication management should be treated differently than other types of beneficiary incentives, and if so, how and why.  Further, the OIG is seeking input regarding what disclosures the offer or should be required to make to beneficiaries regarding an incentive, such as the source of the incentive, as well as input regarding the risks and benefits related to certain types of incentives such as cash equivalents, gift cards, in-kind items and services, and non-monetary remuneration.  Additionally, the OIG is also seeking input on whether the “nominal value” threshold under the CMP should be increased from $15 per item and $75 in the aggregate per patient on an annual basis, whether a similar nominal value “policy” should be applied to the AKS, and if so, how such policy would contribute to care coordination or value-based care.  The OIG is also requesting information about how reducing or eliminating patient cost-sharing obligations might improve care delivery and promote quality of care. Other Related Topics of Interest  The OIG is seeking feedback on a number of related topics of interest. These include: (a) current fraud and abuse waivers developed for purposes of carrying out the Medicare Shared Savings Program; (b) donated or subsidized cybersecurity-related items and services; and (c) new exceptions under the Bipartisan Budget Act of 2018 related to (i) incentive payments under the ACO Beneficiary Incentive Program and (ii) telehealth technologies. The Intersection of the Stark Law and the AKSFinally, the OIG would like feedback regarding circumstances in which Stark Law exceptions and AKS safe harbors should align for purposes of the goals of the RFI and circumstances in which Stark Law exceptions related to care coordination/value-based care should not have a corresponding AKS safe harbor. The OIG noted that, where relevant, it intends to review comments submitted in response to the CMS RFI related to the Stark Law (described above), but that it urges commenters to resubmit any relevant comments to the OIG RFI to ensure that they are considered by the OIG, given the volume of questions included in the CMS RFI and the separate authorities of the OIG and CMS.   Please contact the authors or your regular attorney at Dorsey & Whitney if you want more information about the RFI process or desire to submit comments to the RFI by the October 26, 2018 deadline.  

Many regulatory and legislative calls for modernizing the federal physician self-referral law (or “Stark Law”) in light of the move to value-based payment under Medicare have been made in recent months.  Most recently, a hearing on “Modernizing the Stark Law to Ensure the Successful Transition from Volume to Value in the Medicare Program” took place on July 17th with the House Ways and Means Subcommittee on Health.  At the hearing, the Department of Health and Human Services (HHS), legislators and providers emphasized that the Stark Law has slowed the move to value-based payment under Medicare and that reforms to the Stark Law are needed. Further, the Centers for Medicare & Medicaid Services (CMS) published a Request for Information (RFI) on June 25th regarding reducing the regulatory burdens of the Stark Law, with a particular focus on soliciting comments on how the Stark Law may impede care coordination initiatives.  The RFI describes how transforming the healthcare system into one that pays for value is a key priority of HHS, and that HHS launched a “Regulatory Sprint to Coordinated Care” to accelerate this transformation.  One of CMS’s goals in this Regulatory Sprint is to address “unnecessary obstacles to coordinated care, real or perceived, caused by the [Stark Law].”  In a press release related to the RFI, CMS Administrator Seema Verma is quoted as follows: “We are looking for information and bold ideas on how to change the existing regulations to reduce provider burden and put patients in the driver’s seat. . . . Dealing with the burden of the physician self-referral law is one of our top priorities as we move towards a health care system that pays for value rather than volume.” In the RFI, CMS requests public input on 20 different areas.  These areas include, among others, the structure of existing or potential alternative payment models and other novel financial arrangements, what additional exceptions to the Stark Law are needed for these arrangements, the utility of certain existing exceptions to the Stark Law, and creating new defined terms and revising certain existing defined terms.  CMS also requests comments on areas beyond care coordination initiatives, such as requests for input on defining “commercial reasonableness” in the context of Stark Law exceptions, qualifying as a “group practice,” other areas of Stark Law regulations that need clarification, and compliance costs for regulated entities. The hearing and RFI continue the recent trend of regulatory and legislative initiatives aimed at modernizing the Stark Law in light of the move to value-based payment under Medicare.  As we explained in our prior post, a bill that addresses this very topic, titled the “Medicare Care Coordination Improvement Act of 2017,” was introduced in both the U.S. House of Representatives (H.R. 4206) and Senate (S. 2051) in November 2017.  The bill is still under consideration in both the House and the Senate.  (Please see our prior post for a detailed explanation of the bill.)  As we also explained in this prior post, in January 2018, CMS Administrator Verma identified Stark Law reform as a top policy priority and reported that an inter-agency group was being formed to review the law. Next, as the RFI describes, the President’s fiscal year 2019 budget, which was released in February 2018, included a legislative proposal to create a new Stark Law exception for arrangements arising from alternative payment model participation. Given these recent developments, Stark Law legislative and regulatory reforms are likely to occur in the near future.  The RFI is a great opportunity for stakeholders to be involved in these reforms.  CMS is accepting comments on the RFI through August 24, 2018.  If you would like to submit comments, one of the authors or your regular Dorsey attorney would be happy to assist you.

Overview On February 9, President Trump signed the Bipartisan Budget Act of 2018 (“BBA”) into law. The BBA funds the federal government through March 23 and included a bipartisan agreement to increase annual spending authority for a two-year period. In addition, the legislation contains significant policy changes impacting Medicare, Medicaid and other federal health agencies. These changes include revisions to the federal physician self-referral law (commonly referred to as the “Stark Law”), expansion of coverage for telehealth services, funding extensions of several critical Medicare programs, and changes to the Medicare Shared Savings Program. A summary of some of these key health care policy changes is included below. Revisions to the Stark Law The BBA revised the Stark Law to codify certain regulatory changes that went into effect on January 1, 2016 and corresponding clarifications via preamble by the Centers for Medicare & Medicaid Services (“CMS”) in the 2016 Medicare Physician Fee Schedule Final Rule (the “2016 Final Rule”). Specifically, the BBA revised the Stark Law to indicate the following: The writing requirement of various Stark Law compensation exceptions can be satisfied “. . . by a collection of documents, including contemporaneous documents evidencing the course of conduct between the parties involved.” Previously, CMS had only indicated in preamble text in the 2016 Final Rule that a collection of documents could be relied upon to meet the writing requirement. This was not set forth in regulatory text, however. Now that this language is in the Stark Law itself, stakeholders can take greater comfort in relying on a collection of documents to meet the writing requirement. The signature requirement of various Stark compensation exceptions is met if the parties obtain the required signatures “not later than 90 consecutive calendar days immediately following the date on which the compensation arrangement became noncompliant” and the arrangement otherwise complies with all applicable criteria. This statutory language now aligns with regulatory language in 42 C.F.R. § 411.353(g) regarding temporary noncompliance with signature requirements. That regulatory language was revised in the 2016 Final Rule to provide organizations with greater flexibility and to eliminate the prior rule that included a confusing, and often unhelpful, distinction between inadvertent noncompliance not inadvertent noncompliance. The Stark Law itself, however, has not previously referenced any provisions with respect to temporary noncompliance with the signature requirements. A holdover lease or personal service arrangement can indefinitely meet the requirements of the Stark exceptions for rental of office space, rental of equipment and personal service arrangements, respectively. However, the immediately preceding arrangement must have expired after a term of at least one year, the arrangement must have met all requirements of the applicable exception when it expired, the holdover arrangement must be on the same terms and conditions as the immediately preceding arrangement, and the holdover arrangement must continue to satisfy the conditions of the applicable exception. This statutory language now aligns with regulatory language regarding holdovers in the rental of office space, rental of equipment and personal service arrangements exceptions in 42 C.F.R. § 411.357. That regulatory language was revised in the 2016 Final Rule which previously only permitted holdovers for up to six months. The Stark Law itself, however, has not previously referenced any provisions with respect to holdover arrangements. These Stark-related provisions of the BBA used the language from Section 301 of H.R.3178, titled the “Medicare Part B Improvement Act of 2017,” which we summarized in our blog post here. This bill, which includes many other non-Stark Law-related provisions, is still pending in the Senate. We note that, while the changes to the Stark Law under the BBA were fairly inconsequential, broader Stark Law reform initiatives, including in response to the move to value-based payments under Medicare, are also currently underway. See our blog post here for further details. Increase in Civil and Criminal Penalties for Violations of Fraud and Abuse Laws The BBA significantly increased civil and criminal penalties for federal health care program fraud and abuse. Specifically, existing maximum penalties under the Civil Monetary Penalties Law (“CMPL”) for improperly filed claims (under 42 U.S.C. § 1320a–7a(a)) increased to $20,000 (from $10,000), to $30,000 (from $15,000), and to $100,000 (from $50,000). Maximum penalties under the CMPL for payments to induce reduction or limitation of services (under 42 U.S.C. § 1320a–7a(b)) increased to $5,000 where they were previously $2,000 and $10,000 where they were previously $5,000. Additionally, criminal penalties for acts involving federal health care programs under 42 U.S.C. § 1320a–7b, including but not limited to the Anti-Kickback Statute, were increased to $100,000 (from $25,000), to $20,000 (from $10,000), and to $4,000 (from $2,000). Finally, maximum sentences for felonies involving federal health care program fraud and abuse under 42 U.S.C. § 1320a–7b, including but not limited to the Anti-Kickback Statute, were increased to ten years where they were previously five years. The effective date of these increased penalties is February 9, 2018 (the date of enactment of the BBA). We note that, in 2016, penalties under the CMPL and for criminal acts involving federal health care programs were adjusted for inflation in accordance with the Bipartisan Budget Act of 2015 (see 81 Fed. Reg. 61538 et seq. (Sept. 6, 2016)), and are adjusted on an annual basis under 45 C.F.R. § 102.3 (but have not yet been updated for 2018). So, the previous statutory maximum penalties had already been increased from the amounts set forth in the statute, and now have been increased even further. It is not clear how inflation adjustments will be applied in 2018 to the new statutory penalty maximums under these laws. Medicare Telehealth Expansion The BBA also included potentially far-reaching expansions to Medicare coverage for telehealth services. Telehealth Services for Stroke Patients Current Medicare coverage for telehealth services is limited to certain care locations that are either: (A) outside of any Metropolitan Statistical Area and designated as a rural health professional shortage area; or (B) participating in a Federal telemedicine demonstration project. The BBA eliminates this originating site requirement beginning January 1, 2019 for services to diagnose, treat, or evaluate symptoms of an acute stroke. The Medicare beneficiary receiving diagnosis, treatment, or evaluation of an acute stroke may be located at any hospital or critical access hospital, mobile stroke unit, or any other type of care site that CMS designates. Home Dialysis Assessments Similarly, beginning January 1, 2019 Medicare beneficiaries with End Stage Renal Disease (“ESRD”) may choose to receive monthly ESRD-related clinical assessments via telehealth. A face-to-face clinical assessment will be required monthly during the initial 3 months of home dialysis, and thereafter only once every 3 consecutive months. The statute also states that the provision of telehealth technologies to a Medicare beneficiary receiving home dialysis will not be considered remuneration under the beneficiary inducement statute, so long as the telehealth technologies are not offered as part of any advertisement or solicitation, are provided for purposes of furnishing telehealth services related to the beneficiary’s ESRD, and meet any other requirements CMS may adopt by regulation. The condition-based expansions in telehealth coverage for ESRD and stroke patients beyond rural health professional shortage areas signals an important recognition that service delivery via telehealth is both effective and increasingly common. Telehealth Services Provided Under Medicare Advantage Plans Beginning in plan year 2020, a Medicare Advantage Plan (“MA Plan”) may provide additional telehealth benefits to its enrollees. The telehealth benefits must be a service type available under Medicare Part B, and must be services that the MA Plan identifies as clinically appropriate to furnish using electronic information and telecommunications technology when a clinician is not at the same locations as the plan enrollee. CMS will adopt regulations regarding physician and practitioner requirements, coordination of benefits rules, and other requirements. If the MA Plan wishes to offer the service via telehealth, the MA Plan must offer the same benefit in-person and allow the enrollee to determine whether or not to receive the benefit via telehealth. The MA Plan’s bid to CMS must attribute the telehealth benefit cost to amounts attributable to the provision of benefits under the original Medicare fee-for-service program. Telehealth Services to ACO Beneficiaries Lastly, the BBA allows increased Medicare coverage for telehealth services provided to Medicare fee-for-service beneficiaries assigned to an Accountable Care Organization (“ACO”) participating in certain Medicare shared savings programs. After January 1, 2020, the existing Medicare telehealth geographic limitations will not apply when a physician or practitioner participating in an ACO provides telehealth services covered under Medicare to a Medicare beneficiary assigned to the ACO. The beneficiary’s home can be an originating site for the telehealth services, but the beneficiary’s home need not be located in a rural health professional shortage area. This expansion in telehealth coverage applies only to ACOs participating in a two-sided ACO model (in which the ACO shares in both savings and losses), or an ACO tested and expanded pursuant to authority granted to the Center for Medicare and Medicaid Innovation. No facility fee will be paid; only the professional service is paid pursuant to this telehealth expansion. And coverage does not extend to services appropriate only for hospital inpatients. Other ACO Changes The BBA includes a provision allowing ACOs to elect to have beneficiaries assigned to the ACO prospectively rather than having Medicare beneficiaries attributed to ACOs retroactively using encounter data based upon visits for primary care services. A beneficiary may also choose to align with an ACO in which his or her main primary care provider participates. The beneficiary can continue to receive services from any provider participating in Medicare even if he or she elects to align with a specific ACO. The BBA also establishes a new voluntary ACO beneficiary incentive program that allows certain two-sided risk ACOs to offer beneficiaries a payment of up to $20 per service for receiving select primary care services. ACOs that want to offer payment to beneficiaries will have to apply for approval to participate in the incentive program with Health and Human Services. Outpatient Therapy Payments The BBA repeals annual payment caps for outpatient hospital therapy services (including physical therapy, speech-language pathology services, and occupational therapy) effective January 1, 2018. Funding Extensions The BBA includes a number of funding extensions for critical health care programs, including: Extension of CHIP funding for four more years (Fiscal Year 2024 through Fiscal Year 2027); Five-year extension of the Medicare low-volume hospital payments through September 30, 2022; Five-year extension of the Medicare-dependent hospital (MDH) program through September 30, 2022. Two-year extension of funding for quality measure endorsement, input, selection, and reporting requirements. Five-year extension with reforms of the home health rural add-on until October 1, 2022.

Stark Law Reform Initiatives The Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma recently identified federal physician self-referral law (or “Stark Law”) reform as a top policy priority and reported that an inter-agency group is being formed to review the law. Specifically, in a January 17 American Hospital Association Town Hall webcast focused on regulatory relief for hospitals and health systems (excerpt available here), Verma reported that CMS will be looking to modernize the Stark Law to reflect the move from fee-for-service to value-based payments under Medicare. According to Verma, the Stark Law was one of the top responses from providers to a CMS request asking providers to identify the most burdensome regulations. Because the Stark Law is not completely in CMS’s jurisdiction, an inter-agency group is being formed to look at Stark Law reform initiatives that will include CMS, the Department of Health and Human Services (HHS) Office of Inspector General, the HHS General Counsel, and the Department of Justice. Verma also indicated that then-acting Secretary of HHS Eric Hargan was interested in the issue. Lastly, Verma specified that Congressional intervention may be required. While not mentioned by Verma in the recent webcast, a bill that addresses modernizing the Stark Law in light of the shift to value-based payment under Medicare, titled the “Medicare Care Coordination Improvement Act of 2017,” was introduced in both the U.S. House of Representatives (H.R. 4206) and the Senate (S. 2051) on November 1, 2017. The bill is still under consideration in both the House and the Senate. If enacted, this bill would give HHS authority to grant waivers to fraud and abuse-related statutes for participants in the Medicare Shared Savings Program, i.e., accountable care organizations. Such waiver authority would be extended to “covered APM entities” such as entities participating in alternative payment models (or “APMs,” as defined by MACRA) and similar entities. Additionally, the bill would expand the authority of HHS to promulgate ownership and compensation exceptions to the Stark Law to promote care coordination, by expanding the HHS Secretary’s authority to provide exceptions for financial relationships not posing a “significant risk of program or patient abuse, including those that would promote care coordination, quality improvement, or resource conservation by physician practices under [Medicare] part B” (emphasis added), rather than the current standard for exceptions, which requires that excepted arrangements not pose a “risk of program or patient abuse.” It would also limit the Secretary from imposing requirements that could adversely affect care coordination or participation in APMs. Finally, it would establish a new statutory exception to the Stark Law for services furnished pursuant to an arrangement entered into for the purpose of developing or operating an APM, provided the arrangement meets certain requirements including that it is in writing, that services are furnished at fair market value and that semi-annual reports are submitted to the Secretary on the progress of the APM (among other requirements). Further, while not addressing modernizing the Stark Law in light of the shift to value-based payment under Medicare, two additional bills that would amend the Stark Law are currently pending. First, H.R. 3726, the “Stark Administrative Simplification Act of 2017,” was introduced in the House on September 11, 2017. This bill proposes an alternative protocol to the Stark self-referral disclosure protocol (SRDP) for inadvertent technical noncompliance (including, for example, compensation arrangements with an inadvertent missing signature) with the Stark Law and reduced civil monetary penalties for disclosures made pursuant to this alternative protocol. This bill is still under consideration in the House. Second, H.R. 3178, titled the “Medicare Part B Improvement Act of 2017”, was passed in the House in July 2017 and is currently pending in the Senate. Among non-Stark Law-related provisions, if enacted, this bill would codify in the Stark Law certain regulatory changes that went into effect on January 1, 2016 (and corresponding clarifications via preamble by CMS) regarding the writing requirement of the Stark Law compensation exceptions, temporary non-compliance with the signature requirement of the Stark Law compensation exceptions, and the indefinite holdover provision for the lease of office space or equipment and personal services arrangements exceptions. It remains to be seen where the above-described legislation will lead, and what additional legislative and/or regulatory initiatives will be pursued given the stated focus on Stark Law reform by CMS Administrator Verma, the inter-agency group formed to review Stark Law changes, and the new HHS Secretary Alex Azar. 2018 DHS Code List and CPI-U Updates The 2018 Medicare Physician Fee Schedule (PFS) final rule, which took effect on January 1, included the annual update to the list of CPT/HCPCS codes used to identify certain categories of Stark designated health services (DHS) (the Code List).  As we explained in our post on the 2017 PFS, the Stark Law regulations at 42 C.F.R. § 411.351 specify that the following four categories of DHS are defined by reference to the Code List: (1) clinical laboratory services; (2) physical therapy, occupational therapy, and outpatient speech-language pathology services; (3) radiology and certain other imaging services; and (4) radiation therapy services and supplies.  (The other categories of DHS—which are (1) durable medical equipment and supplies; (2) parenteral and enteral nutrients, equipment and supplies; (3) prosthetics, orthotics, and prosthetic devices and supplies; (4) home health services; (5) outpatient prescription drugs; and (6) inpatient and outpatient hospital services—are defined at 42 C.F.R. § 411.351 without reference to the Code List.) The Code List is updated annually to reflect changes in the most recent CPT and HCPCS Level II publications and to account for changes in Medicare coverage and payment policies. Further, items and services that may qualify for either of two Stark Law exceptions—the exception for preventive screening tests, immunizations and vaccines at 42 C.F.R. § 411.355(h) and the exception for EPO and other dialysis-related drugs at 42 C.F.R. § 411.355(g)—are identified by reference to the Code List.  The Code List included the annual updates to the codes eligible for the preventive screening tests, immunizations and vaccines exception.  However, as in previous years, the Code List does not include any codes eligible for the EPO and other dialysis-related drugs exception (for reasons explained by CMS in the rule). The PFS rule includes tables showing the additions and deletions to the Code List.  As per usual, the complete list was posted to the CMS website dedicated to the Code List, found here. Finally, per the CPI-U Updates page of the CMS Stark website, CMS updated the compensation limits for the nonmonetary compensation exception (at 42 C.F.R. § 411.357(k)) and medical staff incidental benefits exception (at 42 C.F.R. § 411.357(m)), which are both updated annually for inflation. For calendar year 2018, the non-monetary compensation limit is $407 and medical staff incidental benefits must be less than $34 per occurrence. (CMS also noted in a footnote on this page that, “From November 9, 2016, through November 16, 2017, the CY 2015 nonmonetary compensation limit was inadvertently listed on this website as $395 instead of $392.”)

The Centers for Medicare and Medicaid Services (“CMS”) issued new Self-Referral Disclosure Protocol (“SRDP”) forms, and, beginning June 1, 2017, these SRDP forms will be mandatory for those parties submitting voluntary self-disclosures of actual or potential violations of the federal physician self-referral law (the “Stark Law”) through the SRDP.  The Patient Protection and Affordable Care Act established the SRDP, giving providers and suppliers that may have received an overpayment as a result of actual or potential violations of the Stark Law the opportunity to facilitate the resolution of these violations with CMS.  The SRDP forms are intended to streamline and standardize the SRDP submission process. Parties making disclosures under the SRDP will now be required to submit: (1) the SRDP Disclosure Form, providing information about the disclosing party including the history of abuse, pervasiveness of noncompliance, and steps to prevent future noncompliance; (2) the Physician Information Form(s), providing details of the noncompliant financial relationship(s) between the physician(s) and the disclosing party; (3) the Financial Analysis Worksheet, quantifying the overpayment; and (4) a certification signed by the disclosing party stating that the information provided is truthful and based on a good faith effort to bring the matter to the attention of CMS. Submissions to the SRDP involving solely a failure by a physician-owned hospital to disclose physician ownership on any public website or in any public advertisement must continue to follow special instructions from CMS available on the SRDP website. Although this is the first time CMS has mandated prescribed forms, much of the information now required for SRDP submissions is not significantly different from information previously required for such submissions.  One of the differences is the new requirement that the disclosing party disclose the pervasiveness of Stark violations, illustrating how common the disclosed noncompliance was in comparison to similar relationships between the disclosing party and physicians.  Some hope the specific forms will allow for faster resolutions of actual or potential Stark Law violations, but that remains to be seen.