How Coronavirus Public Health Emergency Offers Potential for Temporary Stark Relief

On Jan. 31, 2020, the U.S. Department of Health and Human Services declared novel coronavirus, aka, COVID-19, a public health emergency (PHE). While it might sound like the highest level of government policy, declaration of a PHE might have a direct and immediate practical impact on your lab and in a way you probably would have never thought of. Specifically, the PHE offers the potential for temporary relief from the Stark Law, freeing you up to make business arrangements with referring physicians related to coronavirus testing that would be completely illegal during periods of normalcy.

The Laws of PHEs

The Stark Law bans physicians from referring Medicare or Medicaid patients to labs or other health care entity with which they or an immediate family member have a financial relationship. Ensuring adherence to Stark restrictions when dealing with referring physicians is an everyday and pressing imperative for labs and their compliance managers.

But there’s another law that may come into play, namely, the Public Health Service Act, which empowers the HHS Secretary to declare a PHE. While it may feel like public relations, the reason the Secretary made such a declaration was to activate his powers to take broad response measures to deal with the coronavirus and protect the public, which may include educating the public and disseminating information about the coronavirus, encouraging research and development of diagnostic and treatment techniques, improving screening and detection efforts; and supporting state and local government efforts to control the virus.

One application of these powers involves setting aside or relaxing health care regulations to deal with the emergency. Specifically, while a declared PHE is in effect, HHS may waive or modify Medicare, Medicaid, State Children’s Health Insurance Program and HIPAA requirements under Section 1135 of the Social Security Act (SSA), including:

Conditions of participation:

• The need of preapproval for medical items or services;
• Restrictions on telemedicine; and
• Stark Law restrictions.

Section 1135 Waivers

Section 1135 waivers aren’t automatic or self-activating. To get one, you need to actually apply to CMS, which reviews each application on a case by case basis. The waiver can take effectively retroactively to the start of the emergency period or to any other subsequent date CMS determines. The waiver ends upon termination of the PHE or 60 days after the waiver or modification is first published. If the PHE is still in effect after 60 days, it can be renewed for additional 60-day periods.

Takeaway

During the current coronavirus emergency, labs need to recognize that they may have additional latitude to enter into temporary arrangements with physicians to promote public health. More precisely, seeking a Section 1135 waiver may make a lot of sense if your lab has an opportunity to provide coronavirus testing or other related services for Medicare or Medicaid beneficiaries in collaboration with a physician or medical group that has ownership interests in or other financial ties to your lab that would normally be prohibited under the Stark Law.