The 18 Things You Can Do for COVID-19 that You Can’t Do for Other Testing  

Blanket Waivers relaxing kickback law restrictions standing in the way of desperately needed COVID-19 tests continue to play a crucial role in the federal government’s response to the Public Health Emergency (PHE). As lab compliance officer, you need to make your officers aware of these Blanket Waivers and the potential business and testing opportunities they create for your lab. Here’s a list of the talking points to cover in your CEO briefing.

Section 1135 Blanket Waivers

First, set the legal context for the CEO by explaining that during a PHE, CMS has discretion to not impose penalties on remuneration arrangements that would normally violate kickback and other anti-fraud laws. On March 30, 2020, the agency exercised that discretion by issuing Blanket Waivers,  aka Section 1135 waivers, clearing the way for COVID-19 testing arrangements that would otherwise raise red flags under the Stark Law for as long as the PHE remains in effect.

But it soon became evident that the Stark waivers weren’t enough. The problem was that many of the COVID-19 testing arrangements that labs and physicians wanted to make implicated not only Stark but also the federal Anti-Kickback Statute (AKS) which bans offering, requesting or payment of “remuneration” to referral sources to induce or reward referrals. So, on April 3, the OIG issued a Policy Statement to indicate that it was all behind the Stark Law Blanket Waivers and would exercise its discretion not to seek AKS penalties against providers that entered into COVID-19 testing business relationships permitted by the Waivers.

The 18 Blanket Waivers

The heart of the briefing is a description of which COVID-19 testing arrangements are now on the table. But first you need to provide your CEO an important caveat. Explain that the OIG’s AKS non-enforcement policy doesn’t go as far as the CMS Blanket Waivers under the Stark Law. Specifically, the OIG covers only the first 11 of the 18 arrangements listed in the Blanket Waivers. Having clearly pointed this out, go through the list of Blanket Waivers.

1. Compensation for Physician Services: A lab or other entity (which for simplicity’s sake, we’ll refer to collectively as “lab”) may provide remuneration that’s above or below the fair market value to physicians for services they personally perform for the lab.

2. Office Space Rentals: During the PHE, labs can pay physicians (or their immediate family members) rental charges below fair market value for lease of office space from the physician.

3. Equipment Lease Rental Charges: Labs can also lease equipment from the physician at below fair market rent.

4. Purchases of Goods & Services: You can also make below fair market value purchases of items or services from a physician, e.g., purchase of an unused respirator from a physician.
5. Below Market Rent: The flipside of Blanket Waiver 2 is that a physician can lease office space from a lab at below fair market value rent.

6. Below Market Equipment Equipment Rental: Similarly, Waiver 3 can also work in reverse with physicians leasing equipment from the lab at below market rent.

7. Below Market Use of Premises: Physicians can provide a lab below fair market value remuneration for use of the lab’s premises, e.g., for use as a COVID-19 satellite office, or to purchase items or services from the lab.

8. Medical Staff Incidental Payments in Excess of Limits: Remuneration from a hospital to a physician can be in the form of medical staff incidental benefits above the normal limits set out in the Stark Law regulations, currently $423 per year.

9. Non-monetary Compensation Above Limits: Remuneration from a lab to a physician can be in the form of nonmonetary compensation that exceeds the normal limits set out in the regulations.

10. Below Market Loans to Physicians: Labs can offer referring physicians loans at below market interest or on favorable terms unavailable absent referrals.

11. Below Market Loans from Physician: Conversely, referring physicians can offer labs loans at below market interest or on favorable terms unavailable absent referrals.

Intermission: The Blanket Waiver Blind Spot Reminder

Pause at this point to remind your CEO that the OIG AKS non-enforcement policy applies only to the previous 11 items. Bottom Line: While permissible for purposes of the Stark Law, entering into the remaining COVID-19 testing arrangements is still subject to enforcement action and prosecution under the AKS and will thus have to be structured to take advantage of applicable AKS exceptions and safe harbors.

12. Temporary Expansion of Physician Owned Hospital Beds: The referral by a physician owner of a hospital that temporarily expands its facility capacity above the number of operating rooms, procedure rooms, and beds for which the hospital was licensed is allowed, provided that it serves a COVID-19-related purpose.

13. ASC to Hospital Conversions: Referrals by a physician owner of a hospital that converted from a physician owned ambulatory surgical center to a hospital on or after March 1, 2020 are also allowed for COVID-19 purposes, but subject to specific limitations.

14. Home Health Referrals: Similarly allowed are referrals to a home health agency that doesn’t qualify as a rural provider and in which the referring physician has an ownership or investment interest.

15. DHS Not in Same or Centralized Building: To DHS services available at remote or temporary treatment locations, the CMS is allowing referrals by a physician to a group practice designated health services location that does not qualify as a “same building” or “centralized building.”

16. Referrals for DHS in Patient’s Home: This Waiver permits referral by a physician in a group practice for medically necessary designated health services furnished by the group practice to a patient in his/her private home, an assisted living facility or independent living facility where the referring physician’s principal medical practice doesn’t consist of treating patients in their private homes.

17. Rural Referrals: The referral by a physician to an entity with which the physician’s immediate family member has a financial relationship if the patient who is referred resides in a rural area is now permitted for COVID-19 purposes.

18. Waiver of Written Signature: CMS has temporarily waived the requirements that a compensation arrangement satisfy writing or signature requirement(s) as long as the arrangement satisfies each other requirement of the applicable exception, unless such requirement is waived under one or more of the blanket waivers set forth above.

Takeaway

The one thing you want your CEO to take away from this briefing is that the foregoing Blanket Waivers are temporary and apply only if the arrangement is necessitated by the pandemic, such as awarding physicians “hazard pay,” giving away lab space or equipment to create new COVID-19 testing clinics or paying a key physician’s transport and travel expenses to ensure his/her availability for COVID-19 purposes. For all other forms of lab testing and treatment, the normal Stark Law and AKS restrictions still apply.