Stark Law Blanket Waivers during COVID

Stark Law is a federal law that regulates referral agreements between physicians and health agencies. The law generally provides that doctors can’t refer patients to a “designated health agency” in which the doctor (or an immediate relative of the doctor) has a financial interest in. The law has many exceptions. Violations of Stark law can result in substantial civil fines and penalties. Violations of Stark law may also serve as the foundation for a False Claims Act suit against the medical practice and the physicians.

According to the FCA Insider (FCA stands for False Claims Act), the US Department of Health and Human Services issued blanket waivers on March 30, 2020, so that “certain financial relationships and referrals that would otherwise be sanctioned by the Physician Self-Referral Law (Stark Law),” would  be permissible during the COVID-19 pandemic.

The blanket waivers generally apply to certain financial relationships and referrals identified by the Centers for Medicare & Medicaid (CMS) – regarding COVID-19, the deadly disease that has already taken over 300,000 American lives. The retroactive effective date of the blanket waivers is March 1, 2020 – which means financial relationships and referrals which meet the waiver requirements after that date should be protected. An experienced California healthcare lawyer can explain how the blanket waivers apply to your financial relationship and referral arrangements

Stark Law and Medicare/Medicaid

Generally, in order to submit a bill for Medicare and Medicaid designated health services (DHS) – if “a financial relationship exists between a physician and a DHS entity” the relations must meet a Stark Law exception. The blanket waiver applies to transactions that don’t normally qualify for a Stark law exception.

The HHS exceptions are meant to give physicians more flexibility during the pandemic. The blanket waivers will end when the public health emergency ends. The core preconditions to qualify for a blanket waive are:

  • The providers must be acting in good faith to provide responsible care during the pandemic
  • The financial arrangement is covered by one of the 18-permitted Medicare/Medicaid (CMS) relationships.
  • The government doesn’t determine that the relationship involves fraud or abuse. The blanket waivers apply to Stark Law.

The referrals and compensation should “solely related to COVID-19 purposes.” COVID-10 purposes are defined fairly broadly. The covered purposes include the following:

  • “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.”

CMS does not require notice or pre-approval prior to using the wavier. The physician or health provider who is using the blanket wavier should keep sufficient documentation to support using the applicable waiver. The documentation must be given to HHS upon request. The documentation should include a showing that the referral/relationship meets a COVID-19 purpose and identity which of the 18 waivers applies.


In today’s video, we discuss some exceptions to Stark Law, which deals with improper referrals by physicians and healthcare practitioners.

The financial relationships which CMS permits

The relationships must meet one of the 18 specific relationships which are generally divided into:

  • Permissible forms of remuneration
  • Permissible referral relationships

Permissible remuneration forms

CMS waivers apply to doctors (and immediate family members) or a doctor’s medical practice and the DHS for the following types of remuneration. (Only a partial summary of the 18 waiver conditions is provided in the remuneration section and in the relationship section).

  1. Compensation for Services that are personally performed. Normally, the physician must be compensated by a DHS at the fair market value (FMV) rate of his/her services. The waivers allow compensation above or below FMV. A common reason would be to encourage a contracted physician to treat more COVID-19 patients by paying for overtime or hazard pay.
  2. Compensation for equipment rental and office space. To accommodate a surge in COVID-19 cases, a hospital may “rent office space or equipment from an independent physician practice at below fair market value or at no charge.” These lower rates should help doctors who are having income problems (because physicians aren’t seeing many patients due to patient concerns about contracting COID-19) to keep their equipment and office space while treating patients.
  3. Compensation for Items and Services. An entity can use the waiver for payment to/by a doctor for items or services (if the payment is below FMV).
  4. Adding incidental benefits for your medical staff. The CMS waiver protects “remuneration from a hospital to a physician in the form of medical staff benefits that exceeds the limit set forth in 42 CFR 411.357(m)(5). For example, the wavier can be used for payment of childcare services, a change of clothing allowance, or any other incidental benefits to help the staff work during the health crisis.
  5. Forms of nonmonetary compensation. Without the waiver, there is a $423 annual limit. The Waiver permits a doctor (or an immediate family member of a physician) to receive more than the $423 per year limit for items related – such as continuing medical education to respond to the COVID-19 pandemic, “supplies, food, or other grocery items, isolation-related needs (for example, hotel rooms and meals), childcare, or transportation.”
  6. Loans that are low-interest or no-interest. The waiver allows some loans below the FMV interest rate or on terms that are unavailable from a lender that is not a recipient of the physician’s referrals or business generated by the physician – to a physician (or immediate family member of the physician). This waiver is, in part, to help physicians and practices recoup some of their financial losses due to the pandemic.

Permissible Referral Relationships.

Only during the pandemic, CMS provides waivers for the following types of relationships:

  1. Referrals by Owners of Physician-Owned Hospitals. This waiver helps physician owners of a hospital to expand the capacity of the hospital “above the number of operating rooms, procedure rooms and beds for which the hospital was licensed on March 23, 2010 (or, in the case of a hospital that did not have a provider agreement in effect as of March 23, 2010, but did have a provider agreement in effect on December 31, 2010, the effective date of such provider agreement), without prior application and approval of the expansion of facility.”
  2. Referrals by Owners of ASCs That Temporarily Convert to Hospitals. Here, physicians can make referrals to a hospital (ambulatory surgery center (ASC)) that the physicians own when that hospital/ASC expands its facility capacity above the number of operating rooms, procedure rooms, and beds for which the hospital was licensed on March 23, 2010…without prior application and approval of the expansion of facility capacity as required by law.
  3. Referrals by Owners in Home Health Agencies. If a doctor owns a home health agency (or an immediate family member has an ownership interest), referrals by the doctor to that agency – which don’t “otherwise satisfy the rural provider requirements” shouldn’t be a Stark Law violation. This wavier was granted due to concerns there may not be available home health agencies that can treat Medicare patients because of the COVID-19 pandemic.
  4. Referrals for In-Office Ancillary Services at Additional Locations. This waiver, which your healthcare lawyer can explain, helps to expand the locations where patients can be treated during to pandemic – including mobile vans and other pop-up locations.
  5. Rural Referrals to Immediate Family Members. Normally, Stark law does protect rural referrals if certain conditions are met. The blanket CMS wavier protects referrals by a doctor of a Medicare beneficiary for the provision of designated health services to a home health agency:
    1. that does not qualify as a rural provider under 42 CFR 411.356(c)(1) and
    2. in which the physician (or an immediate family member of the physician) has an ownership or investment interest.
  6. Waiving some of the writing requirements. Normally, Stark Law requires that most financial relationships be in writing. The blanket wavier means CMS is permitting the relationships to be oral provided the other requirements of any Stark Law exception are being met. “For example
    1. “A physician provides call coverage services to a hospital before the arrangement is documented and signed by the parties”
    2. “A physician with in-office surgical capability delivers masks and gloves to the hospital before the purchase arrangement is documented and signed by the parties”
    3. “The daughter of a physician begins working as the hospital’s paid COVID-19outbreak coordinator before the arrangement is documented and signed by the parties.”

The waivers can be used for many purposes such as:

  • When an entity “provides free telehealth equipment to a physician practice to facilitate telehealth visits for patients who are observing social distancing or in isolation or quarantine.”
  • “A physician owner of a hospital lends money to the hospital to assist with operating expenses of the hospital, including staff overtime compensation, related to the COVID19 outbreak in the United States.”

Fraud and Abuse

Again, the waivers don’t apply if the financial relationship involves fraud or abuse. The CMS language doesn’t specifically define fraud or abuse. Again, the more documentation of COVID-19 related purposes, the better.

Post COVID-19 Considerations

Once the pandemic ends, the physician/medical practice should:

  • Preserve their documentation in support of the blanket waiver during the pandemic
  • Return any items such as telehealth equipment that may have been transferred in violation of Stark Law – when the waivers don’t apply.
  • End any financial relationship that may violate Stark Law or work with a skilled healthcare lawyer to understand if the relationship qualifies for a Stark Law exception.

The financial penalties for noncompliance with Stark Law or the Anti-Kickback Statute can be quite severe. Stark and AKS violations can also lead to claims by the Department of Justice and by whistleblowers under the False Claims Act.


The DOJ reported several new cases in which health care companies and doctors agreed to pay millions to settle claims of healthcare fraud due to AKS and Stark violations.


In today’s video, I’m going to speak extemporaneously about Stark Law and Anti-Kickback Law. Why? Because Stark and anti-kickback and fee splitting, also known generally as fraud and abuse, these […]

Due to the COVID-19 pandemic, the US Department of Health and Human Services and CMS have authorized blanket waivers of specific remunerative and financial relationships to help ensure patients with COVID-19 can be treated for the disease in a timely and professional manner.

Certain types of remunerations may be acceptable during the healthcare emergency. Similarly, certain types of financial relationships, that would otherwise be illegal, may be legal during the pandemic. The blanket waivers don’t apply to every relationship or referral. The terms and conditions of the blanket waivers must be met. An experienced healthcare lawyer can explain how and when doctors and medical practices can use these waivers.

Medical practitioners and practices should contact Cohen Healthcare Law Group, PC for legal advice on whether the blank waivers can help protect the doctors and practices from claims of Stark Law violations. Our experienced healthcare attorneys understand Stark Law, Stark Law exceptions, and the new blanket waivers.

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