EMERGENCY WAIVERS TO FEDERAL SELF-REFERRAL LAW
Now that health care facilities are fully reopening in many states, it is an appropriate time to review the federal health care regulatory blanket waivers of Section 1877(g) (Self-Referral Law). These blanket waivers were designed to make it easier for health care industry to function in this emergency. Department of Health and Human Services (HSS) implemented these blanket waivers in response to the COVID-19 pandemic.
Background.
HSS has the authority to waive or modify Medicare, Medicaid, Children’s Health Insurance Program (CHIP), and Health Insurance Portability and Accountability Act of 1996 (HIPAA) requirements when two conditions are met:
The President must have declared an emergency or disaster under either the Stafford Act or the National Emergency Act; and,
The HHS Secretary must have declared a Public Health Emergency under section 319 of the Public Health Service Act.
Both of these conditions were met on March 13, 2020 and continue to apply as of the date of this publication (May 14, 2020). HHS has the authority to revise terminate these waivers.
Purpose of Waivers.
The purpose of these waivers is two fold:
To ensure sufficient health care items and services are available to meet the needs of individuals in the emergency area enrolled in the Medicare, Medicaid, and CHIP programs; and
To ensure health care providers that furnish such items and services in good faith, but that are unable to comply with one or more requirements described in section 1135(b) of the Act, may be reimbursed for such items and services and exempted from sanctions for such noncompliance—including sanctions under section 1877(g) of the Act—absent any determination of fraud or abuse.
Scope of the Waivers.
The waivers apply nationwide and any revisions and/or termination of the blanket waivers will be applied prospectively (going forward from that point) only.
CMS will pay for claims for designated health services that would violate the physician self-referral law but satisfy the conditions of a blanket waiver.
Many of the existing exceptions to the self-referral law may already allow for certain financial relationships related to COVID-19 purposes. If an existing exception already applies, there is no need to rely on a blanket waiver.
The waivers do not provide immunity from liability but are intended to temporarily reduce administrative burdens and increase flexibility of service providers during a declared emergency with the goal of promoting greater access to care by individuals affected by the emergency.
Record Keeping for use of Waivers.
To effectively apply the stated protections under each blanket wavier, providers must keep records relating to the waiver’s use. To comply, adhere to the following steps:
Determine and document each instance of a possible violation under the self-referral law;
Determine and document that a blanket waiver is applicable and applied to each instance of a possible violation under the self-referral law;
Develop and maintain records in a timely manner and concurrently with the process of decision making. Avoid a practice that would document application of a waiver at a later time.
Timeline of Waivers.
Waivers apply nationwide as of March 1, 2020 and will expire when the underlying emergency/disaster declaration terminates.
Application of Waivers.
Waivers apply only to financial relationships and referrals that are related to the national emergency (i.e., COVID-19 outbreak in the US). Any remuneration described in the blanket waivers must be directly between the entity and:
the physician or the physician organization in whose shoes the physician stands under 42 CFR 411.354(c); or
the immediate family member of the physician.
Application of the waivers must be for “COVID-19 Purposes” only. COVID-19 Purposes means:
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.
List of Blanket Waivers:
The following is a list of 18 blanket waivers applied to the physician self-referral laws:
Remuneration from an entity to a physician (or an immediate family member of a physician) that is above or below the fair market value for services personally performed by the physician (or the immediate family member of the physician) to the entity.
Rental charges paid by an entity to a physician (or an immediate family member of a physician) that are below fair market value for the entity’s lease of office space from the physician (or the immediate family member of the physician).
Rental charges paid by an entity to a physician (or an immediate family member of a physician) that are below fair market value for the entity’s lease of equipment from the physician (or the immediate family member of the physician).
Remuneration from an entity to a physician (or an immediate family member of a physician) that is below fair market value for items or services purchased by the entity from the physician (or the immediate family member of the physician).
Rental charges paid by a physician (or an immediate family member of a physician) to an entity that are below fair market value for the physician’s (or immediate family member’s) lease of office space from the entity.
Rental charges paid by a physician (or an immediate family member of a physician) to an entity that are below fair market value for the physician’s (or immediate family member’s) lease of equipment from the entity.
Remuneration from a physician (or an immediate family member of a physician) to an entity that is below fair market value for the use of the entity’s premises or for items or services purchased by the physician (or the immediate family member of the physician) from the entity.
Remuneration from a hospital to a physician in the form of medical staff incidental benefits that exceeds the limit set forth in 42 CFR 411.357(m)(5).
Remuneration from an entity to a physician (or the immediate family member of a physician) in the form of nonmonetary compensation that exceeds the limit set forth in 42 CFR 411.357(k)(1).
Remuneration from an entity to a physician (or the immediate family member of a physician) resulting from a loan to the physician (or the immediate family member of the physician): (1) with an interest rate below fair market value; or (2) on terms that are unavailable from a lender that is not a recipient of the physician’s referrals or business generated by the physician.
Remuneration from a physician (or the immediate family member of a physician) to an entity resulting from a loan to the entity: (1) with an interest rate below fair market value; or (2) on terms that are unavailable from a lender that is not in a position to generate business for the physician (or the immediate family member of the physician).
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 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 capacity as required under section 1877(i)(1)(B) and (i)(3) of the Act and 42 CFR 411.362(b)(2) and (c).
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, provided that: (i) the hospital does not satisfy one or more of the requirements of section 1877(i)(1)(A) through (E) of the Act; (ii) the hospital enrolled in Medicare as a hospital during the period of the public health emergency; (iii) the hospital meets the Medicare conditions of participation and other requirements not waived by CMS during the period of the public health emergency described; and (iv) the hospital’s Medicare enrollment is not inconsistent with the Emergency Preparedness or Pandemic Plan of the State in which it is located.
The referral by a physician 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.
The referral by a physician in a group practice for medically necessary designated health services furnished by the group practice in a location that does not qualify as a “same building” or “centralized building” for purposes of 42 CFR 411.355(b)(2).
The referral by a physician in a group practice for medically necessary designated health services furnished by the group practice to a patient in his or her private home, an assisted living facility, or independent living facility where the referring physician’s principal medical practice does not consist of treating patients in their private homes.
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.
Referrals by a physician to an entity with whom the physician (or an immediate family member of the physician) has a compensation arrangement that does not satisfy the writing or signature requirement(s) of an applicable exception but satisfies each other requirement of the applicable exception, unless such requirement is waived under one or more of the blanket waivers set forth above.
Definitions.
Health care providers. means any entity that furnishes health care items or services, and includes a hospital or other provider of services, a physician or other health care practitioner or professional, a health care facility, or a supplier of health care items or services.
42 CFR 411.351 provides a definition for each of the following terms: centralized building, designated health services, entity, fair market value, hospital, immediate family member, physician, physician in the group practice, physician organization, referral, referring physician, remuneration, rural area, and same building.
42 CFR 411.354 provides a definition for each of the following terms: financial relationship, ownership or investment interest, and compensation arrangement.
About the Author: Reza Ghafoorian, MD, JD is the founder and Principal attorney at G2Z Law Group, PLLC, a health care law firm established in 2012. Dr. Ghafoorian focuses his practice in the fields of health law, health care regulations and patent law, representing health care entities and professionals.
