Retroactive Blanket Stark Law Waivers for IFED Owners: What This Means For You

Are you a physician who owns an independent freestanding emergency department (IFED) and served Medicare patients during the COVID-19 pandemic? If so, you may be shielded from sanctions for possible Stark Law violations. 

The Centers for Medicare and Medicaid Services (CMS) have added a blanket waiver for IFEDs to the Section 1135 waivers put in place at the start of the COVID-19 pandemic. The waivers do not waive the entire Stark Law, only the part of the law that imposes sanctions for violations. 

(For a deeper dive into the blanket waivers, see our related article, “Blanket Waivers of the Stark Law: What This Means for Your Healthcare Practice During the COVID-19 Outbreak.”)

What is the Stark Law?

In short, the federal Ethics in Patient Referrals Act (or the “Stark Law”) prohibits a physician who has a financial relationship with an entity from referring Medicare or Medicaid patients to that entity for specific health services known as “designated health services.” 

IFED Stark Law Waiver

The new blanket waiver exempts physician owners of IFEDs that served Medicare patients during the pandemic from Stark Law violation sanctions if they referred designated health services. They must also meet specific conditions, which we’ll discuss.

The waiver will apply retroactively, effective March 1, 2020. It terminates at the end of the national emergency, April 10, 2023.

Blanket Stark Law Waiver Requirements

The blanket waivers require that the remunerations and referrals must have been solely related to “COVID-19 Purposes,” which CMS defines as:

• Diagnosis or medically necessary treatment of COVID-19 for any patient or individual, regardless of confirmed diagnosis.
• Securing the services of physicians and other healthcare practitioners and professionals to provide medically necessary patient care services. This includes services not related to the diagnosis and treatment of COVID-19, in response to COVID-19;
• Ensuring the ability of healthcare providers to address patient and community needs due to COVID-19;
• Expanding healthcare providers’ capacity to address patient and community needs due to COVID-19;
• Shifting patients’ diagnosis and care to appropriate alternative settings due to COVID-19; or
• Addressing medical practice of business interruption due to COVID-19 to maintain the availability of medical care and related services for patients and the community.

IFED Waiver Conditions  

The IFED waiver applies to referrals by a physician owner of a hospital that was an IFED immediately prior to its enrollment as a hospital in Medicare, provided that the hospital met the following conditions:

• On March 1, 2020, the hospital was licensed as an IFED by the state in which it is located and had physician ownership or investment;
• The hospital enrolled in Medicare as a hospital during the public health emergency;
• The hospital did not increase the aggregate percentage of physician ownership or investment in the hospital after enrolling in Medicare;
• The hospital meets the Medicare conditions of participation and other requirements not waived by CMS during the public health emergency; and 
• The hospital’s Medicare enrollment is not inconsistent with the emergency preparedness or pandemic plan of the state in which it is located.

The IFED waiver could apply to different arrangements. For example, it could include IFEDs that purchased items or supplies from a physician practice at below fair market value or received them at no charge. It could also cover IFEDs that paid physicians above their previously contracted rate for providing professional services to COVID-19 patients in particularly hazardous conditions or challenging environments. 

Moving Forward

The blanket waivers are self-executing, so there’s no need to notify The U.S. Department of Health and Human Services (HHS) or CMS if you qualify. However, it’s crucial to keep proper records of your arrangements during the waiver period in case HHS requests them. Remember, even with the blanket waivers, the HHS Secretary retains the authority to pursue penalties in cases of fraud or abuse.

If you have questions about how the additional IFED Stark Law blanket waiver may affect your practice or business, reach out to an experienced healthcare lawyer. If you operate in one of the states where Jackson LLP has licensed attorneys, book a free consultation to learn how we can help you maintain compliance with state and federal fraud, waste, and abuse laws.

This blog is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between our firm and the reader. It should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.