OIG Follows the Stark Law COVID-19 Waivers for Anti-Kickback Statute

RELATED:  End of COVID-19 Emergency: Legal Implications for Healthcare Providers (May 1, 2023)

On April 3, 2020, the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) issued a policy statement announcing that the OIG will exercise its enforcement discretion not to impose administrative sanctions under the federal Anti-Kickback Statute (AKS) for remuneration related to the 2019 novel coronavirus (COVID-19). OIG’s announcement follows the recent blanket waivers issued by the HHS with the Centers for Medicare & Medicaid Services (CMS) to protect certain specified financial relationships and referrals otherwise sanctioned by the Physician Self-Referral Law (Stark Law), as long as they pertain to at least one COVID-19 purpose. The blanket waivers were discussed in an April 3, 2020, client alert.

The AKS is an intent-based statute broadly prohibiting the offer or exchange of anything of value to induce or reward the referral of federal healthcare program business. Because of the AKS’ breadth and because the statute subjects violators to criminal sanctions, the OIG previously issued a series of voluntary safe harbors to protect relationships that do not pose a high risk of fraud or abuse. The April 3 policy statement takes this one step further, explaining that beyond these safe harbors, the OIG will exempt additional arrangements that do not satisfy the safe harbor requirements so long as they satisfy one of the permissible forms of remuneration allowed under the Stark Law blanket waivers (specifically, Section II.B(1)-(11) of the blanket waivers). To be clear, the policy statement does not cover all of CMS’ Stark Law enumerated blanket waivers related to referral relationships (specifically Section II.B(12)-(18) of the blanket waivers)

OIG’s decision not to enforce certain administrative sanctions against arrangements that may otherwise implicate the AKS is another way HHS is giving providers more flexibility during the COVID-19 pandemic. In a recent letter, OIG stated specifically its desire to minimize burdens on providers during the crisis. Here, too, OIG is providing enforcement discretion related to the AKS to ensure flexibility for providers that meet the Stark Law blanket waivers. OIG also made it clear that it was extending its non-enforcement discretion to referrals for all federal healthcare program beneficiaries stemming from the arrangement.

In releasing the policy statement, OIG stated that all conditions and definitions that apply to the blanket waivers would need to be satisfied for a provider to receive this enforcement discretion. The conditions include: (i) the providers are acting in good faith to provide care in response to the COVID-19 pandemic, (ii) the government does not determine that the financial relationship creates fraud and abuse concerns, and (iii) providers seeking protection under this policy statement maintain sufficient documentation. For more information on these conditions, view the McGuireWoods April 3, 2020, client alert.

On the other hand, recognizing the differences between the AKS and the strict liability Stark Law, OIG diverted from the blanket waivers in some material ways:

1. The Policy Statement Protects Only Remuneration. Unlike the blanket waivers, which provide protections for certain enumerated remuneration as well as certain referral relationships, the policy statement protects only the permissible forms of remuneration specified in the blanket waivers. Therefore, the policy statement would not protect the following, even though they are protected under the blanket waivers with respect to the Stark Law:
   1. Referrals by owners of physician-owned hospitals temporarily expanding their capacity
   2. Referrals by owners of ASCs that temporarily convert to hospitals
   3. Referrals by owners in home health agencies to their HHA
   4. Referrals for in-office ancillary services provided at additional locations, although most physician group intra-practice referrals will still be protected through either the existing AKS group practice investment safe harbor or the employee safe harbor
   5. Referrals of patients located in rural areas to immediate family members
   6. Waiving in-writing requirements of the Stark Law exceptions
      
      
   It is important to reiterate that, unlike the strict liability Stark Law, absence of the applicability here of specific blanket waivers does not mean the relationship violates the AKS or that the OIG would take enforcement action. First, another AKS safe harbor may apply. Second, the relationship may not have the intent to induce or reward referrals, which is required to demonstrate a violation.
   
   
2. No Retroactive Effective Date. Where the blanket waivers retroactively apply to arrangements entered into as of March 1, 2020, the policy statement applies only to conduct occurring on or after April 3, 2020. Though OIG does not explain its reasoning for not aligning entirely with the blanket waivers here, pursuant to the statements above about the applicability of the AKS, parties would still be able to argue for protection from AKS sanctions absent an improper motive to induce or reward referrals.
   
   
3. No Protection for Pharmaceutical or Device Manufacturers. OIG states that the policy statement has “no bearing” on arrangements that may implicate the AKS and are not covered by the blanket waivers. As a result, direct financial relationships with pharmaceutical companies or device manufacturers are not protected by the policy statement since they were not included in the blanket waivers, and should be reviewed under the existing AKS framework. Furthermore, because the blanket waivers cover only provider relationships involving physicians, a provider arrangement involving non-physician providers (e.g., nurse practitioners or physician assistants) might not receive the OIG enforcement discretion discussed herein. While this appears to be the official position of OIG based on the policy statement, the blanket waivers would likely still be influential to determining if such non-physician provider relationships had an improper intent, and may be structured with physician groups to cover such relationships as well.

Though OIG does not adopt the blanket waivers verbatim, its policy statement follows CMS to allow providers to pursue certain financial relationships that would allow treatment in the face of the COVID-19 pandemic that may otherwise implicate the AKS. Further, since protections under the policy statement expire at the end of the public health emergency, providers will need to perform a compliance review of their various relationships to ensure each relationship falls within an AKS safe harbor, much as they would need to do regarding the blanket waivers.

Please contact the authors for additional information on the policy statement, the applicability of the Stark Law blanket waivers to the AKS and their availability to various financial relationships. McGuireWoods has published additional thought leadership on how companies across various industries can address crucial coronavirus-related business and legal issues. The firm’s COVID-19 response team stands ready to help clients navigate urgent and evolving legal and business issues arising from the COVID-19 pandemic.