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Healthcare Providers: Comparison of New OIG Waivers and Flexibilities under Anti-Kickback Statute in Response to COVID-19

On March 30, 2020, the Centers for Medicare & Medicaid Services (CMS) issued several temporary regulatory waivers to further enable the American healthcare system to respond to the COVID-19 pandemic with more efficiency and flexibility (the “Blanket Waivers”).

The official publication can be found here: Physicians and Other Clinicians: CMS Flexibilities to Fight COVID-19.

On April 3, 2020, the Office of Inspector General (OIG) issued a Policy Statement announcing that OIG would exercise its enforcement discretion to not impose administrative sanctions under the federal Anti-Kickback Statute (AKS) for eleven of the eighteen CMS Blanket Waivers when certain conditions are met. This policy is applicable on or after April 3, 2020 and will continue through the end of the public health emergency declaration. Importantly, OIG has retained the right to enforce the AKS regarding relationships that create fraud or abuse concerns.

The official publication can be found here: OIG Policy Statement Regarding Application of Certain Administrative Enforcement Authorities Due to Declaration of Coronavirus Disease 2019 (COVID-19) Outbreak in the United States as a National Emergency.

To receive enforcement discretion in the scenarios identified below, the following conditions must be met:

  • The providers are acting in good faith to provide care in response to the COVID-19 pandemic;
  • The government does not determine that the financial relationship creates fraud and abuse concerns; and
  • Providers seeking protection under this policy maintain sufficient documentation.

CMS Blanket Waivers covered by the OIG policy:

  • Remuneration from an entity to a physician that is above or below the fair market value for services personally performed by the physician to the entity;

Example: A hospital pays physicians above their previously contracted rate for furnishing professional services for COVID-19 patients in particularly hazardous or challenging environments.

  • Rental charges paid by an entity to a physician that are below fair market value for the entity’s lease of office space from the physician;

Example: To accommodate patient surge, a hospital rents office space or equipment from an independent physician practice at below fair market value or at no charge.

  • Rental charges paid by an entity to a physician that are below fair market value for the entity’s lease of equipment from the physician;

Example: A hospital’s employed physicians use the medical office space or supplies of independent physicians in order to treat patients who are not suspected of exposure to COVID-19 away from their usual medical office space on the campus of the hospital in order to isolate patients suspected of COVID-19 exposure.

  • Remuneration from an entity to a physician that is below fair market value for items or services purchased by the entity from the physician;

Example: A hospital or home health agency purchases items or supplies from a physician practice at below fair market value or receives such items or supplies at no charge.

  • Rental charges paid by a physician to an entity that are below fair market value for the physician’s lease of office space from the entity;

Example: A hospital provides free use of medical office space on its campus to allow physicians to provide timely and convenient services to patients who come to the hospital but do not need inpatient care.

  • Rental charges paid by a physician to an entity that are below fair market value for the physician’s lease of equipment from the entity;

Example: 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.

  • Remuneration from 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 from the entity;

Example: An entity sells personal protective equipment to a physician or permits the physician to use space in a tent or other makeshift location, at below fair market value (or provides the items or permits the use of the premises at no charge).

  • 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);

Example: A hospital provides meals, comfort items (for example, a change of clothing), or onsite childcare with a value greater than $36 per instance to medical staff physicians who spend long hours at the hospital during the COVID-19 outbreak in the United States.

  • Remuneration from an entity to a physician in the form of nonmonetary compensation that exceeds the limit set forth in 42 CFR 411.357(k)(1);

Example: An entity provides nonmonetary compensation to a physician or an immediate family member of a physician in excess of the $423 per year limit (per physician or immediate family member), such as continuing medical education related to the COVID-19 outbreak in the United States, supplies, food, or other grocery items, isolation-related needs (for example, hotel rooms and meals), child care, or transportation.

  • Remuneration from an entity to a physician resulting from a loan to the physician: (i) with an interest rate below fair market value; or (ii) on terms that are unavailable from a lender that is not a recipient of the physician’s referrals or business generated by the physician; and

Example: A hospital lends money to a physician practice that provides exclusive anesthesia services at the hospital to offset lost income resulting from the cancellation of elective surgeries to ensure capacity for COVID-19 needs or covers a physician’s 15 percent contribution for electronic health records (EHR) items and services in order to continue the physician’s access to patient records and ongoing EHR technology support services.

  • Remuneration from a physician to an entity resulting from a loan to the entity: (i) with an interest rate below fair market value; or (ii) on terms that are unavailable from a lender that is not in a position to generate business for the physician.

Example: 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 COVID-19 outbreak in the United States.

It is important to remember that AKS is an intent-based statute. As such, the enforcement leniency will not apply to situations that raise fraud or abuse concerns or conduct intended to induce referrals.

Finally, while flexibility and leniency have been provided under Stark and AKS, no similar guidance or publication has been provided under the Eliminating Kickbacks in Recovery Act (EKRA). EKRA makes it a crime to knowingly and willfully solicit, receive, pay or offer any remuneration in order to induce referrals to specific entities, including all clinical laboratories. As such, all health care providers taking advantage of the Stark and AKS flexibility during this time should also review their relationships with clinical laboratories responsible for testing and diagnosing COVID-19 to ensure compliance with EKRA.

See the this chart for a comparison of CMS Blanket Waivers and the OIG Enforcement Discretion Policy. Our recent Client Alert discussing the initial Stark Blanket Waivers can be found here.

BMD will continue to educate healthcare providers as additional waivers and guidance on COVID-19 are issued. For questions, please contact Jeana M. Singleton at jmsingleton@bmdllc.com or 330-253-2001, or any member of the BMD Healthcare and Hospital Law group.

Investment Training for the Second and Third Generations

Consider this scenario. Mom and Dad started the business from the ground up. Over the decades it has expanded into a money-making machine. They are able to sell the business and it results in a multimillion-dollar payday for their labors. The excess money has allowed Mom and Dad to invest with various financial advising firms, several fund management groups, and directly with new startups and joint ventures. Their experience has made them savvy investors, with a detailed understanding of how much to invest, when, and where. They cannot justify formation of a full family office with dedicated investors to manage the funds, but Mom and Dad have set up a trust fund for the children to allow these investments to continue to grow over the years. Eventually, Mom and Dad pass. Their children enjoy the fruits of their labors, and, by the time the grandchildren are adults, Mom and Dad's savvy investments are gone.

Provider Relief Funds – Continued Confusion Regarding Reporting Requirements and Lost Revenues

In Fall 2020, HHS issued multiple rounds of guidance and FAQs regarding the reporting requirements for the Provider Relief Funds, the most recently published notice being November 2, 2020 and December 11, 2020. Specifically, the reporting portal for the use of the funds in 2020 was scheduled to open on January 15, 2021. Although there was much speculation as to whether this would occur. And, as of the date of this article, the portal was not opened.

Ohio S.B. 310 Loosens Practice Barrier for Advanced Practice Providers

S.B. 310, signed by Ohio Governor DeWine and effective from December 29, 2020 until May 1, 2021, provides flexibility regarding the regulatorily mandated supervision and collaboration agreements for physician assistants, certified nurse-midwives, clinical nurse specialists and certified nurse practitioners working in a hospital or other health care facility. Originally drafted as a bill to distribute federal COVID funding to local subdivisions, the healthcare related provisions were added to help relieve some of the stresses hospitals and other healthcare facilities are facing during the COVID-19 pandemic.

HHS Issues Opinion Regarding Illegal Attempts by Drug Manufacturers to Deny 340B Discounts under Contract Pharmacy Arrangements

The federal 340B discount drug program is a safety net for many federally qualified health centers, disproportionate share hospitals, and other covered entities. This program allows these providers to obtain discount pricing on drugs which in turn allows the providers to better serve their patient populations and provide their patients with access to vital health care services. Over the years, the 340B program has undergone intense scrutiny, particularly by drug manufacturers who are required by federal law to provide the discounted pricing.

S.B. 263 Protects 340B Covered Entities from Predatory Practices in Ohio

Just before the end of calendar year 2020 and at the end of its two-year legislative session, the Ohio General Assembly passed Senate Bill 263, which prohibits insurance companies and pharmacy benefit managers (“PBMs”) from imposing on 340B Covered Entities discriminatory pricing and other contract terms. This is a win for safety net providers and the people they serve, as 340B savings are crucial to their ability to provide high quality, affordable programs and services to patients.