COVID-19: “Hospitals Without Walls” and “Patients Over Paperwork” - Key Takeaways For Hospitals From CMS’ Additional Blanket Waivers

06 April 2020 Blog
Authors: Lauren P. Carboni Jane R. Rugg Emily Weber
Published To: Coronavirus Resource Center Health Care Law Today

On March 30, 2020, the Centers for Medicare and Medicaid Services (CMS) announced additional blanket waivers and temporary rule changes designed to assist the health care system in coping with patient surges due to the novel coronavirus disease (COVID-19). As part of these “sweeping” regulatory changes, CMS, among other things, is now allowing hospitals to provide services outside of their hospital buildings in an effort to increase hospital capacity through what CMS has dubbed “Hospitals Without Walls.” CMS also issued eighteen unprecedented blanket waivers of sanctions under section 1877(g) of the Social Security Act, better known as the physician self-referral law (Stark Law), which afford hospitals, and other health care providers, greater flexibility to effectively respond to the COVID outbreak in the United States. CMS has dubbed these flexibilities “Patients Over Paperwork.” This article provides a high-level summary of the Stark Law waivers available to hospitals. Be sure to check Health Care Law Today for an in-depth analysis of the Stark Law Waivers.

“Hospitals Without Walls”

Under existing federal rules, hospitals must provide inpatient services within the walls of the hospital in order to bill Medicare for those services. The new temporary emergency rules, however, allow hospitals to transfer patients to other facilities—including ambulatory surgery centers, inpatient rehabilitation hospitals, hotels, and dormitories—while still receiving payment for hospital services from Medicare. Under the temporary rules, hospitals that transfer patients to outside facilities must take care “to continue to exercise sufficient control and responsibility over the use of hospital resources in treating patients regardless of whether that treatment occurs in the hospital or outside the hospital under arrangements.”

CMS also announced the following rule changes and waivers—retroactively effective March 1, 2020 through the duration of the COVID-19 public health emergency—which aim to allow greater flexibility in the provision of medical services outside of a hospital facility:

  • Hospitals, independent laboratories and other entities may conduct COVID-19 testing in people’s homes, skilled nursing facilities, and other community-based settings outside of the hospital. Additionally, hospital emergency departments can now test and screen patients for COVID-19 at drive-through and other off-campus testing sites. These changes are intended to simultaneously increase access to testing and reduce risk of exposure from patients traveling to hospitals for testing.

  • Ambulances may now transport patients from any point of origin to a destination that is equipped to treat the condition of the patient consistent with state and local EMS (emergency) protocols. These new destinations can include a much wider range of locations, including critical access hospitals, skilled nursing facilities, community mental health centers, federally qualified health centers, physicians’ offices, urgent care facilities, ambulatory surgery centers, any location furnishing dialysis services outside of an end-stage renal disease facility when an end-stage renal disease facility is not available, and the beneficiary’s home.

  • Surgery centers may now contract to provide hospital services to overflow patients, in order to create additional capacity for services usually provided by hospitals like cancer procedures, trauma surgeries, and other essential surgeries that have not been canceled. Additionally, surgery centers can enroll and bill as hospitals themselves during the emergency declaration.

  • Hospital emergency departments can utilize telehealth services, reimbursed at the same rates as in-person services, to evaluate ill patients. These changes will help to avoid crowded emergency rooms, as patients can be evaluated from home or other off site locations.

“Patients Over Paperwork” 

In addition to the above waivers, CMS issued unprecedented waivers of sanctions under the Stark Law for referrals and claims related to the COVID-19 outbreak (collectively, the Stark Law Waivers or Waivers). As a result, hospitals now have increased flexibilities to provide certain items and services in response to the COVID-19 without fear of sanctions for noncompliance with certain Stark Law regulations. The Stark Law Waivers are retroactive to March 1, 2020 and apply for the duration of the national emergency, subject to a limited extension. This section highlights some of the Waivers available to hospitals. For an in-depth analysis of the full scope and applicability of the Stark Law Waivers, we recommend reading our previous blog post on the temporary blanket waivers issued by CMS.

Under the Stark Law Waivers, which apply only to financial relationships and referrals that are solely related to “COVID-19 Purposes” (as defined by CMS), hospitals have greater flexibility to provide certain medical items and services during the COVID-19 public health emergency, such as: 

  • Non-Fair Market Value (FMV) Compensation – Hospitals can pay above or below FMV to rent equipment or office space or receive services from physicians (or vice versa). Per CMS, a physician practice may be willing to rent or sell needed equipment to a hospital at a price that is below what the practice could charge another party, or a hospital may provide free use of medical office space on hospital grounds to allow physicians to timely and convenient services to patients who come to hospital but do not require inpatient or emergency care.

  • Physician-Owned Hospital Capacity Expansion - Physician-owned hospitals can temporarily increase their number of licensed beds, operating rooms and procedure rooms, and physician-owned ambulatory surgical centers can also temporarily convert to a hospital (so long as it’s consistent with the State Emergency Preparedness or Pandemic Plan) to accommodate patient surge during the COVID-19 outbreak.

  • Medical Staff Benefits – Hospitals may provide benefits to its medical staff, such as daily meals, laundry service or childcare services while physicians are at the hospital and engaging in activities that benefit the hospital and its patients.

  • Non-Monetary Compensation – Hospitals may provide certain items and services in the form of non-monetary compensation, such as continuing medical education regarding care protocols for COVID-19 patients, isolation shelter, or meals to the family of a physician who was exposed to COVID-19 while working in the hospital emergency department, without exceeding the annual non-monetary compensation cap.

  • Writing Requirement Waived – Hospitals may commence compensation arrangements prior to the required documentation of the arrangement in writing and the signatures of the parties, so long as all other requirements of the applicable exception are satisfied. Per CMS, the following scenarios would likely be covered by this Waiver physician provides call coverage services to a hospital before the arrangement is documented and signed by the parties or a physician with in-office surgical capabilities delivers masks and gloves to the hospital before the purchase arrangement is documented and signed by the parties. 

In its announcement of the Stark Law Waivers, CMS provided nearly twenty examples of remuneration, referrals or conduct that would likely be covered by such waivers. Prior to entering into any arrangement, we recommend reviewing these examples and consulting a member of the Foley health care team to ensure such conduct is covered by one of the available Waivers.

For more information, please contact your Foley relationship partner or the Foley colleagues listed below. For additional web-based resources available to assist you in monitoring the spread of the coronavirus on a global basis, you may wish to visit the websites of the CDC and the World Health Organization

Foley has created a multi-disciplinary and multi-jurisdictional team to respond to COVID 19, which has prepared a wealth of topical client resources and is prepared to help our clients meet the legal and business challenges that the coronavirus outbreak is creating for stakeholders across a range of industries. Click here for Foley’s Coronavirus Resource Center to stay apprised of relevant developments, insights and resources to support your business during this challenging time. To receive this content directly in your inbox, click here and submit the form.

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