Alyssa James

EKRA Enforcement Developments and Moving Forward

EKRA Enforcement Developments and Moving Forward

Recovery Homes, Clinical Treatment Facilities, and Laboratories must continue to be mindful of the Eliminating Kickbacks in Recovery Act of 2018 (“EKRA”), an all-payor statute enacted in 2018 prohibiting kickbacks related to remuneration for referrals to these entities. EKRA’s passage generated uncertainty surrounding its applicability and enforcement, particularly regarding the statute’s breadth and its interplay with permissible arrangements under existing federal health care laws. However, the Department of Justice announced its first conviction under EKRA at the beginning of 2020, signaling the government’s commitment towards enforcing the statute and emphasizing the importance of structuring compliant arrangements.

Podcast Participants

Alyssa James

Attorney, Hall Render

Gregg Wallander

Attorney, Hall Render

Alyssa James: Hello. Welcome to Hall Render’s Practical Solutions podcast, featuring thoughtful analysis and insightful commentary on the legal issues facing the healthcare industry. My name is Alyssa James and I am an attorney with Hall Render, the largest health care focused law firm in the country. Today my colleague, Gregg Wallander, and I will be discussing the EKRA Law, which stands for Eliminating Kickbacks in Recovery Act of 2018. This law was passed in October of 2018 as part of a larger act known as the Support Act, which focused on substance use, disorder prevention, as well as opioid recovery and treatment. This law was passed with the intention of being a comprehensive law that would combat the opioid epidemic at various levels within the healthcare industry.

Alyssa James: Now, I am going to kick it over to Gregg to give us a little more background and an introductory discussion into EKRA and its implications.

Gregg Wallander: Thanks Alyssa. EKRA was ultimately buried in an opioid law when it was enacted, and really caught a lot of people by surprise. It was not part of the initial drafts of the Support Act, as Alyssa mentioned, but it ended up being buried in there like a peanut butter and jelly in between two slices of bread, and it’s right in the middle there.

Gregg Wallander: We are faced to deal with this law, which is very comprehensive. EKRA is an all-payer statute and it addresses services that are covered by any health care benefit program, so it applies to both federal payers as well as commercial insurers. The reason is because it’s a federal law and applies to programs affecting interstate or foreign commerce. But what it really does is establish criminal sanctions up to $200,000 fines and 10 years imprisonment for kickbacks with respect to services covered by any type of healthcare benefit program, as I mentioned. It prohibits kickbacks regarding the solicitation or receipt of remuneration for referrals to recovery homes, clinical treatment facilities, or laboratories.

Gregg Wallander: Laboratories have received the most scrutiny under this law at this point in time, and EKRA further criminalizes the payment or offer of remuneration to induce a referral. So soliciting or inducing the referral can cause liability under EKRA. This is a very broad statute that impacts the ability to pay, solicit or receive money in exchange for referrals or patronage for recovery homes, clinical treatment facilities, or laboratories.

Gregg Wallander: Now, where we see some of these issues in practice really come into play, what about employees? What about payments for marketing services, payments to independent contractors, those kinds of things?

Gregg Wallander: We have discounts with respect to pharmaceuticals. We have discounts with respect to laboratory services. We have discounts that go across the board in the healthcare continuum. We have employment arrangements and we have services arrangements. There’s a lot to deal with here with EKRA.

Gregg Wallander: Alyssa, let’s talk a little bit about the exceptions with EKRA. Let’s go through them and we can chat about them. As I mentioned, there are discounts across the continuum, but there is an exception under EKRA for discounts as long as they’re properly disclosed and reflected in the entity’s cost or charges. In the supply chain context, there are exceptions for this. There also is exception coverage language for Medicare coverage gap drug discounts. From a discount perspective, EKRA does have those two exceptions to keep in mind.

Gregg Wallander: Alyssa, let’s talk about payments to employees and independent contractors.

Alyssa James: Sure. Thanks Gregg. As you mentioned, there are several exceptions to EKRA. I think one thing that just kind of more broadly is important to note is that some of the exceptions under EKRA are less forgiving, or permit fewer activities than would be permitted under the federal Anti-Kickback Statute. I think it’s important to kind of keep in mind when you’re thinking through these types of arrangements that something may be permissible under the Anti-Kickback Statute but not permissible under EKRA, and so that’s an important distinction. To your point, Gregg, regarding payments to employees and independent contractors, there is an exception for that under EKRA, but that exception requires that the compensation that’s paid to those employees or independent contractors not be determined by, or vary based on: the number of individuals that are referred to a particular entity that’s a part of the arrangement, or outside of the arrangement; the number of tests or procedures that are performed; or the amount that is billed or collected from health care benefit programs.

Alyssa James: And so when you read the plain language of that exception, and then review the exceptions to the exception, if you will, EKRA on its face prohibits the commission-based payments that are very common, especially in the laboratory space for sales reps and similar positions. The types of arrangements that maybe would be permissible under the Anti-Kickback Statute, for example, don’t meet the corollary exception to EKRA because of those caveats of what those payments to employees and independent contractors cannot be based upon. EKRA really is trying to focus more on fixed-fee compensation for employees and independent contractors, which generally speaking is a pretty big shift for the industry as far as what would be permitted for those types of relationships.

Gregg Wallander: That’s spot on. We’ve spent a lot of time, as you know, dealing with questions from clients across the country. Every conversation seems to be, “Is this really true? Can we not pay a commission anymore? Can we not pay incentive for achievement in this regard? Every sales person is compensated in this manner.” We agree and understand this sentiment. It does seem very unrealistic that the intent was to be this broad when you’re dealing with the private commercial insurance world. But, as Alyssa mentioned payments to employees and independent contractors that are not determined by, or vary with individuals referred, number of tests performed, or amount billed, really cut off a lot of mainstream and accepted sales arrangements.

Gregg Wallander: There are already laws on the books as well as industry guidelines, like the Pharmacode and AdvaMed Guidelines, which govern institutional relationships and sales relationships between entities to remove issues of inducement. So there are already safeguards on the books, but yes, we’ve had to advise that this law is broad and it potentially implicates a number of commission-based and other sales relationships.

Gregg Wallander: I think there are entities saying, “Wait, it’s just really hard to believe that this can be intended in this manner.” We certainly empathize with that. I think a lot of folks have been saying, “Hey, let’s see how this develops and see if Congress changes its mind or realizes that this was really an overreach.” We’ve talked with our DC office folks about this, and it’s not clear that really there is an intent to revisit this.

Gregg Wallander: It can be politically expedient on either side of the aisle to say, “Hey, we’re against opioid abuse, and so we’re not going to touch any of these laws for fear of looking weak,” or some other term. Again, our interest is in making sure we get this right, but it’s not clear that this law is going away anytime soon.

Alyssa James: I think that’s exactly right, Gregg. In the law itself, there are references to regulations that may be promulgated in the future, and we’ve seen nothing to that effect. We have this law that on its face seems overly broad and much more restrictive than existing laws, and not just in the sense that it also applies to commercial patients in addition to federal health care program patients, but also just in the conduct that on its face, it permits.

Alyssa James: In the year-and-a-half since it has been issued, we’ve seen no proposed regulations or any discussion about forthcoming proposed regulations that would maybe help clarify or fine-tune a little bit the intent and maybe give some additional framework for healthcare organizations, especially labs and entities that contract with labs, to maybe give a little more flexibility, or at least move the needle a little bit back to where it was before. When we’re talking about this, even though we’re talking about this in the context of an opioid law, it’s important to remember that it applies to all laboratory services, not just those related to opioid testing and treatment.

Alyssa James: So it’s very broad, and I think there are a lot of stakeholders in the industry who maybe aren’t aware of how broad it is. Or, like you said, Gregg, just waiting to see what happens before they take action to restructure all of their compensation arrangements that they may have with employees or independent contractors, specifically, at least with regard to that exception. So far, we haven’t seen any sort of guidance or inkling from Congress or regulators that would help to narrow down that scope a little bit or provide any more clarity.

Gregg Wallander: In moving forward, let’s round out a few of the final exceptions, and then we’ll move on to enforcement. There is an exception for: waivers or discounts of certain co-payments or co-insurance as long as it’s in good faith and not routine; certain transfers to federally-qualified health centers under the Anti-Kickback Statute safe harbor; and remuneration made pursuant to approved alternative payment models, meaning different kinds of payment programs for the government.

Gregg Wallander: If you’re outside of the employment context and you’re looking at discounts or other kinds of payments, there are some other exceptions to examine and find out if you fall within those. The main question we’ve gotten after looking at the exceptions relates to enforcement, and with respect to all federal laws, usually when they get put on the books, there’s a time lag for enforcement as the Department of Justice gets its arms around it and as everyone in the industry kind of gets their arms around it. It looks like we’ve had to wait about a year and a couple of months for enforcement. EKRA was enacted in 2018, but just this year at the start of 2020, we finally have an enforcement action. Alyssa, you want to chat a little bit about that and go from there?

Alyssa James: Sure. As you mentioned, we’ve seen one enforcement action back in February. That enforcement action involved an office manager of a substance abuse clinic in Kentucky. That office manager was allegedly soliciting kickbacks from the CEO of a toxicology lab in exchange for urine screening drug testing referrals.

Alyssa James: The period of time in which the alleged conduct occurred was from around December of 2018 to August of 2019. In the period of time after EKRA was enacted, of course, but not an overly long-standing arrangement before it was under investigation. The office manager who allegedly received a check of $4,000 from the CEO of the toxicology lab as a part of a larger package of promised inducements (that were not actually received) ended up being sentenced to five months in prison followed by an additional five months of home detention, and was assessed a fine $55,000.

Alyssa James: Although the alleged inducement or kickback was really only valued at $4,000, her fine there was $55,000 plus time in prison, which is obviously significant. It doesn’t go up to the maximum allowable under EKRA which is up to $200,000 in fines and up to 10 years in prison. But certainly, it would appear that the government is trying to let folks know that the enforcement under EKRA, if you find yourself in that position, will not be taken lightly given the prison time and the fine assessed in the one enforcement action that we do have.

Gregg Wallander: Yes. This is significant, as again, when we wait for a law to be enforced, and people have wondered, “Can the government really mean this?” Well yes, they do. It is going to be a law that is going to be prosecuted in some manner. My sense is that we’ll see some sporadic enforcement. I think it’s going to take some sort of a marketing relationship, or some sort of sales commission relationship that has been very commonplace and deemed very legal forever, that rises to a level to see if in fact there would be congressional action.

Gregg Wallander: I think everybody needs to understand and to respect EKRA. There is an enforcement now on the books, it’s there. There was a $4,000 inducement situation which resulted in a $55,000 fine and five months in jail. Pretty significant given what the issue was.

Gregg Wallander: We’re going to have to continue to monitor this. Our advice is to continue to monitor EKRA. I think folks need to be aware of the scope of EKRA and that you can’t just assume that because it’s not government, that you don’t need to review all your relationships. You do need to review them. Again, don’t assume that if it’s just commercial, that you can move forward. Again, the government’s recent enforcement action underscores the need to remain keenly aware of the statute and maintain compliant arrangements.

Alyssa James: I think that’s exactly right. I know we’ve seen an increase recently in the necessity of EKRA-related analyses in light of the COVID-19 pandemic, for example, and proposed arrangements with labs related to COVID testing. Again, EKRA is not limited to opioid-related services and testing and there was a flurry of new arrangements and continue to be, to some extent, as a result of the pandemic that we’re currently facing. It’s important to keep EKRA in mind there as well and the implications that it may have on those arrangements.

Alyssa James: Of course, I think when folks are faced with very time-sensitive analysis and arrangements because of the nature of COVID and wanting to get that testing up and running, it’s easy to quickly put those arrangements in place without vetting out some of the regulatory implications, especially those like EKRA that folks may not be as familiar with. While there have been waivers issued for certain fraud and abuse regulations related to COVID treatment and responses, which we’ve discussed on previous podcasts, there have been no published waivers that are corollary to that for EKRA. So, it’s something to keep in mind. Just because something is in response to the pandemic doesn’t mean that these regulatory implications may not still be there.

Gregg Wallander: Exactly. In wrapping up, if you’re dealing with recovery homes, clinical treatment facilities, and laboratories, be aware of all of your relationships. Take a good inventory of them. Talk with counsel and see if any modifications are necessary. Appreciate everyone listening today and hope you are all safe during this time.

Alyssa James: Thanks everyone.

Gregg Wallander: Thank you.

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Navigating COVID-19 Contracting, the Stark Waivers and Why Providers Need to Act Now

Navigating COVID-19 Contracting, the Stark Waivers and Why Providers Need to Act Now

Alyssa James and Joe Wolfe chat about the latest guidance on the Stark Law waivers and why timing and documentation are critical for health care organizations that intend to rely on the waivers. 

Podcast Participants

Alyssa James

Attorney, Hall Render

Joe Wolfe

Attorney, Hall Render

Alyssa James: Hello and welcome to Hall Render’s Practical Solutions podcast featuring thoughtful analysis and insightful commentary on the legal issues facing the healthcare industry. I’m Alyssa James, an attorney with Hall Render, the largest healthcare focused law firm in the country, and today my colleague Joe Wolfe and I will be discussing the explanatory guidance that was recently issued by CMS in order to clarify certain aspects of the COVID-19 Stark Blanket Waivers and discuss how providers can respond to the waivers and the explanatory guidance in order to better modify their relationships with their physicians if they so desire.

Alyssa James: On April 21st CMS issued explanatory guidance to further clarify and elaborate on its intent when it issued the Stark Blanket Waivers that we discussed in an earlier podcast several weeks ago. Those waivers were issued at the end of March in response to the COVID-19 pandemic of course. But before we dive into our discussion today about the details of the explanatory guidance and other recommendations for providers, Joe is first going to give us a quick recap of the Stark Waivers and the types of situations in which they may be relied upon in order to set the stage for our discussion today.

Joe Wolfe: Yeah, thanks Alyssa and thanks to everyone listening to today’s podcast. Alyssa and I have been working through this kind of analysis around the Stark Waivers for hospitals and health systems nationwide as they react and continue with their physician contracting and fraud and abuse and related compliance issues. And on top of that, we’ve also been working with healthcare organizations to help develop documentation supporting reliance on these waivers. And as Alyssa hit on already, these waivers were initially issued back on March 30th, were made retroactive to March 1st, so they do cover any activities that fall within their scope going back to that March 1st timeframe. And I think providers were happy to see that retroactivity. Now they’re set to expire at the end of the declared public health emergency period, and so that tells us a bit about our timeframe we’re talking about, going back to March 1st through the end of the national emergency.

Joe Wolfe: This recent guidance that was issued on April 21st spoke a lot about the importance of timing. Essentially, the government said that if you’re going to rely on these waivers, the amounts you’re paying should be made within the waiver period. I think more than anything that means that healthcare organizations need to do their analysis and need to move quickly. And that’s because any payments or disbursements, whether it’s in the form of a loan proceed or additional payments for services or space or equipment or other items that occur after the termination of the waivers are likely going to have to meet the requirements of an actual Stark exception. And for many of our clients, we’ve always recommended they try to meet a Stark exception. But if they’re going to try to rely on these waivers for potentially more aggressive compensation terms or if they’re looking to pay above previously contracted rates, they might still want to look to these waivers.

Joe Wolfe: There could be some room for analysis here if some obligations are going to fall after that waiver period. The government gave an example of loan repayments that were agreed to prior to the termination still being okay if they fell after the termination of the waivers without being problematic. That example seemed to be where you would have a repayment of an obligation falling after the termination rather than a new disbursement, and that may open up the opportunity for reconciliation type payments or recapture payments after the waiver period. However, again, those new disbursements of money likely will need to be analyzed more carefully and you may need to look to existing exceptions.

Joe Wolfe: I think the bottom line here is for healthcare organizations that are listening to this podcast, if you’re going to rely on a waiver, you should do the analysis. If you have an arrangement that may not fit squarely within an existing exception, you may want to take steps now to address questions to try to understand whether you could pursue a wavered arrangement. Now you’d want to get contemporaneous documentation in place. The government has said that you should be ready to produce that documentation if the government asks for it, so you should be taking those steps now. I think all of that will help reduce future headaches. The government has said it would work with the Department of Justice to address False Claims Act relater suits or whistleblower suits after the fact here, where parties have acted with a good faith belief that they’re falling under the waivers, and that’s where this really fits into the overall compliance part. If you’re going to take actions now, if you line up reliance on the waivers and you have a good faith reliance on those waivers, it could help you avoid future whistleblower suits or hopefully the government would step in to move towards a dismissal if there is a future whistleblower suit.

Joe Wolfe: The waivers themselves, as we hit on in the earlier podcast, they’re not just a free pass. If you’re going to use them, you should identify a COVID-19 purpose. There were six of them identified in the waiver documents. Second, you should fit within one of the Stark Waivers. There were 18 of them identified in the first go round. And then you should develop the documentation supporting the use of those waivers. For those first six COVID-19 purposes, they fell in a number of different categories. The first focused on diagnosis or medically necessary treatment of COVID-19 for patients or individuals. The second focused on securing the services of physicians and healthcare providers to furnish medically necessary services.  Third, ensuring the ability of health care providers to address patient and community needs.  Fourth, expanding capacity of health care providers to address patient and community needs. Fifth, shifting the diagnosis and care of patients to alternative settings of care. Then a final number six, a very broad category that discussed addressing medical practice or business interruption due to the COVID-19 outbreak. That really gets at the scope of some of these COVID-19 purposes that you should align with. And as a threshold matter, you should figure out which of those you actually line up with.

Joe Wolfe: The new guidance we’re here to talk about mostly today discussed some different areas that did need some clarification around action and timing of relying on these waivers, about amendments to the waivers, the application of the waivers, indirect compensation arrangements and special issues related to loan, recruitment and professional service agreements. Alyssa and I are going to step through some of that guidance in this podcast. So Alyssa, I’ll turn it to you to start the discussion on some of the explanatory guidance.

Alyssa James: Thanks, Joe. That was a great recap and I completely agree with the examples that you provided in that discussion thus far. As Joe said, now we’re going to walk through some of the explanatory guidance and specific parameters and examples that CMS set forth. Something that’s important to keep in mind as we evaluate the waivers and the corresponding explanatory guidance. In that in that recent explanatory guidance, CMS reiterated that financial arrangements and relationships with physicians and referrals from physicians must still satisfy all of the non-waived requirements of the applicable Stark exception. Because many of the waivers may only weigh one or a few components of an applicable Stark Law exception, healthcare organizations need to ensure that their arrangements with physicians continue to comply with the remaining non-waived components of those exceptions. So, it’s just important to keep in mind that the waivers are not a broad brush to do whatever you would like in your physician relationships. We need to really, as Joe hit on as well, clearly focus on what those waived requirements are and then make sure that we’re satisfying any other requirements of an exception that may not be waived in a particular scenario.

Alyssa James: CMS also issued guidance on how to amend certain compensation arrangements in light of the waivers if required for your particular circumstance while still remaining in compliance with Stark. Due to the fact that so many Stark exceptions require that compensation arrangements with physicians be in place for at least one year, CMS has received some questions from industry stakeholders in response to their issuance of the blanket waivers regarding the ability to amend a compensation arrangement to account for those COVID-19 adjustments that they may be considering. And then along with that, the ability to potentially amend those arrangements again in order to, for example, revert back to the standard compensation terms that were in place prior to the COVID-19 pandemic adjustments and wanting to make those adjustments back to the standard compensation terms at the end of the public health emergency period.

Alyssa James: And so, in its discussion CMS reiterated some old guidance from the 2009 IPPS final rule that allows subsequent amendments of compensation terms of arrangements, even if those occur within the first year, so long as those modifications are set in advance, otherwise comply with the requirements of the Stark exception. For example, they can’t take into account volume or value of referrals of course, and things of that nature. And then the overall arrangement must remain in place for at least one year after the amendment. Therefore, healthcare organizations and providers could amend an arrangement to change compensation in light of that organization’s response to COVID-19 and then amend the arrangement again at the end of the public health emergency period or any time prior to the end of the public health emergency period if they don’t desire to continue that modified arrangement throughout the entire declared emergency and revert back to the existing compensation terms. So, CMS has acknowledged there’s some flexibility there, not necessarily in conjunction with the waivers but just in conjunction with their guidance and interpretation of that one year requirement more broadly.

Alyssa James: A more practical solution I think that we’re seeing rather than amending an arrangement to adjust for COVID-19 and then amending again and that we’ve seen a lot of clients doing would be to maybe include language in the initial amendment that states that the compensation will revert back to the prior compensation structure at the end of the declared public health emergency period if that’s your desired timeframe. This eliminates the need for two separate writings to document the change and then shift back to the prior fee structure, which just can help streamline things and make it a little more practical for providers and their physicians. We typically find that if we can limit the number of signatures that need to be obtained, for example, and the number of documents, it just sets the parties up for success as far as not having to spend so much time preparing documents and signing things and such.

Alyssa James: So, if you know at the outset of your COVID-19 adjustments when you’re doing that initial amendment that you’re going to want things to revert back at the end of the declared public health emergency and not prior to that, again they can’t continue beyond that, but within that time period and you’re going to want to revert back to what the compensation was prior to COVID-19, you could go ahead and include that structure in the initial amendment and potentially alleviate the need to do a subsequent amendment a few months or however long down the road.

Alyssa James: And now Joe is going to talk us through some of the additional guidance that CMS provided regarding things like indirect compensation arrangements and loan arrangements with physicians.

Joe Wolfe: Yeah, thanks Alyssa. First, one question that emerged from the initial Stark Blanket waiver guidance was how does this work with respect to indirect arrangements? And for those of you familiar with a Stark analysis, you know that an indirect arrangement is triggered if you have an unbroken chain of financial arrangements between a healthcare organization and a physician. And there is a more granular analysis around aggregate compensation that varies with the volume or value of referrals and if the entity has knowledge of the indirect financial relationship. And so, as healthcare organizations do the analysis around indirect arrangements, they would obviously like to know if they can rely on these Stark waivers. The government came out and said that the waivers do not apply to indirect compensation arrangements, and that is a practical matter there may not even be a need to look to the waivers because in many instances physicians will be deemed, if they’re owners of a physician organization, they’ll be deemed to stand in the shoes of their physician organization, or if they’re an employed position they may be permitted to stand in the shoes of their physician organization. So as a practical matter, many of those arrangements that may be indirect actually would become direct once you look to those deeming or permissive stand in the shoe rules.

Joe Wolfe: The government also pointed out that parties have the option to request individual waiver for their indirect financial arrangements if they have concerns about them fitting within a Stark exception and they’re unable to rely on the waivers. So again, the government here clarifying that these really are intended, the waivers are intended to protect direct financial arrangements including situations where physician stand in the shoes.

Joe Wolfe: The new guidance also spoke to the issue of repayment options for loans between entities and physicians. The government actually gave a significant amount of flexibility, noting that loans do not need to be repaid in cash. And in fact, healthcare organizations could look to in kind repayment as long as those in kind repayments are commercially reasonable. If there are situations where repayments are not commercially reasonable, those repayments may not fall within the waivers themselves. The government spoke about the need for the aggregate value of any in kind payments to be consistent with the amounts of the loan balance that’s being reduced through those in kind payments. And so, I think healthcare organizations that are going to look to in kind repayments should really do their work to make sure that they understand why the services they’re using to reduce that balance line up with any reduced payments.

Joe Wolfe: There also was some discussion around having a physician practice remaining in the community considered as in kind services. CMS did caution that relocation services to a community to establish a practice may be deemed to be a benefit to the community and not to the recruiting hospital. And I think that’s an important distinction that we’ve seen arise in prior commentary, that if the situation is one where the community is benefiting from those in kind services that may not be as appropriate to look at that as a viable in kind service that would reduce any outstanding payments. So again, the government did provide some alternatives here beyond just standard loan repayment.

Joe Wolfe: The government also talked about the repayment of loans, some of the timing issues that may arise as we think about the practical usage of these waivers. The government talked about in this guidance disbursements of remuneration after the termination of the waiver period having to satisfy an applicable Stark exception. That’s something Alyssa and I have both talked about, that if you’re going to have disbursements of loans or additional payments for services that are going to extend after the waiver period year, it’s going to be very challenging to rely on the waivers. That’s why you need to be doing some analysis using the facts and circumstances of your arrangement and really thinking about the timing and whether it’s going to be appropriate to continue to rely on those waivers. And if you’re, again considering these, you’re going to consider pursuing a wavered arrangement, you should do your review and your analysis and prepare that documentation now before the waiver period is over. And so, really this is some very helpful government guidance speaking to the timing and the ability to rely on the waivers and offering up some potential for in kind services to help reduce what liabilities are out there.

Joe Wolfe: I’m going to turn things back to Alyssa to step through a bit more of the guidance and then to close out the podcast.

Alyssa James: Yeah, thanks Joe. That was a great discussion of some of the additional guidance and options that providers may have. The last item that CMS addressed in its supplemental explanatory guidance is the concept of whether or not providers could potentially restructure income guarantees and other terms associated with existing physician recruitment arrangements with independent physicians and or physician groups in their communities. As you may be aware, there are instances where hospitals will enter into recruitment arrangements to relocate a physician to their service area and community, and that physician may be practicing completely independently or may be employed by another third party group practice. And so, those arrangements can be a great benefit for the community in order to get providers recruited to that area that may otherwise not have the means to relocate and start up a new practice in a service area that may have a needy population there.

Alyssa James: And so, there’ve been some questions CMS has received regarding whether or not those recruitment arrangements could be modified to potentially, for example, increase the income guarantee associated with that in response to the hospital and the physician practice’s COVID responses. In this explanatory guidance, CMS reiterated its long standing position that recruitment arrangements really should not be able to be amended to provide additional or potentially additional compensation to the recruited physician, because the purpose of that recruitment arrangement exception under Stark is to permit a physician to relocate to the community. If you’re amending a recruitment arrangement, CMS takes the position that that physician is already there and so they’ve already relocated their medical practice and the recruitment arrangement exception is not appropriate then to modify compensation terms midway through.

Alyssa James: That said, CMS did also note that there may be instances where other Blanket waivers would be appropriate to assist a physician or physician practice whose practice was experiencing interruption or struggling due to the COVID-19 pandemic. For example, providers could consider reduced rental rates to help these physicians or possibly below fair market value loans, those options that Joe described earlier, in order to assist the physicians in the community without restructuring their existing recruitment arrangement. So, all in all in this explanatory guidance, CMS has taken some follow-up questions that they’ve received from industry stakeholders and tried to clarify how the Blanket Waivers may or may not be applied to certain arrangements, which I think is helpful for providers and healthcare organizations as they look to utilize the waivers as well as maybe evaluate whether or not the utilization of a waiver is or isn’t appropriate for their organization and a particular physician arrangement.

Alyssa James: We hope that this discussion today has been helpful and has helped to interpret and discuss this additional guidance provided by CMS. When we’re evaluating modifications to various physician arrangements during the pandemic, of course it’s always important to remember to always pursue any compensation modifications or other arrangements with the proper purposes. Joe talked at the beginning about these proper purposes, but it’s just always important to keep that in mind with any sort of physician relationship. Also, remember to take action now to evaluate, potentially implement, and then also to prepare to wind down any compensation adjustments or modifications or new arrangements that you’re entering into during this COVID-19 time in order to ensure compliance with the waiver requirements regarding timing. As we’ve discussed, that timing element is very specific and very important when relying on the waivers, and so to make sure that you’re doing what you can now in order to make sure that you comply with those timeframes down the road. And as always, ensure that your organization’s strategic goals during this time are in line with the legal and compliance guidance and recommendations that have been issued by CMS and that we’ve discussed here today as well as on prior podcasts and articles that we’ve written in order to ensure that those strategic goals are in line with the legal requirements and vice versa. Joe, do you have anything else to add? Closing thoughts before we wrap up here today?

Joe Wolfe: Thanks everyone for listening to this podcast. As we’ve hit on a number of times, the time to act, to ensure compliance is now. We think that it’s important to act within the waiver period and documentation is always more compelling if it’s created at the time you were entering into the arrangements. And so, we think developing that documentation in writing right now is critical, whether it’s in the form of an amendment or a separate written agreement or some other type of supporting documentation. We’ve seen all of those approaches. We recommend that you do that now. You may want to capture the parties and the term, the type of the financial arrangement that you’re entering into, likely the proper COVID-19 purpose that you’re looking to, and the applicable waivers you’ve relied on. And Alyssa and I are hoping a number of healthcare organizations do that kind of analysis and we’re pointing healthcare organizations to developing best practices and making sure you have the tightest record that can help you down the road should you ever have to show that to the government or have to navigate a later compliance issue. And so again, thanks for listening in. I’ll turn things back to Alyssa to sign off.

Alyssa James: Thanks Joe, and thank you everyone for joining us today. If you’d like to learn more about topics that you heard in today’s episode, please feel free to visit our website at or reach out to either Joe or me via email. Joe can be reached at and I can be reached at Please remember that the views expressed in this podcast are those of the participants only and do not constitute legal advice. Thank you very much for joining us.

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