Compliance With Healthcare Regulations: Misunderstanding COVID Pandemic Law Waivers May Put Your Practice at Risk

Ericka L. Adler, JD, LL.M


November 10, 2022

Since the start of the COVID pandemic in 2020, we have seen the introduction of new regulations that apply to healthcare entities — and a relaxing of others. While some COVID-era changes may permanently remain in place, such as rules related to telemedicine, others are temporary or may have already ended. Healthcare providers need to be alert for temporary changes that are coming to an end and need to also confirm that they have properly understood any waivers or changes in the law on which they previously relied.

One notable example of a change in the law during COVID is the Physician Self-Referral Law, which is commonly referred to as the Stark law (see 42 CFR §411.350, et seq.). In general, this law prohibits physicians from referring Medicare patients to an entity in which the physician or an immediate family member has a financial interest for certain designated health services (DHS).

In order to comply with Stark, strict requirements must be satisfied. One of these limitations is exactly where self-referred DHS can physically be provided by physicians in a group practice. Stark generally requires self-referred DHS to be provided in the "same building" or a "centralized building" in order for a group practice to meet the Stark "in-office ancillary services" exception.

To help healthcare practices during the COVID pandemic, state and federal regulators temporarily waived existing regulations to allow healthcare providers to adapt to COVID restrictions. One Stark waiver allows for referrals of Medicare-payable DHS to be provided in locations that would not otherwise qualify as a "same building" or "centralized building" for purposes of Stark. This waiver has allowed, for example, practices to offer Medicare-payable pathology or radiology services at any location without violating Stark for failing to meet the in-office ancillary services exception. Clinicians have welcomed the freedom to provide such services from a variety of locations. Currently, this waiver is still in effect.

Although the Stark law was relaxed during COVID, other healthcare laws have not been, setting up the potential for inadvertent violations.

For example, the Medicare Anti-Markup Payment Limitations rule (the AMPL) (see 42 CFR 414.50), which was not waived at any time, remains in full force and effect.

The AMPL is a Medicare payment limitation rule that applies whenever a practice orders a service and also serves as the billing practice (the practice making a claim for payment to Medicare), but the service is actually performed by a physician who does not "share a practice" with the billing practice.

Whether a performing physician shares a practice with the billing practice is determined by whether: (1) the performing physician furnishes "substantially all" of the physician's professional services for the billing practice (ie, at least 75% of the performing physician's professional services); or (2) the performing physician provides the service on site or "in the office" of the billing practice.

When medical practices violate the AMPL, amounts they receive can be considered overpayments and are subject to repayment to Medicare.

When a practice hires an outside physician to interpret radiology and pathology tests, often the practice does not have enough volume to sustain the performing physician 75% of the time, and the performing physician likely renders services for various practice and would not travel to be on site at each location. When this occurs, payment to the billing practice is limited to the lesser of: (i) the performing physician's net charge to the billing practice; (ii) the billing practice's actual charge to Medicare; or (iii) the fee schedule amount for the test that would be allowed if the performing physician billed Medicare directly.

So while the location requirements were waived for Stark, off-site services covered by the AMPL still needed to be billed properly in accordance with the law's requirements. Unfortunately, as a result of the Stark waiver, many practices assumed that AMPL did not apply or perhaps were not even aware of the AMPL requirements and failed to handle the billing requirements properly once staff moved off-site.

Even among healthcare lawyers, there is confusion over the application of these rules, but Centers for Medicare & Medicaid Services has confirmed that there has been no waiver of the AMPL during the COVID pandemic.

If your practice has violated the AMPL or any other law which was thought to be waived during COVID, you may have an obligation to identify and return payments to Medicare or other payers.

There is every indication that COVID waivers are coming to an end as soon as the official "public health emergency" ends. Many reversions of laws will happen with short notice, and enforcement is expected to pick up almost immediately. A particular area of concern is practitioners who brought telemedicine into their practices in the midst of the pandemic and who may find those practices are no longer compliant with post-COVID billing, privacy, and prescribing regulations.

Although it is unknown when the formal public health emergency will end and life will return to "normal," practices should prepare in advance and minimize legal risk and financial penalties, which can be significant. In addition, for any practice that is currently considering a sale transaction, compliance in these areas is key. Finding out a practice failed to provide or bill for services in accordance with relevant laws can make it a less attractive target for purchase and significantly impact the purchase terms.

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About Ericka Adler
Ericka L. Adler, JD, LL.M, is a shareholder and health law practice group manager for Chicago-based law firm Roetzel. She has nearly 25 years representing individual providers, physician groups, and other healthcare entities, focusing on regulatory and transactional healthcare law. Adler is also skilled in compliance counseling, handling mergers, sales and acquisitions of healthcare entities, and has deep experience with Stark, Anti-Kickback Statute, and other challenges facing healthcare professionals.

She also works with providers in HIPAA, fraud and abuse, billing audits, government investigations, and contract disputes.

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