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June 16, 2023

CMS Adds a New 1135 Blanket Waiver for SSA Section 1877(g)

On April 27, 2023, CMS updated the Section 1135 Blanket Waivers for Section 1877(g) of the Social Security Act. Section 1877(g) refers to the sanctions for violating the physician self- referral law (Stark Law).

The newest waiver focuses on physician owners of hospitals that, among other things, were licensed as independent free-standing emergency departments (IFEDs) and owned by physicians on March 1, 2020; were IFEDs right before enrolling in Medicare as a hospital; enrolled in Medicare as a hospital during the pandemic; and did not increase physician investment or ownership in the hospital. Similar to the other Stark Law waivers, the remuneration and referrals at issue are permissible if they satisfy a “COVID-19” purpose, as defined in the update. Otherwise, the financial relationship between IFEDs-turned-hospitals and the physician owners who refer designated health services to them would violate the Stark Law. Application of the blanket waiver is retroactive, so the waiver is effective by its terms from March 1, 2020, through April 10, 2023.The addition of the waiver provides relief for IFEDs-turned-hospitals that were not afforded Stark Law protection in connection with their Covid-19 efforts. 

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