AHA Seeks to Simplify Contracting Process for Physicians and Suppliers to Meet Increased Staffing Needs Resulting from COVID-19


Hospitals are facing an increased need for flexibility in implementing new models of care as the COVID-19 pandemic continues. In order to appropriately staff their facilities, many hospitals are shifting resources in order to provide the high level of care required by the incoming patients.  In recognition of these new demands, the American Hospital Association (“AHA”) has requested that the United States Department of Health & Human Services, the Centers for Medicare & Medicaid Services (“CMS”), the Office of the Inspector General (“OIG”) and the Attorney General temporarily suspend enforcement of the Stark Law and the Anti-Kickback Statute. Specifically, AHA believes that suspension of enforcement of these laws will allow the hospitals to simplify the contracting process with physicians and/or suppliers to meet their increased staffing needs.    

Under the Stark Law, hospitals cannot bill Medicare for inpatient and outpatient services delivered on referral from a physician who has a financial relationship with the hospital or entity affiliated with the hospital. While there are a number of exemptions to the Stark Law, none are applicable to a short-term employment relationship established during the COVID-19 public health emergency. AHA asked CMS to adopt an exception to the definition of “compensation arrangement” that would include any compensation paid to a physician or a physician’s immediate family “in return for a service necessary to the hospital’s response to the COVID-19 public health crisis.” 

The Anti-Kickback Statute prohibits transactions intended to induce or reward referrals for items or services reimbursed by Medicare or Medicaid. As with the Stark Law, the existing exemptions do not apply here. Specifically, none of the exemptions apply when, in the midst of a public health crisis, the extent of which is unknown, it is impossible to measure the “fair market value” of the physician’s services for contracting purposes. The AHA is asking that the OIG make clear that any “transaction between hospitals, physicians and other potential referral sources, or any vendor who delivers services and supplies to hospitals, that has as its primary purpose the delivery of supplies or services necessary to the hospital’s response to the COVID-19 public health crisis, will not be subject to prosecution or sanctions under the Anti-Kickback Statute.” 

The AHA seeks this relief in order for physicians and hospitals to avoid the lengthy process traditionally required in employment contracts given the technical application of these laws. As of today’s date, there has been no guidance given by the federal agencies as to whether or not these exceptions will be permitted.   

BrownWinick attorneys have significant experience drafting agreements for physicians, hospitals, and hospital systems. If this advice is adopted by the federal government, we can work with providers to develop compliant contracts quickly and efficiently.

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