Physician Wellness Programs: A New Stark Law Exception and AKS Safe Harbor to Combat Burnout

The new exception and safe harbor specifically allow entities to offer referring physicians a “bona fide mental health or behavioral health improvement or maintenance program.” These provisions of the CAA were a small part of the giant spending bill, which includes billions of dollars in funding and policy changes directed at addressing mental health and addiction.

The exception and safe harbor align with the Lorna Breen Health Care Provider Protection Act, a law enacted in March of 2022 authorizing the US Department of Health and Human Services (HHS) to award grants to hospitals and other health care entities for evidence-based programs to improve mental health and resiliency for health care professionals. The CAA effectively ensures that entities can use grant funds under the Lorna Breen Act to address the needs of their affiliated physicians without violating the Stark Law or AKS.    

Physician Wellness Initiatives: Stark and AKS Considerations

Since the early days of the COVID-19 pandemic, physician well-being and burnout have become increasingly prominent concerns. Medscape’s 2023 Physician Burnout & Depression Report, which surveyed over 9,100 US physicians in 29 specialties, showed that 53% of physicians suffered from burnout and 23% reported experiencing depression, which are significantly higher rates compared with those in 2018 (27% and 15%, respectively).

Lorna Breen, MD, the namesake of the Lorna Breen Act, is a tragic example of the extreme consequences of burnout. After treating waves of sick and dying patients at the beginning of the COVID-19 pandemic, the overworked New York City emergency room physician, who had no known prior mental health conditions, died by suicide in April of 2020.

Particularly in light of the grant funding available under the Lorna Breen Act, health care entities may be interested in providing their affiliated physicians supportive items and services related to wellness and well-being, such as programs to support work-life balance and mental health counseling. To these ends, an organization must comply with the Stark Law and AKS, two federal health care fraud and abuse laws.

The Stark Law (also known as the Physician Self-Referral Law) is a strict liability law prohibiting physicians from referring patients for certain health services payable by Medicare to entities with which the physician or an immediate family member has a financial relationship. AKS is a criminal law prohibiting hospitals, physicians, and other providers from knowingly paying or receiving anything of value to induce or reward referrals of items or services payable by Medicare, Medicaid, or other federal health care programs. Both laws contain numerous carve-outs (referred to as “exceptions” under the Stark Law and “safe harbors” under AKS) for lawful business arrangements that meet specified criteria.

New Stark Exception and AKS Safe Harbor for Wellness Programs

Section 4126 of the CAA, signed into law in December of 2022, provides for a new “exception for physician wellness programs” under both the Stark Law and AKS. Key requirements to satisfy both laws include:

1. The program’s primary purpose must be to prevent suicide, improve mental health and resiliency, or provide training in appropriate strategies to promote mental health and resiliency.

2. The program may furnish benefits in the form of counseling, mental health services, a suicide prevention program, or a substance use disorder prevention and treatment program.

3. The program must be set out in a written policy adopted by the entity’s governing body that describes the program, including its content, duration, and estimated cost and the evidence-based support for the program’s design.

Notably, there is no limit on the dollar value of the program. This could give hospitals and other entities greater comfort to implement more robust wellness programs than permitted by other Stark Law exceptions, such as those for medical staff incidental benefits and nonmonetary compensation. As we discussed in a previous blog post, the latter exceptions include caps on the monetary value of the benefits that an entity may provide to physicians, potentially limiting the scope of wellness measures under those exceptions. Although the Centers for Medicare & Medicaid Services relaxed those caps with the issuance of blanket waivers during the COVID-19 pandemic, the blanket waivers officially terminated on May 11, 2023, when the COVID-19 public health emergency terminated.

For now, only certain types of health care entities with formal medical staffs are allowed to make use of the new wellness exception and safe harbor — namely, hospitals, ambulatory surgical centers, community health centers, rural emergency hospitals, rural health clinics, and skilled nursing facilities. However, a program must not be limited only to physicians who are members of an entity’s medical staff or who hold clinical privileges. An entity also must extend its program to other physicians who practice in the geographic area served by the entity, without regard to the volume or value of referrals or other business that any physician generates. Reflecting the AKS’s broader applicability to more than just physician referrals, the AKS safe harbor also authorizes an entity to offer a program to “other clinicians” besides physicians.

Although Stark Law exceptions and AKS safe harbors are typically promulgated through agency rulemaking, the wellness program exception and safe harbor are self-executing under the CAA. That means that, for programs offered on or after December 29, 2022, authorized entities can comply with the Stark Law and AKS by structuring their programs to meet the CAA’s statutory requirements. Through future rulemaking, the HHS Secretary may specify other entities that may use the exception and safe harbor and adopt additional regulatory requirements to protect against program or patient abuse.

Key Takeaways

The wellness program exception under the Stark Law and safe harbor under AKS open a new path to provide post-pandemic support to physicians. A key component of compliance is the written program policy that an organization must adopt. In developing its wellness policy, an organization should collaborate with the leaders of its medical staff, as well as other physician stakeholders in its geographic service area, to ensure all aspects of physician needs are addressed. An organization should also consult with its legal counsel to ensure its wellness program is properly structured to meet the new exception and safe harbor or other applicable exceptions and safe harbors.