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Medicare and Medicaid Flexibilities During Public Health Emergencies

This week, our In Focus comes from HMA Vice President Kathleen Nolan and Managing Principal Jon Blum. On March 13, 2020, President Trump declared a national emergency due to the rapid spread of COVID-19 virus. This declaration provides Health and Human Services (HHS) and the Centers of Medicare and Medicaid Services (CMS) new abilities to waive Medicare and Medicaid regulatory requirements to help health care providers, health plans and other stakeholders respond to immediate needs of their patients and communities.   In the past, HHS and CMS have solicited requests for relief needs from states, local providers and trade associations, among other stakeholders.  Health care providers, health plans and others should continue to monitor policy announcements from HHS and CMS and work with their states and trade associations to identify potential areas of need for requested regulatory relief.

This brief summarizes the legislative authorities for how Medicare and Medicaid are able to respond during national emergencies and already announced waivers to provide additional flexibilities.

Federal Section 1135 Waiver Flexibility

Section 1135 of the Social Security Act permits CMS and authorizes the HHS Secretary to take certain regulatory actions when both the President declares a national disaster or emergency and the HHS Secretary declares a public health emergency.  As of March 13, both conditions were met to grant this authority.  The HHS Secretary— through CMS—can waive statutory and regulatory provisions for health care providers, including:[1]

  • Conditions of participation or other certification requirements.
  • Program participation.
  • Preapproval requirements.
  • Requirements that physicians and other health care professionals be licensed in the state in which they are providing services, so long as they have equivalent licensing in another state (this waiver is for purposes of Medicare, Medicaid, and CHIP reimbursement only – state law governs whether a non-federal provider is authorized to provide services in the state without state licensure).
  • Emergency Medical Treatment and Labor Act (EMTALA) sanctions for redirection of an individual to receive a medical screening examination in an alternative location pursuant to a state emergency preparedness plan (or in the case of a public health emergency involving pandemic infectious disease, a state pandemic preparedness plan) or transfer of an individual who has not been stabilized if the transfer is necessitated by the circumstances of the declared emergency. A waiver of EMTALA requirements is effective only if actions under the waiver do not discriminate on the basis of a patient’s source of payment or ability to pay.
  • Stark self-referral sanctions.
  • Performance deadlines (may be adjusted but not waived).
  • Limitations on payment to permit Medicare Advantage enrollees to use out of network providers in an emergency situation

Under this authority, CMS may also permit Medicare Administrative Contractors (MACs) to pay for Part C-covered services furnished to Medicare Advantage enrollees and subsequently seeking retroactive reimbursement from Medicare Advantage Organizations for those health care services.

Health care providers may need to submit requests to operate under the 1135 Waiver authority to the State Survey Agency or CMS Regional Office. These requests typically include a justification and expected duration for the request.  Providers are also expected to keep records of services furnished to beneficiaries under waiver authority in order to ensure coverage and payment. CMS may also elect to implement certain waivers under the 1135 authority on a comprehensive basis rather than for individual providers when a determination has been made that all similarly situated providers in the emergency area need such a waiver or modification.

These waivers typically end after the termination of the emergency period, but HHS may extend them for an additional 60 days after the termination.

Announced 1135 Waivers

To date, CMS has announced the following waivers under 1135 authority.

  • Expansion of Telehealth Coverage:[2] CMS will reimburse for office, hospital, and other visits furnished via telehealth in all areas of the country and in all settings, including in a patient’s place of residence starting March 6, 2020, and for the duration of the emergency. The provider must use an interactive audio and video telecommunications system that permits real-time communication. These telehealth visits will be treated as in-person visits and reimbursed accordingly. The Medicare coinsurance and deductible still apply to these services, but HHS will allow providers to reduce or waive cost-sharing.

Prior to this waiver, telehealth visits were only covered for beneficiaries in designated rural areas and leaving their home to receive care in a qualifying originating site (e.g., clinic, hospital, or certain other types of medical facilities). While the 1135 waiver authority requires an established relationship between patient and provider, CMS indicates the Agency will not audit claims for purposes of ensuring a relationship for the duration of the emergency. CMS also announced that the HHS Office for Civil Rights (OCR) will waive penalties for HIPAA violations against health care providers acting in good faith to serve patients through everyday communications technologies during the emergency.

  • Skilled Nursing Facility (SNF) Eligibility, Coverage, and Resident Assessment Requirements: CMS waived the requirement for a 3-day prior hospitalization for coverage of a Medicare SNF stay. It authorizes renewed SNF coverage for certain beneficiaries who recently exhausted their SNF benefits. It also waived SNF resident assessment requirements to provide relief to SNFs on the timeframe for Minimum Data Set (MDS) assessments and transmission.
  • Critical Access Hospital (CAH) Limits: CMS waived requirements that CAHs limit the number of inpatient beds to 25, and that average length of stay not exceed 96 hours.
  • Housing Patients in Hospital Excluded Distinct Part Units – Inpatient Rehabilitation and Psychiatric Services: CMS will permit acute care hospitals to house acute care inpatients in excluded distinct part units (i.e., units typically designated for psychiatric services or rehabilitative services), where the distinct part unit’s beds are appropriate for acute care inpatients. Hospitals using this flexibility must bill under the Inpatient Prospective Payment System (IPPS) and to annotate the patient’s medical record to note the patient is being treated in the excluded distinct part unit because of capacity issues related to the emergency.
  • Durable Medical Equipment Prosthetics, Orthotics, and Supplies (DMEPOS) Replacement Policies: CMS announced that MACs  may waive requirements for a face-to-face visit, a new physician’s order, and new medical necessity documentation to replace DMEPOS that is lost, destroyed, irreparably damaged, or otherwise rendered unusable. DMEPOS suppliers must still include a narrative description on the claim explaining the reason why the equipment must be replaced and are expected to keep supporting documentation.
  • Care for Excluded Inpatient Rehabilitation and Psychiatric Unit Patients in Acute Care Units of Hospitals: CMS waived requirements to allow acute care hospitals with excluded distinct inpatient rehabilitation or psychiatric units to relocate inpatients from those excluded distinct units to an acute care unit. Hospitals must bill for these patients under the existing payment system (i.e., inpatient rehabilitation facility prospective payment system and inpatient psychiatric facility prospective payment system) and indicate in the medical record that the patient is being treated in the acute care unit as a result of the emergency.
  • Long-Term Care Acute Hospital (LTCH) and Inpatient Rehabilitation Facility (IRF) Threshold Requirements: CMS waived threshold requirements for LTCHs and IRFs. LTCHs can exclude patient stays resulting from the emergency for purposes of calculating the facility’s average length of stay. Under regular circumstances, LTCHs are required to have an average length of stay greater than 25 days. IRFs may exclude patients from the facility or unit’s inpatient population for purposes of calculating the applicable thresholds associated with the requirements that 60 percent of the IRF’s patients have one of 13 qualifying conditions.
  • Home Health Agency (HHA) Relief: CMS waived requirements related to timeframes for HHA patient assessment (OASIS) transmission. MACs will also be able to extend the auto-cancellation date of Requests for Anticipated Payment (RAPs) (i.e., HHA prepayment based on anticipated overall payment) during emergencies.
  • Provider State Licensure Requirements and Enrollment Flexibilities: CMS announced multiple initiatives and flexibilities for provider state licensure and enrollment requirements, including:
    • Toll-free hotline for non-certified Part B suppliers, physicians and nonphysician practitioners to enroll and receive temporary Medicare billing privileges
    • Waiver of the following screening requirements: 1) application fee, 2) criminal background checks, 3) site visits
    • Postponing all revalidation actions
    • Allowing licensed providers to render services outside of their state of enrollment (this applies to Medicare and Medicaid)
    • Expediting any pending or new applications
  • Medicare Appeals: MACs, Medicare Advantage plans and Part D plans must:
    • Allow extensions to file an appeal
    • Waive timeliness for requests for additional information to adjudicate the appeal
    • Process the appeal even with incomplete Appointment of Representation forms but communicating only to the beneficiary
    • Process requests for appeal that don’t meet all required information elements by using information that is available
    • Utilize all flexibilities available in the appeal process as if good cause requirements are satisfied

CMS has stated that states and territories seeking relief for Medicaid & CHIP requirements, including but not limited to those listed above, are encouraged to submit a Section 1135 waiver request directly to Jackie Glaze, CMS Acting Director, Medicaid & CHIP Operations Group Center for Medicaid & CHIP Services by e-mail ([email protected]) or letter.

Earlier this week, Florida became the first state to receive approval for a Section 1135 waiver in response to the COVID-19 national emergency. Flexibilities include: waiving prior authorization requirements to remove barriers to needed services, streamlining provider enrollment processes to ensure access to care for beneficiaries, allowing care to be provided in alternative settings in the event a facility is evacuated to an unlicensed facility, suspending certain nursing home screening requirements to provide administrative relief, and extending deadlines for appeals and state fair hearing requests.[3]

State Medicaid And CHIP Programs Response Options

States may waive certain Medicaid and CHIP requirements using three broad authorities.

  1. General State Plan Flexibilities:

State Medicaid and CHIP programs have the ability to reduce and eliminate barriers for screening and treatment during periods of emergency or disaster under a national or state emergency, including temporary changes to Medicaid to simplify enrollment and renewal processes, expanding presumptive eligibility to new providers and new populations, making the Medicaid agency a qualified entity for presumptive eligibility determinations, and ability to submit a State Plan Amendment to make adjustments to cost sharing for impacted individuals.[4]

Use of these flexibilities may cover the entire state Medicaid population or specific to those impacted populations under State Plan authority.  For example, on March 11, 2020, Pennsylvania took advantage of some of this flexibility, announcing that it would ensure coverage for testing and treatment of COVID-19, remove related prior authorization requirements, and require providers to treat individuals regardless of ability pay any associated copayments.[5]  States with separate CHIP programs may submit a disaster relief state plan amendment that can be retroactive and allows for flexibilities similar to those available in Medicaid such as waivers of cost sharing and premiums, and extending the timeframe for renewals.

  1. Emergency Section 1115 Waivers

Emergency Section 1115 Waivers process allows for an expedited submission and approval timeline, without requiring either state or federal public comment periods where there is a disaster, public health emergency, or other sudden emergency that could not have been reasonably foreseen.  These waivers were deployed to ensure coverage following September 11th, for individuals impacted by Hurricane Katrina, and to extend coverage to those impacted by the Flint water crisis.

Emergency Section 1115 Demonstrations have been used to extend coverage to target populations, simplify application processes, and grant temporary coverage based on member self-attestation without requiring documentation.  In addition to simplified applications and expedited enrollments, Emergency Section 1115 Demonstrations permit extension of limited or full benefits to target populations, which may include individuals with income or resources beyond the existing state plan limits.  The full spectrum of 1115 authority is available under the emergency option, which could include flexibility authorizations related to delivery system, reimbursement, applications and enrollment, as well as expanding eligibility.  Pursing these waivers may have impacts on other non-Medicaid programs such as the Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), and Marketplace eligibility.

  1. 1915 (c) Waiver Appendix K

Waivers operating under 1915 (c) authority providing home and community-based services, may be modified with the submission of Appendix K during an emergency. CMS can approve this appendix retroactively, permitting states to establish an emergency hotline, provide case management and applicable personal care to be conducted telephonically or via other telehealth medium, increase the number of individuals covered under the waiver, modify provider requirements to increase access, and pay for HCBS services during short term hospital or institutional stays.  States may also increase individual eligibility cost limits, modify services and limitations and permit payment to family caregivers under Appendix K.  This appendix may also be used to address qualifying populations that may be in quarantine due to COVID-19.

CMS Activity And Guidance To Date

Prior to the President’s declaration, CMS made the following announcements to assist health care communities respond to COVID-19:

Medicare Parts A & B

  • New Billing Codes for COVID-19 Diagnostic Tests:[6] CMS announced the development of two new Healthcare Common Procedure Coding System (HCPCS) codes for healthcare providers to enable providers to bill for detection of COVID-19. HCPCS code U0001 can be used by providers and laboratories to bill for the Centers for Disease Control and Prevention’s (CDC’s) 2019 Novel Coronavirus Real Time RT-PCR Diagnostic Test Panel. HCPCS code U0002 allows laboratories and providers to bill for non-CDC COVID-19 diagnostic tests that are developed by laboratories and validated by the Food and Drug Administration (FDA). Claims for these codes will be accepted as of April 1, 2020 for dates of service on or after February 4, 2020. CMS established payment rates for U0001 and U0002 at approximately $36 and $51, respectively.[7] There is no beneficiary cost-sharing for these tests, as with other laboratory tests.
  • Alternative Care Sites (ACSs): A hospital may add a remote location that provides inpatient services, provided that the remote location satisfies the requirements to be “provider-based” to the hospital’s main campus, in addition to the Hospital Conditions of Participation (CoPs). The hospital would be expected to file an amended Form CMS 855A (Medicare Enrollment Application) with its MAC.
  • Hospital Payment in Event of Skilled Nursing Facility (SNF) Bed Shortages: A physician may certify or recertify the need for continued hospitalization if the patient could receive proper treatment in a SNF, but no participating SNF bed is available. Under these circumstances, Medicare will pay the diagnostic related grouping (DRG) rate and any cost outliers until the Medicare patient can be moved to the appropriate facility.
  • Separate Payments to Facilities for Controlling Infectious Disease: According to CMS, there are no separate payments for supplies for infection control, however, additional resources (e.g., supplies, staffing) for infection control may be made available from other local, state, or federal government agencies. Medicare typically doesn’t allow payment for services that are paid for by another government entity, but CMS recently announced an exception for services furnished for purposes of controlling infectious diseases.
  • Provider-Specific Infection Control Guidance:[8],[9],[10] CMS issued detailed guidance to hospitals, nursing facilities, and hospice providers addressing patient triage and placement of/staffing for patients with known or suspected COVID-19 to limit transmission.

Medicare Advantage (MA) and Part D:[11]

  • Special Requirements During a Disaster or Emergency: CMS recently reminded MA plans that during a disaster or emergency, plans are obligated to: 1) cover Parts A/B and supplemental Part C services furnished by non-contracted Medicare facilities and provide the same cost-sharing for the enrollee as if the service had been furnished at a contracted facility, and 2) waive requirements for gatekeeper referrals where applicable.
  • Permissible Part C Flexibilities: CMS announced it will add additional plan flexibilities to support efforts to diagnose, treat, and limit transmission of COVID-19. These include:
    • Waiving or reducing enrollee cost-sharing for COVID-19 laboratory tests
    • Expanding access to telehealth benefits, as well as waiving or reducing enrollee cost-sharing for these services
    • Waiving prior authorization requirements that would apply to tests or services related to COVID-19
  • Permissible Part D flexibilities: Part D plans also have the ability to take certain actions during a disaster or emergency. These include:
    • Relaxing “refill-too-soon” edits
    • Reimbursing enrollees for prescription drugs purchased from out-of-network pharmacies
    • Relaxing plan-imposed policies that may discourage certain methods of delivery (i.e., home or mail delivery) for retail pharmacies that offer these services under these circumstances
  • COVID-19 Vaccine Coverage: CMS announced that once a vaccine becomes available for COVID-19, Medicare will cover the vaccine under Part D. All Part D plans will be required to cover the vaccine

Medicaid and CHIP

FAQs for Medicaid and CHIP Agencies:[12] Actions to address COVID-19 via Medicaid and CHIP will be initiated at the state level. To support state actions, CMS published guidance March 12, 2020, outlining authorities available and directing states to existing resources. This includes direction to the existing disaster response toolkit[13] and information on flexibilities available in an emergency under Section 1115, Section 1135, and 1915(k) waivers as well as Medicaid and CHIP State Plan flexibilities.

Commercial Insurance

For large group, small group and individual markets regulated by states, coverage for COVID 19 testing and treatment can be mandated by state insurance commissioners and plans can be required to provide coverage without applying plan cost sharing.  As of March 11, this approach had been taken by Oregon, California, New York, Georgia, Maryland, and Washington.  Self-insured plans offered by larger employers would not be impacted by state directives; employers may reach out to their third-party administrators to define coverage and costsharing for COVID-19.  However, several health insurance plans stated that testing and treatment is covered and that cost-sharing will not be applied.

High-Deductible Plans In The Commercial Market

In coordination with CMS direction that COVID-19 testing and treatment is covered under essential health benefits required in individual and small group plans[14], the IRS published guidance allowing these plans to cover COVID-19 testing and treatment without applying cost-sharing, even if the covered individual had not yet met their deductible.[15]