Section 1135 waivers

Under Section 1135 of the Social Security Act (the Act), the Secretary can waive certain requirements related to Medicare, Medicaid, and the State Children’s Health Insurance Program (CHIP) to ensure that sufficient health care items and services are available to meet the needs of enrollees in affected areas. Section 1135 waiver authority can be used if an emergency or disaster is declared by the President, either under the Stafford Act (P.L. 93-288, as amended) or the National Emergencies Act (P.L. 94-412), and a public health emergency is declared by the Secretary.

Section 1135 of the Act allows the Secretary to waive certain requirements for providers on either a blanket basis or in response to provider requests (CMS 2020). Blanket waivers are implemented when it has been determined that all similarly situated providers in an area need a waiver or modification. Examples of items that may be waived through Section 1135 authority include certain provider requirements such as Medicare conditions of participation or other certification requirements, and Emergency Medical Treatment and Labor Act (EMTALA P.L. 99-272) requirements (MACPAC 2018, CMS 2016).[1]  Section 1135 waivers cannot be used to pay for services otherwise not covered and apply only to federal requirements (ASPR 2019, CMS 2016).

States may request time-limited, Section 1135 waivers for purposes of their Medicaid and CHIP programs.

The decision to issue a blanket waiver or modification of a particular Medicare, Medicaid, or CHIP requirement is based on the need and frequency of requests for specific waivers in response to a declared disaster or emergency (CMS 2016). Providers exercising flexibility under blanket waivers or modifications must do so in good faith, absent any fraud or abuse.

Waivers under Section 1135 typically expire at the end of the emergency declaration, although the Secretary can specify that the waiver will be granted for 60 days. The waivers can be extended for additional 60-day periods, up to the end of the emergency declaration period. In addition, waivers can be retroactive to the beginning of an emergency (ASPR 2019, CMS 2016).

COVID-19 blanket waivers

In response to COVID-19, CMS announced the availability of blanket waivers of certain federal requirements that apply automatically for specified Medicare providers (CMS 2020). These waivers are in effect retroactively to March 1, 2020.

Medicare program rules play an important role in the regulation of providers and facilities that seek payment from state Medicaid agencies. At a minimum, state Medicaid agencies must use certification standards for providers recognized by Medicare. Sometimes, state Medicaid agencies do not adopt additional provider standards, relying instead solely on program standards set by Medicare.

Examples of COVID-19 blanket provider waivers include suspending:

• the requirement that critical access hospitals limit the number of beds to 25, and that the length of stay be limited to 96 hours;
• the requirement, which applies to both Medicaid and Medicare, that out-of-state providers be licensed in the state where they are providing services when they are licensed in another state;
• certain Medicare provider enrollment requirements such as screening requirements (e.g., application fee, criminal background checks for certain provider types which require submission of fingerprints, and required revalidation actions);
• certain SNF requirements (e.g., the requirements for a three-day prior hospitalization for Medicare coverage of a stay in a skilled nursing facility (SNF) to provide temporary emergency coverage of SNF services without a qualifying hospital stay, the requirements that certain beneficiaries who recently exhausted their SNF benefits first have to start a new benefit period before SNF coverage is renewed, and the time frame requirements for Minimum Data Set assessments and transmission);[2]
• the requirement for acute care hospitals to house acute care inpatients in excluded distinct part units, where the distinct part unit’s beds are appropriate for acute care inpatients;
• the requirements for a face-to-face encounter between a Medicare beneficiary and provider, a new physician’s order, and new medical necessity documentation in order to replace durable medical equipment, prosthetics, orthotics, and supplies that are destroyed or rendered unusable;
• the requirements for acute care hospitals with excluded distinct part inpatient psychiatric units that, as a result of a disaster or emergency, need to relocate inpatients from the excluded distinct part psychiatric unit to an acute care bed and unit;
• the requirements for acute care hospitals with excluded distinct part inpatient rehabilitation units that need to relocate inpatients from the excluded distinct part rehabilitation unit to an acute care bed and unit;
• the requirements for a long-term care hospital (LTCH) to exclude patient stays that result from an LTCH admitting or discharging patients in order to meet the demands of the emergency from the 25-day average length of stay requirement; and
• the requirements related to the time frames for home health agency Outcome and Assessment Information Set (OASIS) data transmission. The waiver also allows Medicare Administrative Contractors to extend the auto-cancellation date of requests for anticipated payment during emergencies.

State-Specific COVID-19 Section 1135 waivers

In response to the COVID-19 pandemic, CMS issued a Section 1135 waiver request template, which lists five key areas and flexibilities available to states and territories during the national emergency: Medicaid prior authorization requirements, long-term services and supports, fair hearings, provider enrollment, and reporting and oversight.

States and territories may also request additional flexibilities not listed in the template. For example, states have sought flexibility related to the need and timing for public notice of state plan changes related to cost sharing, alternative benefit plan benefits, and payment. States may also request flexibility to shorten tribal consultation or conduct a consultation after a state plan amendment (SPA) is submitted. Section 1135 waivers can also allow states to have an effective date for SPAs that is retroactive to the date of the public health emergency declaration even if the SPA was submitted after the end of the quarter in which the declaration was made (CMS 2020).

COVID-19 Section 1135 waivers take effect as early as March 1, 2020 and last through the end of the public health emergency. As of April 24, 2020, CMS had approved Section 1135 waivers for all states and the District of Columbia and three territories; many states have since been approved for additional Section 1135 flexibilities they did not request in the first round.

States vary in which provisions they are waiving under Section 1135 authority. Most states are waiving at least some requirements related to fee-for-service prior authorization, long-term services and supports, fair hearings, and provider enrollment. However, they are not using Section 1135 authority to waive reporting and oversight requirements.

Section 1135 Waiver Flexibilities for State Medicaid Programs and Number of States Waiving At Least One Requirement Listed, as of April 24, 2020

Note: The number of states represents the total number of states waiving at least one of the listed requirements, based on state Section 1135 waiver approvals as of April 24, 2020. This does not include U.S. territories.

Source: MACPAC analysis of CMS 2020, Section 1135 waiver COVID-19 state/territory request template and Coronavirus waivers and flexibilities.

^[1]  EMTALA is a federal law that requires hospitals that have an emergency department and participate in Medicare conduct an appropriate medical screening examination for every individual that comes to the emergency department. Such an examination is conducted to determine whether the individual is experiencing an emergency medical condition. Upon examination, if it is determined that an individual has an emergency medical condition, hospitals must, within their capacity, provide necessary stabilizing treatment or provide for the appropriate transfer. Moreover, EMTALA requires hospitals with appropriate capacity to accept transfers, including suspected or confirmed COVID-19 cases.

Under Section 1135, EMTALA sanctions may be temporarily suspended when individuals are redirected to receive a medical screening examination in an alternative location. A hospital may also transfer an individual who has not been stabilized if the transfer is necessary pursuant to the circumstances of the declared emergency. EMTALA waivers for emergencies that involve a pandemic disease last until termination of the pandemic-related emergency. Hospitals that activate their disaster plan and are invoking EMTALA waiver of sanctions must provide notice to their state survey agency (MACLC 2018).

^[2] The Minimum Data Set is a clinical assessment of nursing facility resident functional capabilities, health status, and needs. Assessments are conducted by trained nursing home clinicians on all patients at admission and discharge, in addition to other time intervals (e.g., quarterly, annually, and when residents experience a significant change in status).

For the most up to date information on state-specific Section 1135 waiver approvals see CMS’s Federal Disaster Relief webpage.