Key Features of Section 1135 Waivers

COVID-19 Update

The Big Picture

In response to the national emergency created by COVID-19, Health and Human Services (HHS) Secretary Alex Azar issued a declaration on March 13, invoking his authority under Section 1135 of the Social Security Act (SSA) to waive or modify certain federal healthcare requirements.1 Since then, HHS and the Centers for Medicare & Medicaid Services (CMS) have issued several waivers that relax privacy rules, lift telehealth restrictions, and modify several program requirements in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP). (For more details about CMS’s March 30 announcements related to Section 1135, see Manatt’s analysis.)

In light of the growing number and diversity of approved 1135 waivers, this Q&A document provides a general primer on Section 1135 to help healthcare stakeholders understand the scope of what HHS and CMS can and cannot do under this emergency authority.

What Is Section 1135? Which Requirements Can and Cannot Be Waived?

Section 1135 gives HHS the power to waive or modify certain federal healthcare requirements during a federally declared emergency to ensure, first, that individuals enrolled in Medicare, Medicaid, and CHIP have “sufficient” access to healthcare services; and second, that healthcare providers operating in good faith may receive reimbursement and be protected against sanctions, notwithstanding noncompliance with certain federal rules.2

The scope of HHS’s 1135 waiver authority is limited to a defined list of federal requirements, but HHS has significant discretion in deciding when, how, and for whom to issue waivers. As part of that discretion, HHS typically delegates authority to CMS to determine which waivers are appropriate with respect to healthcare program rules within CMS’s purview.

Requirements That Can Be Waived under Section 1135

Section 1135 allows HHS to waive or modify the following types of requirements:3

  • Program participation requirements for providers in Medicare, Medicaid, or CHIP, including conditions of participation (COPs), certification requirements, in-state licensure requirements, and “pre-approval requirements” (which CMS has interpreted to include certain types of prior authorization)
  • Deadlines and timetables for “required activities” pertaining to Medicare, Medicaid, or CHIP, except that such deadlines and timetables may only be modified, not waived entirely
  • Health Insurance Portability and Accountability Act (HIPAA) rules that define certain rights for patients to receive privacy notices and request certain privacy restrictions
  • Restrictions on Medicare coverage for telehealth services
  • Emergency Medical Treatment and Labor Act (EMTALA) restrictions on diverting individuals from the hospital emergency department to alternative screening locations, and on transferring patients with emergency medical conditions that have not yet been stabilized
  • Stark Law rules governing “self-referrals” by physicians
  • Medicare Advantage requirements under which out-of-network providers that serve program beneficiaries must seek reimbursement from the Medicare Advantage organization rather than from CMS

Requirements That Cannot Be Waived under Section 1135

HHS’s 1135 waiver authority extends only to federal requirements, and therefore cannot be used to modify any requirements that may exist under state law with respect to, for example, provider licensure or patient confidentiality. In addition, certain key program elements are notably absent from the above list of waivable provisions. In particular, prior guidance explains that CMS generally lacks the authority under Section 1135 to modify any of the following with respect to Medicare, Medicaid, or CHIP:

  • Conditions of program eligibility (by, e.g., reducing Medicare’s qualifying age below 65 years, or waiving immigration-related restrictions on Medicaid eligibility)
  • The scope of coverage (by, e.g., adding a new benefit for home-delivered meals to individuals under quarantine, or relaxing the medical necessity standard for nursing-home-level care)4
  • Provider reimbursement rates (by, e.g., providing a Medicare “hazard pay” enhancement to practitioners in high-risk areas)5

Note that other federal authorities may allow for modifications of these types of requirements. SSA Section 1812(f), for example, allows HHS to waive certain restrictions on skilled nursing facility coverage.6 And in the Medicaid context, states can alter program eligibility and coverage by submitting a disaster relief state plan amendment applying for a demonstration project under Section 1115 of the SSA.7

What Is a “Blanket” Waiver?

Healthcare providers and state/local governments may request 1135 waivers by contacting their local CMS Regional Office and describing the nature, duration, and justification of the requested waiver. Although the text of Section 1135 does not require any particular process for reviewing or issuing emergency waivers, CMS’s guidance and prior practice define two general approaches.8 HHS and CMS may review and approve waivers on a case-by-case basis. Alternatively, they may issue certain waivers on a “blanket” basis, meaning that the waiver applies automatically to any entity that satisfies the enumerated criteria. Previous CMS guidance cautioned that any providers seeking to exercise a blanket waiver should notify their CMS Regional Office and State Survey Agency to “ensure proper payment,” but CMS has taken a different approach during the nationwide COVID‑19 crisis: in the March 30 blanket waivers, CMS stated: “These waivers do not require a request to be sent to [CMS] or that notification be made to any of CMS’s regional offices.”9

How Has Section 1135 Been Used in the Past? What’s Different about COVID-19?

The vast majority of HHS’s Section 1135 declarations have been issued in response to natural disasters, such as hurricanes, floods, and wildfires.10 As a result, many of HHS’s 1135 norms and guidance documents are tailored to that context, and required revisions to address the full range of needs in a nationwide pandemic.

When a natural disaster strikes, providers in the affected area may experience severe capacity constraints, driven by both a surge in disaster-related injuries and physical damage to healthcare facilities and public infrastructure. To help ease the strain, 1135 waivers can lift regulatory barriers that might otherwise preclude reimbursement for services furnished by visiting practitioners with out-of-state licensure, increasing or repurposing facility beds designated for certain levels of care, or establishing additional or alternative sites of care.

Like a natural disaster, the COVID-19 outbreak has created a surge in healthcare needs that has already outstripped capacity in many places for practitioner services, inpatient or residential beds, and equipment (including both therapeutic equipment, like ventilators, and personal protective equipment, like medical masks). Certain crucial factors distinguish COVID-19 from the typical 1135 disaster scenario, however.

Because the COVID-19 pandemic is a nationwide event, there are no disaster-adjacent zones with slack capacity, which could send in practitioners or take in evacuated patients. And a pandemic, unlike a flood or a wildfire, can follow patients and practitioners wherever they go. These contagion risks present an array of unique challenges:

  • Given the large number of exposed patients and practitioners, and given our still-rudimentary understanding of COVID-19’s symptom profile and disease progression, even strict infection control practices can’t always prevent the disease from spreading in healthcare settings, risking the health of both patients and practitioners (and exacerbating provider capacity shortages when practitioners fall ill or self-quarantine after an exposure).
  • Social distancing and shelter-in-place policies, although helpful from a public health standpoint, can contribute indirectly to the strain on healthcare capacity.
    • As schools, adult day centers, and long-term care facilities shut their doors or refuse new applicants, practitioners with young children or elderly relatives may be unable to leave home unless they can arrange for alternative care.
    • People who lose income or who lose access to community resources may face a heightened risk of declining mental health, inadequate nutrition, or housing insecurity, all of which are risk factors for increased healthcare utilization.

As providers and states grapple with these and other challenges, they have been sending letters to CMS requesting the same 1135 waivers that have been granted in recent disasters, as well as new types of waivers specifically targeted to the pandemic scenario.

What Section 1135 Waiver Actions Has CMS Taken to Date?

HHS Secretary Azar first invoked his Section 1135 authority on March 13, the same day that the President declared a national emergency.11 Although HHS and CMS moved quickly to issue all permissible waivers regarding HIPAA and telehealth,12 CMS proceeded more cautiously with respect to the other waivers within its purview. CMS issued a limited set of blanket waivers on March 13 focused on Medicare COPs,13 and began approving narrow Medicaid-related 1135 waivers on a state-by-state basis.14 These waivers hewed closely to the types of flexibilities that have been routinely granted in the context of recent natural disasters, including disaster-related terminology like “emergency evacuations” and “inaccessible facilities.”15 Then, on March 30, HHS issued a substantially more muscular set of blanket waivers (as well as an interim final rule modifying regulations that cannot be waived under 1135). Manatt summarizes those recent developments here. CMS is cataloging most of its 1135 waiver actions here.

The March 30 blanket waivers relax or suspend dozens of Medicare and Medicaid requirements with the aim of facilitating care in alternative sites and reducing administrative burden. In this way, CMS hopes to better support providers as they seek to ramp up capacity and minimize the risk of contagion in healthcare settings. Unlike the initial set of blanket waivers on March 13, the March 30 waiver package is clearly tailored to the pandemic context, and addresses many of the most commonly requested flexibilities that have appeared in 1135 request letters filed by state governments and provider associations.

Meanwhile, CMS has not been quite so bold with respect to the state-specific Medicaid waivers. Although CMS has now approved requests from approximately 40 states, these approvals have not strayed far beyond the initial set of approvals regarding core Medicaid functions such as streamlined provider enrollment, expedited procedures for amending the state plan, relaxed prior authorization procedures, and extended timelines for beneficiary appeals. While undoubtedly valuable, these flexibilities represent only some of the many flexibilities that states have requested. Even after the March 30 blanket waivers, many state requests remain pending, including for extensions on a variety of administrative deadlines. States are, in addition, pursuing certain flexibilities through other avenues, including Section 1115 demonstration projects.

What’s Next for 1135?

Even after the March 30 blanket waivers, CMS has not exhausted the capabilities of Section 1135. CMS has evidently become more comfortable crafting tailored waivers that address particular pandemic-related needs, so states and providers should remain vigilant for COVID‑19 response strategies that may benefit from additional waivers, while keeping in mind Section 1135’s limits, as described above. Based on a review of the waivers that have been issued to date (as well as the requests that have not been approved), those requesting additional waivers would be advised to outline the emergency issue they seek to resolve, explain why existing waivers and other flexibilities fail to provide a complete solution, and identify with particularity the requirements they seek to waive or modify.

1 SSA § 1135 is codified at 42 U.S.C. § 1320b-5.

2 Id. § 1135(a). HHS may exercise this 1135 waiver authority only after two conditions have been met: first, the HHS Secretary has declared a national emergency under the Public Health Service Act; and second, the President has declared a national emergency or disaster under either the National Emergencies Act or the Robert T. Stafford Disaster Relief and Emergency Assistance Act. Id. § 1135(g)(1). The waiver authority may be renewed in 60-day increments, but terminates automatically upon the expiration of either of the underlying emergency declarations. Id. § 1135(e).

3 Id. § 1135(b).

4 CMS, Medicare Fee-For-Service: Additional Emergency and Disaster-Related Policies and Procedures That May Be Implemented Only With a § 1135 Waiver at 1135B-1 (Mar. 15, 2019) [hereinafter “Medicare FFS 1135 Q&A”, https://www.cms.gov/About-CMS/Agency-Information/Emergency/Downloads/MedicareFFS-EmergencyQsAs1135Waiver.pdf (“Medicare coverage or payment rules cannot be waived [under Section 1135], even in a disaster or emergency.”)]; see also, e.g., id. at 1135C-1 (“There is currently no statutory authority that would permit Medicare to pay for evacuation costs. Moreover, even in the circumstance where the HHS Secretary invokes the waivers authorized by § 1135 . . . , evacuation costs would not be covered under Medicare by such waivers.”).

5 See, e.g., id. at 1135M-7 (commenting, in response to a question about providers receiving separate payments for services covered under the Outpatient Prospective Payment System, that “Medicare coverage or payment rules cannot be waived [under Section 1135], even in a disaster or emergency”).

6 SSA § 1812(f) is codified at 42 U.S.C. 1395d(f).

7 These and other disaster relief authorities are described in CMS’s COVID-19 Disaster Response Toolkit at https://www.medicaid.gov/state-resource-center/disaster-response-toolkit/covid19/index.html.

8 See CMS, 1135 Waiver—At A Glance, https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertEmergPrep/Downloads/1135-Waivers-At-A-Glance.pdf (last accessed Mar. 29. 2020); CMS, Requesting an 1135 Waiver, https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertEmergPrep/Downloads/Requesting-an-1135-Waiver-101.pdf (last modified Nov. 4, 2009); CMS, Public Health Emergency Declaration Questions and Answers at 5, https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertEmergPrep/Downloads/PHE-Questions-and-Answers.pdf (last accessed Mar. 29, 2020).

9 CMS, COVID-19 Emergency Declaration Blanket Waivers for Health Care Providers (Mar. 30, 2020), https://www.cms.gov/files/document/summary-covid-19-emergency-declaration-waivers.pdf.

10 HHS has not invoked Section 1135 with respect to an infectious disease since the 2009 H1N1 influenza outbreak (commonly referred to as “swine flu”). For a list of HHS’s 1135 waivers going back to March 2009, see Waiver or Modification of Requirements Under Section 1135 of the Social Security Act, https://www.phe.gov/emergency/news/healthactions/section1135/Pages/default.aspx (last visited Mar. 29, 2020).

11 HHS, Waiver or Modification of Requirements Under Section 1135 of the Social Security Act (Mar. 13, 2020), https://www.phe.gov/emergency/news/healthactions/section1135/Pages/covid19-13March20.aspx.

12 HHS’s original March 13, 2020, declaration under 1135 issued waivers of all HIPAA provisions that fall within the scope of 1135. Shortly thereafter, on March 17, CMS issued an 1135 telehealth waiver in conjunction with guidance from HHS’s Office of Civil Rights announcing additional HIPAA-related flexibilities outside the context of 1135. CMS, Medicare Telemedicine Health Care Provider Fact Sheet (Mar. 17, 2020), https://www.cms.gov/newsroom/fact-sheets/medicare-telemedicine-health-care-provider-fact-sheet. Manatt’s coverage of the HIPAA waivers and guidance is available here.

13 CMS, COVID-19 Emergency Declaration Health Care Providers Fact Sheet (Mar. 13, 2020), https://www.cms.gov/files/document/covid19-emergency-declaration-health-care-providers-fact-sheet.pdf.

14 The state-by-state approval letters are available at https://www.medicaid.gov/resources-for-states/disaster-response-toolkit/federal-disaster-resources/index.html.

15 See, e.g., CMS, Section 1135 Waiver Flexibilities—Florida Coronavirus Disease 2019 (Mar. 16, 2020), https://www.medicaid.gov/state-resource-center/disaster-response-toolkit/federal-disaster-resources/entry/53995.

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