When Will Section 1135 Waivers End and What Should Providers be Doing?

Providers across the country have, out of necessity, had to rely on Department of Health and Human Services (“HHS”) Secretary Alex Azar’s Section 1135 waivers of certain Medicare, Medicaid, CHIP and Stark rules in order to adapt their operations to the sudden and dislocating demands of the COVID-19 pandemic. In doing so, these providers are operating contrary to settled law, rules and regulations. They could not conduct operations as they currently are or bill for services as they are being rendered but for the protection afforded by the waivers. The waivers are temporary.Providers have an enormous stake in knowing when the waivers will end and what they need to do to be back in compliance with the permanent rules when that time comes. This article will briefly discuss the duration and effectiveness of waivers and steps providers should be taking in anticipation of the waivers coming to an end.

Conditions to Effective Waivers

For all but the telemedicine waivers, there are three conditions which must remain simultaneously satisfied in order for waivers under Section 1135 to be effective. First, there must be a declaration by the President of a national emergency currently in effect. Here the President issued a Proclamation on Declaring a National Emergency Concerning the Novel Coronavirus Disease (COVID–19) Outbreak on March 13, 2020, effective retroactively to March 1. 2020. The President acted on authority of the National Emergencies Act and the declaration currently remains in effect. The “emergency area” is national and the “emergency period” is “throughout the duration of a public health emergency declared in response to the COVID-19 outbreak.” It is the Secretary of HHS who declares public health emergencies, and the language in the President’s declaration defers to the Secretary in setting the emergency period. Thus, the first condition for the waivers is currently satisfied, subject to termination and modification authority discussed below. For telemedicine waivers, the CARES Act grants the Secretary authority to grant waivers based on the Secretary’s determination of a public health emergency (see below) without the predicate requirement of a Presidential declaration of national emergency.

 Second, the Secretary of HHS under authority of Section 319 of the Public Health Service Act must issue a “determination” that a public health emergency exists. Such a determination opens up a host of options for the Secretary from making grants to conducting supporting investigations as to causes. Such a determination is also a prerequisite to the Secretary’s waiver authority under Section 1135. For waiver purposes, the Secretary’s determination as to emergency area and emergency period must fall within the shadow of the President’s declaration. Secretary Azar initially issued a determination of public health emergency on January 31, 2020 effective as of January 27, 2020. Importantly, the Secretary’s determination has a maximum effective term of 90 days, unless extended, and this factors into the discussion of when the waivers end. For this reason the Secretary subsequently issued a Renewal of Determination That a Public Health Emergency Exists on April 21, 2020 thereby tacking an additional 90 days onto the end of his January 27 determination.

Third, once the President’s declaration of national emergency and the Secretary’s determination of public health emergency are in place, the Secretary may issue waivers of specific rules. The waivers cannot continue beyond the duration of the President’s declaration or the Secretary’s determination. The waivers must also conform to any limitations placed on the identification of the emergency period or emergency area. Using his authority, Secretary Azar issued “blanket” waivers related to certain Stark sanctions on March 30, effective retroactively to March 1, and his broad COVID-19 Emergency Declaration Blanket Waivers for Health Care Providers on March 15, also retroactively effective to March 1. Besides these blanket waivers, the Secretary has been issuing many individual waivers requested by states, associations, and providers.

How Do Waivers End?

Blanket waivers end in several different ways, and because there is no uniform notice or unwind procedure in the statutes or regulations, timely transition back to the permanent rules could be a difficult process to manage for providers. Specifically:

1. Termination or Modification of the President’s Declaration. The declaration of national emergency can terminate or expire in three ways. First, the President can issue a proclamation terminating his own declaration at any time and specify the effective date. He can effectively modify the declaration by thus terminating it and reissuing a new proclamation of national emergency with a different scope of emergency area or emergency period. The National Emergencies Act imposes no prior notice requirement. Second, Congress may enact into law a joint resolution “terminating the emergency” as of a date specified. Finally, the President’s declaration of national emergency terminates automatically on the anniversary of the declaration, if within the 90-day prior to each anniversary date the President does not publish in the Federal Register and transmit to the Congress a notice stating that such emergency is to continue in effect after such anniversary. Thus, besides watching for affirmative actions by the President or Congress, providers must watch the calendar to determine if the President publishes notice of intent to continue the declaration beyond the one-year anniversary. Importantly the announcements and publicity surrounding termination of the declaration would likely not be couched in terms of terminating waivers, that simply being one impact of the termination of the declaration of national emergency.
2. Termination of the Determination of Public Health Emergency. Pursuant to the Public Health Services Act, the Secretary’s determination of public health emergency terminates upon the Secretary declaring that the emergency no longer exists or “upon the expiration of the 90-day period beginning on the date on which the determination is made by the Secretary, whichever occurs first.” Thus, the Secretary’s determination of public health emergency runs on a 90-day cycle starting January 27, 2020, which highlights the significance of the Secretary’s renewal on April 21 extending the original cycle to July 25, 2020. Again, there is no set prior notice requirement. It is worth noting the April renewal came only five days before the original 90-day cycle was set to expire and with it the effectiveness of the waivers. Again, providers and their associations need to watch for renewals of the determination of a public health emergency or indications they will not be forthcoming.
3. Termination or Modification of Waivers Themselves. Just as the Secretary has discretion in drafting and implementing waivers, he can modify and terminate them. Thus, even though the requisite declaration of national emergency and determination of public health emergency are in place, providers need to watch for amendment or termination of the waivers themselves. Again there is no set time period for notice, although the Stark waiver is express in stating termination of the blanket waivers will be prospective only.

The more troubling and ambiguous issue is whether the blanket waivers are themselves subject to 60-day life cycles unless renewed and whether they have been timely renewed. The enabling text in Section 1135 states that waivers terminate upon the termination of the President’s declaration, the Secretary’s determination or “the termination of the period of sixty days from the date the Waiver or modification is first published….” The clear implication there and in other CMS text regarding waivers generally is that the Section 1135 waivers terminate on the earliest of the three events, effectively imposing a maximum 60-day life cycle unless renewed. So far as can be determined, there has been no renewal of the two blanket waivers that were effective March 1, as such, unless the Secretary believes his April 21 renewal of the determination of a public health emergency has that effect. Since it refers to the Secretary’s authority to declare public health emergencies under the Public Health Services Act and not to his authority to issue waivers under Section 1135 of the Social Security, it is doubtful it serves this purpose. The Secretary and CMS are proceeding as if the waivers remain in effect, notwithstanding this apparent gap or uncertainty.

What Should Providers Do to Prepare?

Suggestions for providers, often with help from their associations, include:

1. Inventory the blanket and individual (if any) waivers on which they are relying for conduct and relationships that fall outside of the permanent rules. Because of the speed with which providers needed to reorganize operations around the COVID-19 paradigm, it is probable that some providers are acting according to ad hoc decisions and actions that strayed from Conditions of Participation (“CoPs”) or Stark exceptions, for example, that are not on their current list of formal waiver events. Now is the time to identify such arrangements so as to bootstrap compliance with needed waiver terms and plan for termination.
2. Confirm that all identified waivers are in compliance with required terms and thoroughly documented.
3. Assure each waiver arrangement with a third-party (particularly the Stark waivers) contains a workable unwind and return to full compliance with permanent rules provision. With the passage of time, is what was originally scripted workable, or should the terms be modified? The Explanatory Guidance to the Stark waivers notes flexibility in returning to original terms or scripting new (but compliant) post-waiver terms for waivers involving compensation arrangements.
4. Assure that all other waivers, such as for critical CoPs, have workable unwind arrangements in place and that responsibility to lead the unwind process is clearly assigned.
5. Follow and calendar the key dates in the life cycle and renewal requirements for the President’s declaration and the Secretary’s 90-day public health emergency determination. This should also include calendaring the Secretary’s 60-day cycle for renewing waivers when we receive clarity on how and when the Secretary is issuing these.