CMS Responds to COVID-19 National Emergency Declaration

March 16, 2020

On March 13, 2020, the Trump administration announced a series of waivers and regulatory flexibilities designed to help healthcare providers and states in responding to and containing the spread of the 2019 novel coronavirus (COVID-19). Following President Trump’s declaration of a national emergency under the Stafford Act, the secretary of the Health and Human Services is empowered to authorize the Centers for Medicare & Medicaid Services (CMS) to take protective steps through the waiver of certain Medicare, Medicaid and Children’s Health Insurance Program (CHIP) requirements under Section 1135 of the Social Security Act.

Section 1135 waivers are intended to ensure that sufficient healthcare items and services are available to meet the needs of individuals enrolled in Medicare, Medicaid, CHIP and other healthcare programs, and that providers who provide such services in good faith can be reimbursed and exempted from sanctions (absent any determination of fraud or abuse). These 1135 waivers typically end no later than the termination of the emergency period, or 60 days from the date the waiver or modification is first published, unless the secretary extends the waiver by notice for additional periods of up to 60 days, up to the end of the emergency period.

The following is a summary of the temporary blanket waivers CMS announced on March 13, that providers can utilize to provide the care communities need in this national emergency. The waivers relate to (1) expanding the capacity of hospitals to accept and treat patients with COVID-19; (2) reducing the procedural burdens associated with the provision of durable medical equipment and home health services; and (3) maximizing the number of providers available to treat ill patients through waivers related to the provision of telemedicine services and provider and supplier enrollment. CMS announced that each waiver will be retroactively effective as of March 1, 2020.

Expanding Hospital Capacity and Reserving Beds for the Severely Ill

In announcing the waivers, CMS Administrator Seema Verma stated that the agency’s actions will “allow hospitals to reserve beds for the most severely ill patients.” To achieve that goal, CMS is waiving the three-day hospitalization requirement to cover a skilled-nursing facility (SNF) stay under the Medicare program. This will allow patients who are ready to be discharged to move to an SNF and will free up needed hospital beds for acutely ill patients. In addition, CMS will allow certain beneficiaries who recently exhausted their SNF benefits to renew SNF coverage without first having to start a new benefit period through a qualifying hospital stay.

CMS is also providing more flexibility for rural critical access hospitals (CAH) to maximize inpatient care. CMS is waiving both the 25-bed limit for such CAHs and the 96-hour maximum length of stay for inpatients in such facilities. This will allow rural CAHs with more space in their facilities to accept additional patients and will eliminate the obligation of CAHs to transfer patients to other facilities after a four-day stay.

CMS is also issuing a waiver to allow acute-care hospitals to locate acute-care inpatients in a “distinct part” unit, which is a portion of an institution that is certified to provide SNF, inpatient psychiatric or inpatient rehabilitation services that is separate for certain purposes, assuming the beds in the distinct part unit are appropriate for the delivery of acute care. Under the waiver, the hospital may bill under the inpatient prospective payment system for the acute-care services rendered to a patient in a distinct part unit, with an annotation in the medical record to indicate that the patient is an acute-care patient being located in a distinct part unit because of the COVID-19 pandemic. CMS will also allow institutions to transition distinct part unit patients to the acute-care unit and bill under the applicable PPS where acute-care beds are appropriate for the patient.

CMS is also waiving certain payment requirements for inpatient rehabilitation facilities (IRFs). Specifically, CMS is allowing IRFs to exclude patients from the hospital or unit’s inpatient population for the purposes of calculating the applicable thresholds associated with the requirements to receive payment as an IRF if the IRF admits a patient solely in connection with the COVID-19 crisis and the patient’s medical record so indicates.

Finally, CMS will waive its average-length-of-stay rules for long-term acute-care hospitals (LTCHs) to allow them to serve additional patients during this emergency. Under non-emergent circumstances, LTCHs must maintain an average length of stay of greater than 25 days in order to receive enhanced reimbursement. CMS will exclude patient stays where an LTCH admits or discharges patients to meet emergency needs related to COVID-19 from its calculation of the average length of stay for LTCHs.

Reducing Procedural Burdens Related to DME and Home Health Services

Verma also clarified that CMS was addressing “federal requirements designed for periods of relative calm [to] not hinder measures needed in an emergency.” One waiver addressing this goal relates to replacements for damaged Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS). Under current law, when an item of DMEPOS is lost, destroyed, irreparably damaged or otherwise rendered unusable, to replace the item, a patient must meet with the ordering provider on a face-to-face basis, the provider must issue an order for the item, and the provider must document the necessity for the replacement. Medicare Administrative Contractors (MACs) now have the flexibility to waive these requirements. This will give Medicare patients the ability to obtain a replacement more quickly without further contact that may expose them or otherwise contribute to the spread of COVID-19. Suppliers still need to include a narrative description on the Medicare claim explaining why the equipment needs replacement.

Another CMS blanket waiver provides relief to home health agencies (HHAs) on the required timeframes related to Outcome and Assessment Information Set (OASIS) data transmission. OASIS is a CMS-required reporting system regarding quality items for each patient that addresses utilization, environmental factors, sociodemographic factors and health status. This waiver also allows MACs to extend the auto-cancellation date of requests for anticipated payment (RAPs) during emergencies for HHAs. RAPs allow an HHA to bill and collect on a 60-day episode for an HHA Medicare patient before the care is completed, which is critical for smaller HHAs in managing their revenue cycle.

Maximizing the Number of Providers Available to Treat Ill Patients

Verma also indicated that the CMS’ waivers would increase the number of providers available to treat ill patients. Specifically, CMS is waiving the Medicare and Medicaid coverage rules that require an out-of-state provider to hold a license in the state where the patient who is receiving services is located, assuming that the provider is licensed in good standing in another state. While this waiver does not override the state professional licensure laws themselves, in this context, states may either issue waivers or exercise enforcement discretion to allow licensed providers to practice across state lines. This will be critical to the delivery of telemedicine and telehealth services during the COVID-19 crisis.

Another set of CMS waivers concern provider enrollment. CMS is taking a number of steps to facilitate provider enrollment during the COVID-19 pandemic, including allowing temporary enrollment in the Medicare Part B program. These steps include:

  1. Establishing a toll-free hotline for non-certified Part B suppliers, physicians and non-physician practitioners to enroll and receive temporary Medicare billing privileges.
  2. Waiving the following screening requirements
    1. application fee — 42 C.F.R 424.514
    2. criminal background checks associated with FCBC (fingerprint-based criminal background checks) — 42 C.F.R 424.518
    3. site visits — 42 C.F.R 424.517
  3. Postponing all revalidation actions
  4. Expediting any pending or new applications from providers

CMS is also reducing the burden on healthcare providers by waiving certain rules regarding Medicare appeals (including those related to Medicare Advantage and Medicare Part D). These waivers include: an extension to file any appeal; waiver of timeliness requirements for requests for additional information to adjudicate the appeal; processing appeals despite incomplete appointment of representation forms but communicating only to the beneficiary; processing requests for appeals that do not meet the required elements using information that is available; and utilizing all flexibilities available in the appeal process as if “good cause” requirements are satisfied. This waiver will facilitate processing payment-related appeals for Medicare providers, with the goal of relieving administrative roadblocks to reimbursement and allowing providers to focus on patient care.

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While providers nationally may utilize these waivers and modifications to provide needed care and respond to the spread of COVID-19, past CMS guidance on 1135 waivers clarifies that providers should notify their State Survey Agency and the applicable CMS Regional Office regarding changes to operations. Such notification and reporting could be critical to ensuring that the provider will receive proper payment while operating under these blanket waivers. Further, while CMS took significant action here, further actions could be forthcoming as 1135 waivers may also address conditions of participation, penalties with respect to the federal Stark Law, Medicare Advantage provider participation rules and other Social Security Act authorities.

Please contact the authors for additional guidance on how these waivers and other COVID-19 considerations will affect the delivery of patient care and the related coverage and payment rules. McGuireWoods has published additional thought leadership related to how companies across various industries can address crucial coronavirus-related business and legal issues.

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