CMS has released final rules to govern the process for request and review of waivers of for states to operate demonstration projects under the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148). One final rule governs applications for waivers of PPACA requirements relating to qualified health plans, which may begin in 2017.
The other sets requirements for waivers under Social Security Act Sec. 1115, (1115 waivers), applicable to Medicaid, Medicare and the Children’s Health Insurance Program (CHIP), have been granted for decades. Unlike the process for state Medicaid and CHIP plans, however, there were no published regulations. Waivers were negotiated between states and CMS. The terms of the waiver were often shared on the CMS or a state web site, but the process was entirely up to CMS, and perhaps, sometimes unpredictable.
HHS has granted 1115 waivers to provide services targeted to particular groups, (patients with AIDS or traumatic brain injury), to provide emergency assistance after disasters like Hurricane Katrina, to test new models of payment or managed care, or new service models, like premium assistance under President Bush’s Health Insurance Flexibility program. Some 1115 waivers expanded eligibility to parents at higher incomes than otherwise allowed under regulations.
Beginning in 2000, CMS (then HCFA) allowed states to provide coverage of childless, nonpregnant, nondisabled adults using CHIP funds. Because the federal matching rate is higher for CHIP than traditional Medicaid, states were receiving more money for covering these adults than they were getting to cover children on Medicaid. The Deficit Reduction Act (P.L. 109-171) specifically withdrew the Secretary’s authority to grant new waivers to cover this group, but existing waivers were grandfathered in.The Children’s Health Insurance Program Reauthorization Act (CHIPRA) (P.L. 111-3), ended all waivers that used CHIP funds to cover childless adults as of December 31, 2009. States were permitted to apply for 1115 waivers to cover childless adults through Medicaid after that date. Waivers to cover parents with CHIP funds were terminated as of September 30, 2011.
CMS also had granted waivers allowing some states to provide CHIP to families with incomes above 300 percent of the federal poverty level (FPL). CHIPRA allows these waivers to continue, but states receive matching funds at the Medicaid rate.
Waivers under 1115 have been controversial. For example, Hawaii was granted a waiver to require individual eligible because of disability to receive their care through managed care organizations. The state did not need to seek public input. Beneficiaries sued both the state and federal agencies and asked for an injunction against implementation of the waiver.They raised multiple objections to the status of the managed care organization, its compliance with state laws governing both health insurance and managed care organizations; these claims survived a motion to dismiss. Although the agencies eventually prevailed, such a hard-fought battle is expensive and time consuming.
The new rules do not address standards for granting a waiver, rather, they require a public process. States must give notice and make the waiver request available on their web site at lest 30 days before presenting it to the federal government. They must hold two or more public fora at which the public may speak.
The application for the waiver must include detailed descriptions of the purpose and focus of the project, the hypotheses to be tested and how they will be evaluated, the number of beneficiaries likely to be affected. It must specify each requirement to be waived and each expenditure authority to be granted. The documents must report the issues that the raised during the comment period and how the state agency considered the comments in developing the application.
Within 15 days of receipt of a complete application, CMS will notify the state and begin the federal comment period. CMS must place notice of the receipt and status of the application on its web site and either link include the application or link to the appropriate page on the state’s web site.
Notice that the application is complete only begins the review process. CMS may still request additional information or set requirements to be met.The state also may make additions or changes to the application.
CMS must allow at least 30 days for comment and another 15 days to make its decision. All written comments must be posted on a CMS web site.
Within six months of implementation and annually thereafter,the state agency must hold another forum for the public to learn about the demonstration and comment on its progress. At least 30 days’ notice of the forum must be provided on the state’s web site.
The regulations also require the evaluation methodology to spelled out in detail. The research purposes of 1115 waivers are emphasized in the required quarterly and annual reports. Requests to change or extend the terms of the waiver also must be supported by an interim evaluation and an analysis of the results of the research. Many of the procedural requirements may be waived in response to a natural disaster. Perhaps the rules will deter applications to waive statutory requirements for solely for budgetary purposes.