Medicaid As A Public Health Responder: Washington State’s 1135 Waiver

By Sara Rosenbaum, Maria Velasquez, Morgan Handley, Rebecca Morris, and Alexander Somodevilla


On January 31, 2020, the Department of Health and Human Services’ (HHS) Secretary Alex Azar declared a nationwide public health emergency in response to COVID-19 under Section 319 of the Public Health Service Act, 42 U.S.C. § 257d. On March 13, 2020, President Trump declared a national emergency under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. § 5121, et seq. This combination of declarations activated CMS’ authority to grant waivers to states under Section 1135 of the Social Security Act, 42 U.S.C. § 1320b-5. Section 1135 Waivers provide states flexibility to temporarily waive or modify certain Medicare, Medicaid, and CHIP requirements to make available sufficient health care items and services to meet the needs of individuals enrolled in Social Security Act programs during an emergency. [1] As of today, Washington State reported the most total deaths due to  COVID-19 than any other state in the country (68 deaths). [2] While several legislative actions by Congress have begun to address critical public health and health care system issues [3], a number of states are taking further action to mitigate the impact of the virus in their communities while safeguarding first responders.[4]

Washington’s 1135 Waiver Request and Approval

In its request, Washington states several factors for consideration and justification for the 1135 waiver. Washington State is at the epicenter of the COVID-19 outbreak in the U.S., with “about 100 new patients […] identified each recent day,” [5] and the vast majority of deaths occurring from residents in nursing homes. As a result of being so hard-hit, the state is experiencing a shortage in the health care workforce, critical supplies, hospital beds, and equipment necessary to screen and treat COVID-19 patients, further stressing the health care delivery system and affecting the ability of providers to mount an effective and comprehensive response.

On March 19th, the Centers for Medicare and Medicaid Services (CMS) approved Washington’s 1135 waiver, with a retroactive effective date of March 1, 2020. [6] CMS states in its approval letter that in order to streamline these types of waivers, the agency has issued a number of blanket waivers for many requests relating to Medicare, [7] obviating the need for individual requests and approvals. Therefore, this approval only addresses Washington’s requests specifically related to the Medicaid program.

Provisions Approved by CMS

Provider Participation. Washington currently has the authority to rely on screening performed by other State Medicaid Agencies (SMAs) and/or Medicare when enrolling providers into their state programs. For providers not already enrolled with another State Medicaid Agency or Medicare, CMS will waive several screening requirements (e.g., application fee, in-state/territory licensure requirements, etc.) so that the state may provisionally and temporarily enroll the provider. For those located out of state and from whom Washington Medicaid participants seek care, enrollment is not required if the provider meets the criteria listed in the approval (e.g., NPI of the furnishing provider is represented on the claim). However, if the Medicaid participant is enrolled with the Medicaid program, two of the five listed criteria will be waived and there will be “no limit on the instances of furnished care or to how many participants in a 180-day period.” If the provider is enrolled in Medicare or with a state Medicaid program other than Washington, Washington may expedite enrollment of an out-of-state facility in order to accommodate participants displaced by the emergency. The approved waiver authority will allow Washington to enroll providers not currently enrolled by meeting the defined minimum requirements (e.g., must collect minimum data requirements in order to file claims), and allow the state to temporarily cease revalidation of providers who are located in Washington or are otherwise directly impacted by the emergency. These efforts also apply to the state’s CHIP program.

Waiver of Service Prior Authorization (PA) Requirements. With the approval of the 1135 waiver, CMS is allowing for waiver or modification of pre-approval requirements included in Washington’s state plan for particular benefits to permit services provided to beneficiaries, located in the geographic area of the public health emergency declared by the Secretary,  on or after March 1, 2020, through the termination of the emergency declaration for at least 90 days and up to 180 days.

Waiver for Pre-Admission Screening and Annual Resident Review (PASRR) Level I Level II Assessment for 30-Days. Level 1 and Level 2 assessments can be waived for 30 days, and all new admissions can be treated like exempted hospital discharges. After this time, new admissions with mental illness or intellectual disability should receive Resident Review when resources become available.

Waiver to allow evacuating facilities to provide services in alternative settings, such as a temporary shelter when a provider’s facility is inaccessible. The waiver will allow facilities (NFs, intermediate care facilities for ICF/IDDs, psychiatric residential treatment facilities, and hospital NFs) to be fully reimbursed for services rendered during an emergency evacuation to an unlicensed facility. After the initial 30 days, CMS would require the unlicensed facility to seek licensure or the evaluating facility to seek new placement.

State Fair Hearing Requests and Appeal Timelines. CMS approves the “modification of the timeframe for managed care entities to resolve appeals under 42 C.F.R. §438.408(f)(1) before an enrollee may request a State fair hearing to zero days in accordance with [specified] requirements.” If the state exercises this authority, appeals filed between March 1, 2020, and June 29, 2020 “are deemed to immediately satisfy the exhaustion requirement in 42 C.F.R. §438.408(f)(1) and allow enrollees to proceed directly to the state fair hearing.” The modification of the timeframe also allows enrollees to exercise their appeal rights to “allow for an additional 120 days to request a fair hearing when the initial 120th-day deadline for an enrollee occurred during the authorized period of the immediate section 1135 waiver.” Moreover, CMS approves a “modification of the timeframe in 42 C.F.R. §431.221(d) to allow beneficiaries to have more than 90 days to request a state fair hearing for eligibility or fee-for-service issues.” The state is also allowed additional flexibilities including suspending adverse actions for individuals for whom the state has completed a determination (consistent with 42 C.F.R. §431.211) and delaying scheduling fair hearings and issuing fair hearing decisions.

Public Notice and Tribal Consultation. The approval allows Washington State to waive public notice requirements for state plan amendments (SPAs) under 42 C.F.R. 447.205 for changes that provide or increase beneficiary access to items and services related to COVID-19 only (e.g., cost-sharing waivers, payment rate increases, or amendments to ABPs adding services or providers) and “would not be a restriction or limitation on payment or services or otherwise burden beneficiaries and providers, and that are temporary, with a specified sunset date related to COVID-19.” States, however, are encouraged to make all relevant information publicly available. Moreover, states have the flexibility to modify their tribal consultation timeframe, “including shortening the number of days before submission or conducting consultation after submission of the SPA.”

Provisions Requested by Washington State

Although CMS’ approval provides Washington with critical flexibilities that will allow it to promptly respond to the COVID-19 pandemic ravaging its state, it left out many of the provisions included in Washington’s initial request. As noted earlier, CMS has made available several blanket waivers for which approvals are not necessary. These include specific Medicare requirements relating to Skilled Nursing Facilities, Critical Access Hospitals, housing acute care patients in excluded distinct part units, durable medical equipment, care for excluded inpatient psychiatric unit patients in the acute care unit of a hospital, care for excluded inpatient rehabilitation unit patients in the acute care unit of a hospital, supporting care for patients in long-term care acute hospitals, Home Health agencies, provider locations and licensure requirements, provider enrollment, and Medicare appeals in Fee for Service, MA and Part D. [8] For Medicaid and CHIP, 1135 waivers and other existing legal authorities are available to provide flexibility in making changes to eligibility and enrollment (i.e., appeals and fair hearing rights), benefits and cost-sharing (e.g., waiving prior authorization requirements), and provider workforce (e.g., allow facilities to provide services in alternative settings). [9] The following are provisions included in the waiver request submitted by Washington State but not otherwise specifically addressed in the subsequent approval issued March 19th.

Telehealth Provisions

Washington seeks to reduce telehealth restrictions that may be burdensome to providers and dampen access to care during the COVID-19 pandemic by addressing issues around infrastructure, legal liability, and restrictions on eligible patients:

Infrastructure. The elimination of Medicare restrictions on telehealth licensing and geographic restrictions for originating sites can facilitate the provision of care by providers, whose locations do not meet such requirements and who seek to serve patients while minimizing the risk of community spread. The provision allowing for, and requiring clarity around, billing parity between telephonic and telehealth services for Medicaid and Medicare patients can facilitate the work of providers who lack video capabilities and whose patients do not require video services. The request would allow providers to use Medicaid financing, grants, or other financial resources to purchase equipment necessary (e.g. laptops, cell-phones, and cell-phone minutes for patients) for providers and patients can help rapidly equip both parties to transfer from face-to-face to telehealth forms of service.

Legal Liability. The provision seeking indemnification for emergency telehealth services would shift the legal risks associated with such services to the government from providers, encouraging provider participation in the provision of such care. Washington also seeks to clarify providers’ ability to conduct deductible- and co-pay- free telemedicine screenings to allow for patients who fear the associated costs to access screening while protecting providers from the Civil Monetary Penalty law or the anti-kickback statute. The relaxing of HIPAA requirements would also facilitate such provider provision of telehealth services. Waiving sanctions and/or financial penalties for specific HIPAA privacy regulations around obtainment of patient consent to speak with friends and family and distribution of privacy practice notices would allow providers to rapidly respond via telehealth in quickly evolving situations in which patients need immediate services, lack the capacity to make such decisions, and/or access such content. Waiving security requirements around video communication will allow providers who lack secure platforms to quickly reach patients via readily available platforms like Facetime and Skype. Waiving HIPAA EDI code set requirements would allow the state to create codes and/or add specificity to existing codes to facilitate government service tracking and rate setting, for both telehealth and traditional services.

Patient Eligibility Restrictions. The provisions allowing providers to bill for telehealth services for both new and established patients, can (1) help providers reach patients without a usual source of care and those who are typically healthy but who are showing symptoms of coronavirus, (2) reduce the risks to providers, and (3) mitigate provider shortages. Washington specifically requests (1) the applicability of telehealth CPT codes extend to both new and established patients, (2) the elimination of the requirement that providers may only bill for telehealth for Medicaid or Medicare patients they have billed in the past three years, and (3) the ability for providers to bill for evaluation and management for services delivered via telehealth or telephone for first-time patients. 

Medicaid and CHIP

Eligibility and Enrollment. Importantly, the waiver would loosen eligibility rules to allow more people to qualify for Medicaid and stay on the rolls, assuring a source of payment if anyone who qualifies falls ill with COVID-19. If approved, eligibility for childless adults would jump from the Affordable Care Act’s threshold at 135% of the federal poverty level to 200%. The requirement that qualified non-citizens maintain green card or lawful permanent resident status for five years before becoming eligible for Medicaid would be waived. The state also seeks otherwise impermissible federal matching funds for unspecified public health activities.

The waiver would also make eligibility and enrollment processes easier. Applicants could self-attest to all eligibility criteria except citizenship and immigration status when documentation is not available. Persons qualifying in the Aged, Blind, or Disabled category would be presumptively eligible and receive LTSS based on an abbreviated level of care assessment, which the state says would help move beneficiaries out of hospitals and free up beds for COVI-19 surges. The state could also extend redetermination timelines, keeping existing beneficiaries on the rolls longer; and streamline eligibility, getting people covered faster. Additionally, the state would classify people quarantined outside of Washington as “temporarily absent” in order to maintain their coverage.

Statewideness, Comparability, and Amount, Duration, and Scope Requirements. In order to target localities and beneficiaries hit by the virus, the state requests a waiver of the statewideness, comparability, and amount, duration, and scope requirements. The waiver would permit the state to deviate from the reasonable promptness requirement with respect to LTSS but lift limits on enrollment. The waiver would also permit HCBS to be provided in an inpatient setting, allowing home health care workers to accompany beneficiaries to the hospital if need be. Additionally, home health benefits would be extended where beneficiaries lose access to an adult daycare center closing due to the risk of infection, and home health payment rates would increase.

Financing. The waiver request would also relax some financing rules, both to shore up hard-hit providers and account for coming uncertainties. For example, the request would waive actuarial soundness, opening the door for a later waiver providing essential payments to vulnerable practices where providers must be quarantined, and permit hardship and supplemental payments to stabilize providers. The waiver raises the need for increased funding for tribal health systems. The state requests that CMS not apply its longstanding policy of budget neutrality to this waiver.

Administration. Several administrative burdens would be waived or be satisfied with delayed timelines. Public notice would be waived. Level of care, care planning, and other supporting documentation requirements would be waived, as would face-to-face encounter requirements, and timely filing requirements. Timelines for reports, surveys, notifications, and licensing visits would all be delayed.

1115 Waivers and ACHs. Washington is also asking CMS for immediate approval of an 1115 budget neutrality corrective action plan, in order to “ensure critical Accountable Communities of Health (ACH) and Delivery System Reform Incentive Payments (DSRIP) are stabilized during this time.” Given that the provider community in Washington is quickly turning to ACHs for help during this crisis, the state is asking for the “establishment for a regional COVID-19 response initiative to allow for Medicaid match to support emerging issues and necessary community efforts to mitigate provider burden, community distress, and misalignment across community response efforts.” Under the waiver, ACHs would function as a regional response hub, that coordinates across clinical and community partners to facilitate engagement, education, provider relief and alignment of response strategies.

Washington proposes several options to best allow ACHs to carry out this mission. One such option would involve supporting providers from a business perspective, assisting them with the development and implementation of strategies that ensure not only long-term sustainability but also adequate patient access throughout the crisis. This would include revenue support for providers who must temporarily close their doors due to deep cleaning for staffing shortages.

Another option involves assisting providers with much of the administrative burdens resulting from this pandemic, so they can devote their attention to providing necessary care. This includes assisting in staying up to date on reimbursement exceptions, providing guidance on HIPAA and telehealth encounters, and disseminating information regarding payer and state agency expectations, to ensure eventual provider reimbursement as well as safe and efficient patient care.

An additional option would focus on community-based care coordination on COVID-19 activities. This can be done by working with traditional and non-traditional providers, such as community health workers. Furthermore, the option would permit community-based coordination to expand its role to support additional activities, such as meals on wheels; transportation of providers or individuals to ensure the delivery of services; assistance to homeless individuals or greater diversion activities to help individuals retain their homes; delivery of food or clothing, or “any other need identified by an ACH that assists individuals and the community with remaining healthy and safe while avoiding the need for more intensive medical and behavioral services.”

Other options include continuing community outreach and education to providers, organizations, and individuals on the latest information regarding COVID-19; permitting the state to request federal funds ahead of scheduled releases to address immediate COVID-19 needs; allowing payment for flexible services such as assistance to individuals whose housing is at risk and phones for individuals to access behavioral health services if telehealth is the primary method of service delivery.


CMS’ approval of Washington’s waiver request points to a specific model of 1135 waivers the agency deems appropriate in ensuring sufficient health care items and services are available to Medicare, Medicaid and CHIP enrollees in an emergency area. With their request, Washington emphasized that Medicaid is critical in responding to public health emergencies such as COVID-19, and while not all waivers requested under differing authorities were addressed through the blanket waiver or in the approval, it can serve as an example for states seeking to remodel Medicaid in response to a crisis. As of today, Washington and Florida [10] have been approved for an 1135 waiver, with California [11], Iowa [12], and Arizona’s [13] requests pending with CMS.

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