Waivers of Federal Health Care Program Restrictions to Aid Providers in Responding to COVID-19 Pandemic

March 20, 2020

The COVID-19 pandemic has affected health care providers in many ways. While hospitals and other facilities and professionals are preparing to meet the challenges presented by this event, they should be aware of certain blanket waivers to regulations offered by the U.S. Department of Health and Human Services to aid those efforts, and of the legal and regulatory compliance issues that might arise out of those waivers.

One issue about which regulators and hospital leaders have expressed concern is the capacity of institutions to admit and treat the numbers of patients who might need care for COVID-19-related illnesses.

  • To help critical access hospitals, which are generally small hospitals located in rural areas, the Federal government has waived the Medicare requirements that such a hospital be limited to 25 beds, and that patients’ length-of-stay be limited to 96 hours. Although this would certainly benefit a rural community suffering from a coronavirus outbreak, critical access hospitals should keep in mind that most states license hospitals to operate a defined number of beds, and that some states require certificates of need in order to expand the number of beds in a hospital. Thus, before expanding the number of beds, critical access hospitals should consider and address state-level licensing issues, even if such an expansion would not run afoul of Medicare’s rules, which would under other circumstances put at risk the hospital’s ability to obtain Medicare payment on a reasonable-cost basis.
  • To help acute-care hospitals, which are paid by Medicare under a prospective payment system, the Federal government has waived certain restrictions against housing acute-care patients in certain “distinct part units” that are otherwise excluded from the prospective payment system. Even so, acute-care hospitals will need to take care to ensure that the beds into which coronavirus patients might be placed are appropriate for acute-care inpatients. They will also need to be sure to document in the patients’ records that the patients were placed in the excluded distinct part unit due to capacity issues. Finally, hospitals should note that this waiver does not mean that patients can be housed in areas not otherwise established for patient care purposes.
  • Similarly, CMS (Centers for Medicare and Medicaid Services) is allowing acute-care hospitals to relocate patients receiving inpatient psychiatric services in “excluded distinct parts” to other acute-care units of the hospital in the event of a disaster or emergency. As discussed above, a hospital doing so would still need to ensure that the acute-care unit is conducive to safe care for psychiatric patients, including an assessment that a patient who is at risk of harm to him- or herself or others can be safely cared for in the alternative location. CMS has waived similar restrictions with respect to the relocation of patients receiving inpatient rehabilitation services in distinct part units.
  • To help address the possible overflow of patients from acute-care hospitals, CMS will allow long-term-care hospitals to exclude patients admitted in order to meet the demands of the emergency from their calculations of their average length-of-stay. Under other circumstances, taking patients who were not expected to stay at least 25 days would put at risk the long-term-care hospital’s eligibility to receive payment under the CMS program for these hospitals. CMS has waived a similar requirement with respect to discharges from hospitals to skilled nursing facilities, allowing Medicare payment without a three-day prior hospitalization for patients who need to be transferred as a result of a disaster or emergency.

In order to ease the movement of trained professionals across state lines in order to address the COVID-19 crisis, CMS has also issued waivers related to individual providers who participate in the Medicare program. Namely, CMS has temporarily waived the requirement that providers be licensed in the state where they are providing services, if they are licensed in another state. It is very important, though, for professionals to recognize that this waiver applies only to licensure requirements for Medicare and Medicaid payment purposes. It does not necessarily mean that physicians or other licensed professionals are allowed to practice medicine in states in which they are not licensed. Before doing so, practitioners should make all necessary arrangements with the licensing authorities in the state in which they would like to practice, prior to providing any professional services. Failure to do so could result in discipline for the unlicensed practice of medicine, nursing, etc., regardless of the CMS waiver, which again applies only for Medicare and Medicaid payment purposes.

Hospitals and other health care providers are on the front lines of the COVID-19 pandemic. They need all the help they can get, including temporary relief from certain restrictions found in the Federal health care programs. However, they must be aware that all other requirements, of state licensing authorities, third-party payors, accrediting organizations, etc., continue to apply and so must be taken into account in planning to care for patients afflicted by the coronavirus.

Please contact Mike Davidson or your regular Lewis Rice attorney if you need any guidance with respect to the waivers offered by the Federal government or any other legal issue related to your response to the COVID-19 epidemic.

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