On Monday, March 14, 2011, the Department of Health and Human Services (HHS), the Centers for Medicare & Medicaid Services (CMS) and the Department of the Treasury jointly published proposed rules that provide a process for States to request waivers of provisions of the Patient Protection and Affordable Care Act (PPACA), including the controversial provision that requires almost every American to have some form of medical insurance beginning in 2014.

Termed “Waivers for State Innovation,” the process would allow a state to request waiver of all or any of the following PPACA provisions:

  • Part I of subtitle D of Title I, which relates to the establishment of qualified health plans;  
  • Part II of subtitle D of Title I, which relates to consumer choices and insurance competition through health benefit exchanges;  
  • Section 1402, which relates to reduced cost sharing for individuals enrolling in qualified health plans; and  
  • Sections 36B (relating to refundable credits for coverage under a qualified health plan), 4980H (relating to shared responsibility for employers regarding health coverage) and 5000A (relating to the requirement to maintain minimum essential coverage of the internal revenue code).  

The waivers are available in 2017, but the administration has announced it would support a bill in Congress to allow states to opt out of the healthcare reform law as early as 2014.

Although the waiver provision of PPACA (Section 1332) does not authorize waivers of related programs, the process established by these proposed regulations would permit states to submit a single waiver request for related waivers of requirements of the Medicare, Medicaid and Children’s Health Insurance Programs and also under any other waiver authority provided by other Federal Laws relating to the provision of health care items or services.  

A state’s waiver application must contain:

  • A comprehensive description of the state legislation and program that is offered in lieu of the PPACA provision sought to be waived;
  • A list of the PPACA provisions the State seeks to waive;
  • Analyses, actuarial certifications, data, assumptions, targets and other information sufficient to provide the Federal agencies with the necessary data to determine that the State’s proposed waiver will:
    • Provide coverage that is a least as comprehensive as the coverage of PPACA and offered through exchanges established under provisions of PPACA;  
    • Provide coverage and cost sharing protections against excessive out-of-pocket spending that are at least as affordable as PPACA would provide;  
    • Provide coverage to at least a comparable number of its residents as PPACA would provide; and  
    • Not increase the Federal deficit.  

Prior to submitting a waiver application the State must provide public notice and a comment period, which includes public hearings that provide interested parties with the opportunity to learn about and comment on the contents of the waiver application.

The federal agencies will perform a preliminary review of each waiver application and must complete this review within 45 days of the application’s submission. Within that timeframe the federal agencies will make a preliminary determination regarding whether the application is complete. The date that a preliminary determination is made that the application is complete will start a 180-day period when the federal agencies must provide public notice and comment period and make their final decision whether to approve the waiver application.

After federal approval, the state must conduct periodic reviews of the implementation of the waiver and file annual reports with the federal agencies. After the initial six months of the waiver’s implementation, and annually thereafter, states are required to hold public forums so that members of the public have an opportunity to comment on the progress of the waiver.

The federal agencies also are charged with performing periodic evaluations of the PPACA waivers, but the proposed regulations do not specify the intervals for these evaluations. The federal agencies are seeking comments on the issue of when these regular evaluations should be performed.