How the End of the COVID-19 PHE Will Impact Lab Compliance

The COVID-19 pandemic has had a direct and significant impact on just about every aspect of lab operations, including compliance. While testing demands and shortages of staff and equipment have created historic challenges, labs have at least been given the latitude to operate in a relaxed regulatory environment. Now, after more than two years of unprecedented relief, reality is set to return. Here’s a briefing on what the inevitable end of the public health emergency (PHE) will mean for lab compliance.

The Section 319 PHE

In its initial response to the COVID-19 outbreak, the executive branch of the federal government exercised its emergency powers under a series of different laws. That includes the PHE declared by the Secretary of the U.S. Department of Health and Human Services (HHS) under Section 319 of the Public Health Service Act on January 21, 2020. It’s the Section 319 PHE that gives the government the authority to issue many of the key emergency measures directly affecting COVID-19 lab testing, coverage, and reimbursement during the pandemic.

Free COVID-19 Tests & Vaccines

Perhaps the most noteworthy example is free COVID-19 testing. On March 25, 2020, Congress adopted relief legislation called the Coronavirus Aid, Relief, and Economic Security Act (CARES) mandating that insurers provide diagnostic and treatment-related COVID-19 tests to beneficiaries with no prior authorization or cost sharing. This was later extended to COVID-19 vaccinations. In 2022, the Biden administration upped the ante by requiring first private payors and later Medicare to provide free over-the-counter rapid COVID-19 tests for use by asymptomatic people for self-screening. Millions of people have taken advantage of the emergency coverage rules to get free COVID-19 tests and vaccinations. When the PHE ends, people without insurance may no longer be able to get free tests and vaccinations via Medicaid. And those covered by Medicare and private insurance will likely have to pay deductibles, copayments, or other cost sharing amounts.

Section 1135 Waivers

Another key law triggered by COVID-19 is Section 1135 of the Social Security Act, which gives the HHS power to enact what are called blanket waivers to standard regulatory requirements during a PHE to provide greater flexibility and access to health care. During the PHE, the Centers for Medicare and Medicaid Services (CMS) has issued a series of blanket waivers to make it easier for labs to provide and patients to access COVID-19 tests. Kickback Relief: Blanket waivers directly affecting lab compliance include those temporarily relaxing Anti-Kickback Statute and Stark Law restrictions allowing labs to enter into otherwise problematic arrangements for the sole purpose of providing COVID-19 diagnosis and treatment, which opened the door for:

• Participation in Accountable Care Organizations (ACOs);
• Remuneration for services or items at above or below fair market value;
• Free or below fair market value rent for leased office space or equipment, e.g., giving a physician free telehealth communications equipment;
• Hospital medical staff incidental benefits above the usual limits;
• Nonmonetary compensation above the usual limits;
• Loans at below fair market value interest or at terms not offered to non-referral sources; and/or
• Referral by a physician in a group practice for medically necessary designated health services furnished by the group practice in a location that doesn’t qualify as a “same building” or “centralized building.”

Telehealth: Although lab testing isn’t provided via telehealth, by increasing physician visits and overall utilization, the relaxation of Medicare telehealth coverage rules has resulted in dramatic increases in test orders.

Coverage Rules

In addition to Section 1135 blanket waivers, during the PHE, CMS has issued regulatory waivers temporarily expanding coverage of COVID-19 testing for Medicare and Medicaid beneficiaries, including:

• Waiving the requirement of an order from a treating physician or other practitioner and accepting orders from any healthcare professional authorized to order tests under state law not only for COVID-19 tests but other tests required as part of coronavirus testing;
• Waiving the requirement of a written practitioner’s order for purposes of Medicare reimbursement for the COVID-19 test;
• Allowing pharmacists to work with practitioners to evaluate beneficiaries, collect samples, and perform COVID-19 tests to clear the way for drive-through testing;
• Paying hospitals and practitioners to evaluate beneficiaries and collect lab samples for SARS-CoV-2 tests, and providing separate payment when it’s the only service the patient receives; and
• Paying for serology and over-the-counter tests.

What Happens When the PHE Ends?

Contrary to popular belief, the government doesn’t have to “declare” an end to the PHE. Under the law, a PHE lapses automatically after 90 days unless it’s renewed. The current PHE has remained in effect because the Trump and Biden administrations have renewed it several times. The most recent renewal of the Section 319 PHE came on April 15. That means the PHE would end on July 15 if it’s not renewed. HHS secretary Xavier Becerra has suggested that the administration would provide 60 days’ notice before allowing the PHE to expire. Accordingly, if no such warning is issued by May 15, the PHE will likely get renewed again on July 15. But that may well prove to be the last renewal. The end of the PHE may not necessarily spell the immediate end of the temporary legal changes made to clear the way for COVID-19 testing and care. Thus, the federal government’s new multi-trillion-dollar funding bill provides for extension of expanded telehealth coverage rules until at least November. HHS can also keep other policy changes in effect after the PHE ends. But that’s unlikely to be the case with the Section 1135 blanket waivers. The agency is actually more likely to eliminate some of the blanket waivers before the PHE ends. In fact, the rollback might already be underway. In the first week of April, CMS announced that it was eliminating certain waivers and regulatory flexibility it provided for skilled nursing facilities, inpatient hospices, intermediate care facilities, and end-stage renal disease (ERSD) facilities under the PHE, expressing a desire to get back to normalcy as soon as possible.