COVID-19: Health System Policy and Guidance on Selected Issues (as of March 16, 2020)

Commentary on the issues at hand:  Meeting the challenge continues to place demands - unprecedented in our time - on healthcare providers, exacerbated by public confusion and delays in a coordinated response. As health systems mobilize to meet the increased demands for access, testing and treatment from the COVID-19 pandemic, they do so at a time of critical healthcare workforce staffing shortages, supply shortages and changing economics. And for many academic medical centers in particular, at a time when their T/Q facilities are already full.

Both Emergency Departments (EDs) and acute care settings may experience a surge of utilization not only from people displaying symptoms associated with the virus, but also from the worried well, as well as patients experiencing other health problems who are unable to seek care from their usual source due to disruptions in the delivery system. EDs around the country are implementing alternative approaches for triaging, testing and isolating patients to protect both infected and non-infected individuals, as well as staff.

In addition, most people who become critically ill from COVID-19 infection will need ICU-level care, including not only space and equipment (including ventilators) but also attention from highly trained staff.  The need for this level of care can rapidly outpace availability. As in the ED, these staff will need to be protected to avoid becoming infected themselves and transmitting infection to their patients and other contacts.

Hospitals will need to clear enough inpatient and ICU beds and take additional steps, such as establishing temporary wards and moving patients to other settings (likely outside the hospital), and ensure an adequate supply of personal protective equipment to manage the surge of critically ill patients. Many hospitals are already taking steps of preemptive cancellation of elective admissions and procedures and expedited discharge of non-critical patients, which will have serious financial repercussions. Hospitals are already working with outpatient providers to expand their use of telehealth to shift as much care as possible out of the hospital or outpatient clinic, and many are already doing so absent clear guidance on reimbursement.  Additional considerations may include a need to develop a regional bed capacity and triage plan, expanded external triage and drive-through testing, new protocols to transfer patients (including to nontraditional settings), alternate staffing flexibilities, creative approaches to child care for medical staff, and establishing virtual learning collaboratives to rapidly share best practices and support hospitals that cannot staff 24-hour intensivist coverage.

However, perhaps the most pressing concern for providers is the health and availability of the clinical and health system support workforce.  Quarantine or isolation protocols that will need to be applied to health system staff for exposure from infected patients coupled with frontline clinical delivery staff falling ill themselves have the potential to decimate a hospital.  There is an inevitable worst-case tipping point at which a hospital will no longer have enough staff to remain fully operational. While much focus has been placed on expanding access to COVID test kits, there is an equal urgency for the medical community to develop and implement a rapid diagnosis and evaluation process for healthcare and emergency response workers so critical decisions can be made on providing safe and adequate care.

In addition, health systems are large employers – sometimes the largest in their communities - and will face the same myriad of employment issues related to COVID-19 that other industries face. 

Of course, acute care providers are not the only providers that are impacted by and involved in the response. Older individuals and medically fragile individuals are at greatest risk from COVID-19. Wherever these individuals are gathered (for example, skilled nursing facilities or dialysis centers), staff will need to exercise extreme caution to avoid introducing COVID-19 and to identify emerging cases quickly.

Home health aides in particular are a critical link, as they provide essential care that helps medically fragile people avoid hospitalization. For some patients, home healthcare is literally a life or death requirement. Social distancing policies and school closures could keep all home health providers from visiting their patients, either because they are barred from doing so or because they need to care for school-aged children.  Home health aides in particular, however, often receive low wages and limited protections such as child care or paid sick leave.  They may also feel pressured to work when symptomatic, due to financial necessity or a sense of obligation.

Strong and consistent communication between post-acute care, long-term care, home health providers and hospital systems will be more critical than ever.

Many healthcare providers have invested heavily in population health management for the purpose of entering into value-based payment arrangements or risk-based contracting. These population health management tools can be used to optimize the outpatient care of medically fragile individuals, helping them to avoid the hospital, decrease their risk of infection and smoothly transition to care settings, allowing more rapid discharge to free up hospital beds.

In sum, every health system is facing difficult decisions for patients and staff alike.  With the announcement of the federal National Emergency Declaration on Friday, March 13, both guidance and questions are rapidly emerging.

To help our clients and friends navigate a complex and rapidly changing policy and market landscape, Manatt Health is providing this summary of current developments or considerations related to selected issues for health systems as of Monday, March 16, 2020.  Please note that these dynamics are extremely fluid at this time.

New guidance is being released daily (if not hourly) as the federal government, state governments and commercial insurers offer new resources and enhanced flexibility in response to the crisis.   Manatt is continuing to monitor developments and will seek to identify opportunities for hospitals and health systems to be proactive in their preparations and response and to inform policy discussions.

Included in this briefing: 1. High-level summary of federal funding authorizations to date and implications for providers; 2. An update on telehealth policies; 3. An update on on-campus and off-campus testing approaches by some health systems and states; and 4. A dynamic list of issues and concerns we are hearing from providers.

I. Summary of Federal Funding Authorizations to Date

March 6, 2020 - Coronavirus Preparedness and Response Supplemental Appropriations Act

• On March 6, President Trump signed an $8.3 billion emergency supplemental appropriations bill for the federal prevention, preparation and response to fight COVID-19.
• The majority of funding included in this funding package was directed to the agencies within the Department of Health and Human Services (HHS), with the largest “pot” of funding going to the Office of the Secretary – Public Health and Social Services Emergency Fund (PHSSEF).  (See the Attachments to this document for details on funding allocations.)
• The new dollars that go to state, local and provider efforts from this particular package will in large part be delivered as an infusion to several existing funds and grant programs, including the PHSSEF and Public Health Emergency Preparedness cooperative agreements (plus $100 million that will be distributed by Health Resources and Services Administration (HRSA) via Section 330 Primary Health Care grants to community health centers).
• The Act importantly included a provision to temporarily make telehealth services more widely available to Medicare enrollees in their homes, removing geographic barriers and waiving originating site regulations.
• Importantly, nothing in this funding package addresses how much money would or could go to reimburse medical providers for expenses related to COVID-19.
  • Health systems in high-need areas may be able to access the CDC’s facility renovation or emergency construction funding.
  • In some cases, health systems may be able to access lab-related funding for authorized testing labs (but details have yet to be released).
  • It remains to be seen how HHS will allocate funding included in this authorization for supplies outside of public health programs and facilities.

Manatt will be continuing to track the guidance associated with and implementation of this funding.

March 13, 2020 - COVID-19 National Emergency Declaration

Manatt has been analyzing the implications and opportunities under the Emergency Declaration and will be releasing a summary shortly. However, from our first review on Saturday, provisions of interest and importance to health systems will include (likely among others):

• For Medicare and Medicaid, the Declaration temporarily waives requirements that out-of-state providers be licensed in the state where they are providing services when they are licensed in another state. Within Medicare, this waiver should allow providers licensed in one state to provide services to patients in another state (including via telehealth). Within Medicaid, this waiver grants federal flexibility, but there may be other state-level requirements or limitations on providers from other states practicing in a state in which they are not licensed (e.g., requirements related to being an enrolled Medicaid provider) which states could choose to waive. Within commercial plans, coverage and reimbursement will be plan-specific. (See Telehealth section below for more information.)
• CMS is waiving requirements to allow acute care hospitals to house acute care inpatients in excluded distinct part units, where the distinct part unit’s beds are appropriate for acute care inpatients.
  • The Inpatient Prospective Payment System (IPPS) hospital should bill for the care and annotate the patient’s medical record to indicate the patient is an acute care inpatient being housed in the excluded unit because of capacity issues related to the disaster or emergency.
• CMS is also allowing acute care hospitals with excluded distinct part inpatient psychiatric units that, as a result of a disaster or emergency, need to relocate inpatients from the excluded distinct part psychiatric unit to an acute care bed and unit.
  • The hospital should continue to bill for inpatient psychiatric services under the Inpatient Psychiatric Facility Prospective Payment System for such patients and annotate the medical record to indicate the patient is a psychiatric inpatient being cared for in an acute care bed because of capacity or other exigent circumstances related to the hurricane.
  • This waiver may be utilized where the hospital’s acute care beds are appropriate for psychiatric patients and the staff and environment are conducive to safe care. For psychiatric patients, this includes assessment of the acute care bed and unit location to ensure those patients at risk of harm to self and others are safely cared for.
• CMS is waiving the requirement for a 3-day prior hospitalization for coverage of a skilled nursing facility (SNF) stay, providing temporary emergency coverage of SNF services without a qualifying hospital stay for those people who need to be transferred as a result of the effect of a disaster or emergency.
  • In addition, for certain beneficiaries who recently exhausted their SNF benefits, it authorizes renewed SNF coverage without first having to start a new benefit period.
  • Second, CMS is waiving 42 CFR 483.20 to provide relief to SNFs on the time frame requirements for Minimum Data Set assessments and transmission.
• States will now also be able to submit an 1135 Waiver,¹ which allows for, among other things:
  • Waiving prior authorization requirements in fee-for-service programs
  • Permitting providers located out of state/territory to provide care to another state’s Medicaid enrollees impacted by the emergency
  • Temporarily suspending certain provider enrollment and revalidation requirements to increase access to care
  • Temporarily waiving requirements that physicians and other healthcare professionals be licensed in the state in which they are providing services, so long as they have equivalent licensing in another state

In addition, related to but not expressly part of the Emergency Declaration, the Secretary is directed to expedite approval of state requests to expand testing and state/local lab approvals (similar to the FDA agreement with New York last week².

Expected Early Week of March 15 – New Stimulus Bill

Shortly after midnight on Friday night/Saturday morning, the House passed a new stimulus package (363-40 vote).  The President tweeted his support.  In anticipation of this legislation, Senate Majority Leader Mitch McConnell (R-KY) cancelled this week’s recess to give the chamber time to consider and pass additional stimulus funding.  A Senate vote and passage is expected early in the week - but timing (and negotiations) remains fluid.

Manatt has been analyzing the House bill over the weekend and will provide more in-depth review of any final legislation.  However, at a high level, funding is anticipated to ensure reimbursement for providers, ensure access to free testing for all (including uninsured), provide up to $1 billion in food aid and extend sick leave benefits.

Of particular note for healthcare providers, the bill passed in the House includes:

• Appropriation of $1 billion into the Public Health and Social Services Emergency Fund for the National Disaster Medical System to pay provider claims for health services consisting of SARS-CoV-2- or COVID-19-related items and services for uninsured individuals.
• A requirement that all commercial insurance cover, and impose at no cost-sharing for, in-vitro diagnostic products for SARS-CoV-2 or diagnosis of COVID-19, including the administration of these products and office visits, urgent care center visits, and emergency room visits related to testing for COVID-19.
• A provision to waive cost sharing under the Medicare Part B and Medicare Advantage program for certain visits related to testing for COVID-19. Includes administration of the diagnostic test, the doctor’s visit, hospital services, ER visits, SNFs and home health services related to the COVID-19 diagnostic test.
• Coverage at no cost-sharing of COVID-19 testing under Medicaid and CHIP. 
  • The Medicaid and CHIP provisions also include a state option to provide coverage for the uninsured for these services through the Medicaid program.
  • Would also provide states with 100% Federal Medical Assistance Percentages (FMAP) for all the services related to the cost sharing for those states taking up this state option.
• Provisions to waive cost-sharing for COVID-19 testing with respect to TRICARE, coverage for veterans, and coverage for federal civilians as well as contracted services provided under the authority of the Indian Health Services.

Many questions remain, such as what would trigger an episode (the COVID-19 test or earlier health system interactions, such as for an influenza panel prior to a COVID test), how payment will actually work and if any further flexibilities will be added to expand lab access.

Note, another stimulus funding package is expected related to the broader economy as well as health system funding over the coming days as discussions are underway in Congress.

II. Telehealth

Expanded use of telehealth has emerged as a national priority. The federal government, state government and commercial health plans have taken various steps to expand coverage and payment for telehealth services and to reduce restrictions on its use. Many provider organizations are expanding use of telehealth, initially for screening and treatment triage for the worried well and people with lower risk levels, independent of reimbursement decisions. Providers are also seeking to rapidly expand their telehealth capacity to care for other (non-COVID) patients who need access to services but would be better served at home (patients who are immunocompromised, patients with chronic conditions, patients with an underlying condition, etc.).

Medicare

The Coronavirus Preparedness and Response Supplemental Appropriations Act passed on March 6, 2020, (as outlined above) included a provision to make telehealth services more widely available to Medicare enrollees in their homes (by removing geographic and origination regulations) during a declared emergency.

• Under long-standing law, Medicare covers telehealth for beneficiaries enrolled in fee-for-service coverage only under limited circumstances. Most notably, statutory restrictions limit coverage generally to telehealth services that originate from healthcare facilities in non-urban areas or areas with physician shortages, and not from patients’ homes. By regulation, the Centers for Medicare & Medicaid Services (CMS) has declined to pay for telehealth services delivered by telephone, other than some “virtual check-in” services. While recently enacted laws have slowly chipped away at these restrictions by giving more telehealth coverage options to enrollees in Medicare Advantage plans, and to individuals with end stage renal disease (ESRD) or substance use disorders, the overall limitations have continued to apply.
• The Act makes two changes to existing Medicare telehealth coverage policies under emergency circumstances:
  • First, the Act allows CMS to extend coverage of telehealth services to beneficiaries regardless of where they are located. This means even if the enrollee is not in a healthcare facility or located in a non-urban or physician shortage area, a beneficiary can receive a covered telehealth visit. This new provision should allow beneficiaries to access telehealth from their homes or from other community locations.
  • Second, the Act allows CMS to extend coverage to telehealth services provided by “telephone” but only those with “audio and video capabilities that are used for two-way, real-time interactive communication” (e.g., smartphones). HOWEVER, to deliver the services, as currently structured, a provider or member of the provider’s practice must have treated the patient within the past three years.

The new telehealth coverage is not a permanent change to the Medicare program. Instead, it is a waiver flexibility that federal officials may implement in emergencies, adding to the toolbox of other emergency authorities available to regulators under federal law. We are awaiting additional guidance from CMS on enactment, coding and claims processing.

Medicare Advantage Plans

As of Tuesday, March 10, CMS introduced significant new flexibilities for Medicare Advantage (MA) and Part D plans to waive cost-sharing for testing and treatment of COVID-19, including emergency room and telehealth visits during the crisis.

Specifically, MA plans are required to:

• Cover Medicare Parts A and B services and supplemental Part C plan benefits furnished at non-contracted facilities…which requires that facilities that furnish covered A/B benefits have participation agreements with Medicare.
• Waive, in full, requirements for gatekeeper referrals where applicable.
• Provide the same cost-sharing for the enrollee as if the service or benefit had been furnished at a plan-contracted facility.
• Make changes that benefit the enrollee effective immediately without the 30-day notification requirement at § 422.111(d)(3). Such changes could include reductions in cost-sharing and waiving prior authorizations.

In particular related to telehealth, MA plans may waive or reduce enrollee cost sharing for telehealth services. MA plans may also provide enrollees access to Medicare Part B services via telehealth in any geographic area and from a variety of places, including beneficiaries’ homes during this period of emergency.

Under the March 10 guidance, MA plans were authorized to waive or reduce enrollee cost-sharing for COVID-19 laboratory tests or for other services to address the outbreak.  Under new legislation expected to pass the Senate this week (week of March 15), they will be required to waive such cost-sharing.  MA plans may also waive prior authorization requirements, prescription refill limits, and restrictions on home or mail delivery of drugs.

Also in the guidance, CMS outlined special requirements for health insurers in states that have declared a state of emergency: MA insurers in those states must immediately cover Medicare Parts A, B and C benefits at out-of-network facilities and provide the same cost-sharing for the plan member as if the service had been provided at an in-network facility. Plans also must waive requirements for referrals.

Medicaid

Federal guidance for Medicaid programs has long permitted telehealth as a reimbursable service but gives broad discretion to states on whether and how to implement telehealth programs in their state.  Most states provide some forms of reimbursement for telehealth. However, depending on the state, reimbursement may be limited to (at minimum) video telehealth services (either expressly excluding telephonic consultations or not, providing clarity either way); there may be some limitations on originating site, and often telehealth visits are reimbursed at a lower level than face-to-face care. There may also be limits on which provider types can conduct telehealth visits. There may be differing policies across fee-for-service Medicaid and Medicaid Managed Care Plans in a given state.

Importantly, the Emergency Declaration gives states broad authority – via the Section 1135 waiver – to waive provider requirements or establish temporary flexibilities during a time of emergency, which can include telehealth provisions.

Private Payers

There is significant variability, especially for commercial payers, about which providers in a network may be reimbursed for telehealth services (for example, some national plans have contracts with third-party vendors to provide televisits for their members). As of March 13, most of the national carriers have announced that they will waive costs for telemedicine visits, with differing language about the nature of the telemedicine visits (such as all virtual visits versus visits for urgent care needs), with self-insured plans able to opt out. It is important to note that the specifics about who can provide these televisits vary by plan. So far, the policies appear to be limited in most cases to in-network providers or contracted vendors delivering synchronous virtual care (live videoconferencing).

Some states require that contracts between health insurers or health maintenance organizations and telehealth providers must be voluntary and must establish mutually acceptable payment rates or payment methodologies for services provided through telehealth.   However, payment parity for commercial plans, which would require that they cover telehealth services at the same rate as in-person services, is not common.

Additional Guidance of Note – High-Deductible Health Plans (Non-Telehealth)

On March 11, the Internal Revenue Service (IRS) published guidance on COVID-19 testing for high-deductible health plans.  The IRS said health insurers  can voluntarily pay the full cost of coronavirus testing and treatment for participants in high-deductible health plans, even if the customer has not yet met the deductible. The IRS notice also applies to self-funded plans, where the employer collects premiums and pays claims. Many employers hire insurance or other companies to administer these plans, so employees may not realize they are self-funded. There continues to be significant concerns that individuals with high-deductible health plans will delay seeking medical care because of out-of-pocket cost concerns. https://www.irs.gov/pub/irs-drop/n-20-15.pdf.   Again, under new legislation expected early this week, commercial plans will be required to waive cost sharing.

III. Drive-Through COVID-19 Testing

A number of provider organizations, one state and at least one public health department have started “drive through” testing programs for COVID-19, with more programs expected to open daily over the next two to three weeks.  These planned vehicle-based testing efforts are likely to be supplemented by additional testing operations in parking lots as indicated by the Trump administration during the President’s national emergency declaration announcement, but there are no details as yet about exactly where they will be located and how these new sites will be staffed and managed (which may potentially offer opportunities for partnership with local health systems).

At this time, there is also no uniform guidance or singular approach to payment.  The administration announced that all patients (including uninsured) who require testing are expected to be able to obtain testing without charge, and the companion bill currently being negotiated between the House and Senate is expected to establish universal payment for testing.  Laboratory authorization will continue to be managed through the CDC and FDA, under the FDA’s Emergency Use Authorization (EUA) authority.  While some additional federal funding has been allocated for public health departments - which is anticipated to include public lab labor costs – there remains a lack of clarity around a unified payment approach for the additional frontline clinical workforce needed – including at provider organizations – to manage testing.  (Though it is again important to note that guidance and FAQs are currently being developed.)

Emerging models of vehicle-based triage include both parking lot-based, tented “drive through” locations, often on hospital campuses, and appointment-based “drive up” models adjacent to ambulatory clinics.  Several provider organizations are coupling drive-through testing with online resources, including patient registration and paperwork requested in advance via web portals, and are negotiating payment individually with commercial payers and states. In most models to date, patients require an appointment and a clinician order (which might be gained via a televisit or in person with a primary care provider) to be indicated for testing first.

Many hospitals have opened 24-hour COVID telephonic hotlines to help triage cases that may require testing and help with patient communication.  In addition, many hospitals have set up tented external triage centers adjacent to their EDs to test some patients in isolation.

Known drive-through testing programs (as of March 15, 2020) include (there are likely others):

• University of Washington (Seattle, WA) – UW opened a drive-through site in a parking garage of its UWMC-Northwest campus on March 6 and is looking to open another location. The testing center has three medical tents on an open floor of the parking garage.  Testing was initially limited to university healthcare workers, first responders and some students with COVID-19 symptoms but has expanded to include a broader patient population.
• Kaiser (San Francisco area, CA) – Kaiser began drive-through testing on March 11 in San Francisco and also launched temporary “pop up” car-based testing sites in San Leandro and Redwood City. The pop-up locations are not being marketed to the public and are appointment-based sites requiring Kaiser referral and were established in an effort to reduce ED volumes. Kaiser has said it is planning to test the concept in other markets as demand warrants.
• Mayo Clinic (Rochester, MN) – Drive-through testing opened March 12 in the parking lot of a Mayo family clinic site. Patients are required to participate in a phone screen prior to arriving for testing. Mayo has said it currently has capacity for 200-300 tests per day in Minnesota and is planning to roll out drive-through testing at its other campuses.
• The Cleveland Clinic and University Hospitals (Cleveland, OH) – The two health systems have partnered to offer drive-through testing beginning March 14. The two organizations jointly announced (prior to the national emergency declaration) that tests will be provided without copay and regardless of ability of the patient to pay, and testing volume will be split between the two organizations’ labs. In addition, The Cleveland Clinic is encouraging patients to use its virtual visit platform as a first step, before face-to-face visits with primary care practitioners.
• Advocate (Chicago, IL) – Advocate began piloting drive-through testing in the parking lot of one of its suburban hospitals on March 12. Drive-through testing is limited to patients displaying mild symptoms who are not indicated to require hospital evaluation and who have obtained a testing authorization number from their local health department.
• M Health Fairview (Minneapolis, MN) – Opened drive-up testing at four clinic locations beginning March 12. Patients must pre-register for an “appointment” and call the clinic from their car when they arrive. A testing team then comes out to meet the car.
• Hartford HealthCare (Hartford, CT) – The system is opening drive-up testing; patients must call its 24-hour hotline and potentially have a telehealth visit prior to being given instructions for drive-up testing.
• UCLA Health (Los Angeles, CA) – The five major medical centers across the University of California are all rolling out COVID testing. UCLA has opened a satellite tented drive-up testing site.
• State of New York – New York opened its first drive-through testing center on March 13 in New Rochelle, NY, a community identified as a COVID-19 hotspot and currently subject to a “containment area.” Under special permission of the FDA in its third Emergency Use Authorization (EUA) since the outbreak began – and the first EUA for a state – New York has authorized 28 public and private labs across the state to run tests.³  The New Rochelle site is located on an island park; it will have six lanes and is expected to process at least 500 patients per day. Patients must call to schedule an appointment and pre-register for the testing.
• Colorado Department of Public Health (Denver, CO) – Believed to have been the first public health department-run vehicle-based free testing center.⁴ Individuals must have an order from a physician to be tested. The program was temporarily shut down due to overwhelming demand, and the Department instituted a new protocol that only the first 150 cars will be able to use the drive-through location each day until more capacity can be developed.

On March 13, the Governor of Texas announced that drive-through testing will open in San Antonio, Dallas, Houston and Austin, but details have not yet been provided on where they will be located and how they will be managed.

Screening and EMTALA

Released March 9 and updated March 11, CMS issued detailed guidance for providers that included on-campus and off-campus screening: Emergency Medical Treatment and Labor Act (EMTALA) Requirements and Implications Related to COVID-19.

IV. Unanswered Questions and Considerations for Health Systems

Finally, many health systems have asked for guidance on issues that have not yet been resolved through current federal or state guidance and/or comments on areas of high need for provider organizations to inform ongoing advocacy efforts.  Some initial (but in no way comprehensive) thinking follows:

• Financial and operational support to continue operations
  • Mechanisms to cover the increased costs associated with higher staffing levels, backfilling staff when necessary and special infectious disease units needed to care for patients under investigation for or with confirmed COVID-19 infection
  • Offsets for canceling elective surgeries and other procedures to preserve medical supplies and ensure adequate capacity for COVID-19 patients
  • Offsets for transition to telehealth and reduced overall system volumes
  • Support for reimbursement delays

• Financial and resource support for operational costs in the face of supply shortages and the need for more personal protective equipment (PPE) and other supplies
  • While some funding has been globally allocated for supplies, it is not yet clear how health systems will directly access high-need items or how to ensure quicker production
• Support for housing, care and monitoring of patients who do not require hospitalization but do require medically monitored isolation
• Enhanced reimbursement (such as in the form of payment parity between in-person and televisits) and support and funding for telephone triage visits (not just video) either as fee-for-service or enhanced care management
• Planning for temporary sites to increase the availability of hospital beds if/as needed
• In the event of a surge, may need to consider regional care planning and moving/triaging of patients based on bed-type needs over patient preference and removal of anti-trust barriers to collaborative planning and greater flexibilities in managed care networks
• Alternate child care solutions for hospital workers as schools across the country continue to close

We welcome your feedback and comments on additional issues and most pressing concerns. Please email bpawlak@manatt.com.

Contacts:

Brenda Pawlak, Managing Director, Manatt Health: bpawlak@manatt.com, 202-585-6523
Randi Seigel, Partner, Manatt, Phelps & Phillips, LLP: rseigel@manatt.com, 212-790-4567
Jared Augenstein, Director, Manatt Health: jaugenstein@manatt.com, 212-790-4597
(lead on telehealth)

Manatt website:https://www.manatt.com/COVID-19

ATTACHMENTS

Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 (P.L. 116-123)

Background: On March 6, President Trump signed an $8.3 billion emergency supplemental appropriations bill for the federal prevention, preparation and response to fight COVID-19. The bill contains both international and domestic provisions and specifies that funding could be disbursed over a multi-year period, although the periods vary by agency and account, with most funding available either through September 30, 2022, or September 30, 2024.

The legislation primarily makes funding available for federal and state response, vaccine development, international aid and some provider resources. There are extremely limited provisions under which providers would be able to directly access or “draw down” funding. The new dollars that go to state, local and provider efforts will in large part be delivered as an infusion to several existing funds and grant programs, including the Public Health and Social Services Emergency Fund, Public Health Emergency Preparedness cooperative agreements, and Section 330 Primary Health Care grants to community health centers.

The majority of the funding, over $6 billion, is for domestic efforts, but the funding package includes $1.25 billion in funding to the Department of State, the U.S. Agency for International Development, and the Small Business Administration for global health programs and assistance, economic support, and disaster loans.

Summary of Domestic Provisions

Of the $6.7 billion designated for the domestic response, the majority ($6.2 billion) is for the Department of Health and Human Services (HHS):

• $3.4 billion for the Office of the Secretary – Public Health and Social Services Emergency Fund (PHSSEF). These funds are designated for HHS’s public health emergency account and the funding infusion comes with significant spending flexibility for the Secretary. This funding will be available until 2024. This funding can be applied toward vaccine development but also additional supplies, including masks and personal protective equipment. Specifically, the funding includes:
  • $3 billion available immediately under a broad charge of response, including research and development of countermeasures; purchase of vaccines, therapeutics, diagnostics, and medical supplies; manufacturing innovations; and facility construction, alteration, renovation to improve preparedness and response capability at the state and local levels.
  • $300 million in contingency funding for the purchase of vaccines, therapeutics and diagnostics to be used if deemed necessary by the Secretary of HHS.
  • $100 million for the Health Resources and Services Administration (HRSA) for grants under the Health Center Program “to prepare for and respond to coronavirus.”
  • Remaining funds may be leveraged by HHS to bring in staff for critical work relating to coronavirus or transferred to the Centers for Disease Control and Prevention (CDC) and the National Institutes of Health (NIH) to augment their coronavirus response activities. Up to $2 million will also be transferred to the HHS Office of the Inspector General (OIG) for oversight of the coronavirus response funds managed by HHS agencies under the legislation.
• $2.2 billion for the Centers for Disease Control and Prevention (CDC), which includes:
  • $950 million for state and local public health departments to be used for hiring, purchasing equipment and improving data analytics. Half, or $475 million of this funding, must be allocated within 30 days of the enactment of the bill (or by April 5, 2020).  It is expected that much of this funding will go toward staffing, overtime and lab equipment as testing ramps up.
    • While CDC has flexibility to use a variety of grants or co-operative agreements to make these funds available, the primary funding mechanism is likely to be the Public Health Emergency Preparedness co-operative agreement, which has provided resources to public health departments since 2002. The legislation guarantees that each of the existing 62 Public Health Emergency Preparedness grantees⁵ will receive at least 90% of their fiscal year 2019 funding levels ($4 million) and directs that $40 million must be allocated to tribes and tribal providers. Each grantee must submit a spending plan to CDC within 45 days of enactment, or by April 20, 2020.
  • $300 million for the replenishment of the Infectious Diseases Rapid Response Reserve Fund, which supports U.S. efforts to respond to an infectious disease emergency.
  • Additional funding appropriated under this heading may be used for grants for the construction, alteration or renovation of non-federally owned facilities to improve preparedness and response capability at the state and local level.  (No guidance has been given yet as to how those grants might be developed and distributed.)
• $836 million for the National Institute of Allergy and Infectious Diseases (NIAID), which conducts research on therapies, vaccines, diagnostics and other health technologies, at the National Institutes of Health (NIH).
  • $10 million is apportioned to the National Institute of Environmental Health Sciences for worker training to prevent and reduce exposure of hospital employees, emergency first responders and other workers at risk of exposure.
• $61 million for the Food and Drug Administration (FDA) for the development and review of vaccines, therapeutics, medical devices and countermeasures; address potential supply chain interruptions; and support enforcement of counterfeit products.

In addition, the funding package includes a waiver removing restrictions on Medicare providers (under Medicare Fee-for-Service) allowing them to offer telehealth beneficiaries regardless of whether the beneficiary is in a rural area (though there are some restrictions). CMS estimates this will cost $500 million.

_{¹When the President declares an emergency through the Stafford Act or National Emergency Act, and the Secretary declares a Public Health Emergency, the Secretary is authorized to waive certain Medicare, Medicaid and Children’s Health Insurance Program (CHIP) authorities under Section 1135 of the Social Security Act.}

_{²https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-gives-flexibility-new-york-state-department-health-fda-issues}

_{³https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-gives-flexibility-new-york-state-department-health-fda-issues}

_{⁴https://www.colorado.gov/pacific/cdphe/covid-19-testing}

_{⁵The recipients are public health departments in all 50 states, 4 major metropolitan areas (Chicago, Los Angeles County, New York City, and Washington, D.C.), and 8 U.S. territories and freely associated states (American Samoa, Guam, U.S. Virgin Islands, Northern Mariana Islands, Puerto Rico, Federated States of Micronesia, Republic of the Marshall Islands, and Republic of Palau).}