Update (Jan. 13, 2021):Certain of the
provisions discussed below that were never enacted, were enacted in a bipartisan
massive year-end spending bill. To review more about the massive spending bill,
our
Jan. 13 alert summarizes 15 key healthcare provisions included
in H.R. 133.
On May 15, 2020, the U.S. House of Representatives narrowly passed, by a
208 to 199 vote,
H.R. 6800, the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES
Act). House Democratic leadership introduced the HEROES Act as their “phase
four” 2019 novel coronavirus (COVID-19) stimulus and relief package. The
HEROES Act would provide $3 trillion in tax cuts and spending to address
the negative health and financial impacts of the COVID-19 pandemic,
including financial relief to state, local and tribal governments;
extensions to enhanced unemployment benefits; debt collection relief; and
direct cash payments to households.
The legislation is unlikely to pass in the Republican-controlled Senate,
however, and the White House
issued a statement
opposing the legislation. Although the HEROES Act probably will not become
law in its current form, certain provisions from the HEROES Act will likely
reappear in future legislation, potentially as part of a bipartisan
stimulus and relief bill late this summer. House Democratic leadership
probably will reference these provisions as its priorities in such
negotiations. Below are 12 of the House’s priorities contained in the
HEROES Act that healthcare providers should understand.
- Waive Cost-Sharing Obligations for COVID-19 Treatment.
Three of the four prior COVID-19-related legislative packages included cost
or cost-sharing obligation waivers or reductions for COVID-19 testing: the
Families First Coronavirus Response Act, Pub. L. 116-127 (Families First), signed into law on March 18, 2020; the
Coronavirus Aid, Relief, and Economic Security Act, Pub. L. 116-136
(CARES Act), signed into law on March 27, 2020; and the
Paycheck Protection Program and Health Care Enhancement Act, Pub. L.
116-139
(Enhancement Act), signed into law on April 24, 2020. However, the
cost-sharing provisions in the previous legislative packages did not
address preventing and treating COVID-19, just testing for the virus. The
HEROES Act would close this gap by eliminating certain out-of-pocket costs
for COVID-19 treatment and vaccines during the
public health emergency. Separate provisions of the HEROES Act address the
waiver of cost-sharing obligations under Medicaid state plans, Medicare
Parts A and B, Medicare Advantage, TRICARE, Department of Veterans Affairs
(VA) health plans, Federal Employee Health Benefit Program, and commercial
payor policies. The HEROES Act would also require coverage for drugs
intended to treat COVID-19 under Medicare Part D Prescription Drug Plans
and Medicare Advantage-Prescription Drug plans, without any cost-sharing
obligations. Patients treated at VA medical facilities would also not face
cost-sharing obligations in connection with preventative treatment or
services related to COVID-19, including vaccinations.
- Revise and Fund Additional Healthcare Provider Relief Grants.
The HEROES Act would provide an additional $100 billion to reimburse
hospitals and other eligible healthcare providers for eligible expenses and
lost revenue to prevent, prepare for and respond to COVID-19. The bill
would formalize and modify the provider relief fund that the U.S.
Department of Health and Human Services (HHS) established (most recently
described in a
May 7 alert) from funds in the CARES Act ($100 billion as discussed in a
March 27 alert) and the Enhancement Act ($75 billion as discussed in an
April 23 alert) by:
- requiring unobligated balances from the CARES Act and the Enhancement
Act to be expended consistent with this modified relief fund;
- limiting eligible providers to those that provide diagnostic or testing
services or treatment to individuals with a confirmed or presumptive
COVID-19 diagnosis (the current relief fund general distributions
effectively paid all Medicare providers);
- requiring applications at the end of each calendar quarter (beginning
with the already completed first quarter of 2020) to HHS to receive relief
fund payments;
- calculating such quarterly payments based on the sum of 100 percent of
eligible expenses plus 60 percent of lost revenue less
funds already received by the provider that will not need to be repaid from
past COVID-19-related legislation (e.g., received HHS provider relief fund
payments);
- limiting eligible expenses to 10 specific COVID-19-related costs
(including building or constructing temporary structures, leasing
properties, purchasing medical supplies and equipment, COVID-19 tests,
increased workforce and training, emergency operation centers, retrofitting
facilities and managing the surge in capacity) plus those items and
services HHS determines appropriate;
- providing a methodology for calculating lost revenue, which would be
paid through the quarterly payments only if a provider had at least a 10
percent revenue decrease; and
- prohibiting the use of funds to compensate certain high-income
individuals, described differently than the current HHS terms and
conditions (discussed in alerts on
April 17 and
April 27).
The bill would also prohibit balance billing and require eligible providers
to accept relief fund payments as full reimbursement for uninsured
patients.
- Provide Significant Aid to Certain Healthcare Providers. The HEROES Act would appropriate funds to various governmental agencies,
but specifically with respect to the healthcare industry, the HEROES Act
would aid healthcare providers, address underserved populations, fund
mental health support and expand access to telehealth and analytics
infrastructure. Specifically, the HEROES Act would provide:
- $7.6 billion to the Health Resources and Services Administration
to expand healthcare services for underserved populations, specifically by
providing funds to health centers and Ryan White HIV/AIDS clinics to
increase triage, care and mobile testing for patients who suffer from, or
who are at a greater risk of developing complications from, COVID-19;
- $2.1 billion to the Indian Health Service to benefit
Native Americans in preventing and responding to COVID-19, including, but
not limited to, supporting the provision of telehealth services and the
expansion of broadband infrastructure and technology;
- $3 billion to the Substance Abuse and Mental Health Services
Administration
to prevent and treat substance abuse and to provide resources to support
individuals who experience negative mental health impacts from the COVID-19
pandemic;
- $2.1 billion to the Centers for Disease Control and Prevention (CDC)
to provide funds and support federal, state and local public health
agencies as they continue to prevent and respond to COVID-19, specifically
addressing public health data surveillance and modern analytics
infrastructure; and
- $150 million to the Centers for Medicare & Medicaid Services (CMS)
to deploy reactive infection-control “strike teams” to support skilled
nursing facilities or nursing facilities promptly after such a facility
experiences three or more residents or employees being diagnosed with or
suspected of having COVID-19.
- Make Medicaid and Medicare Reimbursement Changes for Hospitals.
The HEROES Act would temporarily increase Medicaid disproportionate share
hospital (DSH) allotments by 2.5 percent for fiscal years 2020 and 2021.
This DSH increase would be in addition to the CARES Act delaying a
scheduled $4 billion in Medicaid DSH reductions for fiscal year 2020 and
additional reductions in fiscal year 2021 described further in a
March 27 legal alert. Congress suggested states prioritize DSH hospitals that have a higher
share of COVID-19 patients with these increased allotments. The HEROES Act
would also add a temporary Medicare outlier payment for inpatient hospital
COVID-19 discharges. Outlier payments are made to Medicare-participating
hospitals for cases with extraordinarily high costs. This COVID-19 outlier
payment would be in addition to the CARES Act 20 percent add-on payment for
Medicare COVID-19 inpatients. In addition, the HEROES Act would require CMS
to re-establish the “rural floor” in connection with the Medicare wage
index for hospitals (a portion of a hospital’s Medicare reimbursement
payment rates) in an all-urban state (i.e., a state where there are no
rural areas or where there are no hospitals classified as rural), which
would apply for discharges occurring on or after Oct. 1, 2021. Under the
HEROES Act, if passed, the Medicare wage index for hospitals in an
all-urban state could not be less than the minimum area wage index for the
fiscal year for hospitals in that same state. This would increase certain
urban state hospital payments, as under the “rural floor” rule, a hospital
in an urban area of a state cannot have a Medicare wage index value that is
lower than a hospital in a rural area of that same state and this would
provide such floor in such all-urban states.
- Increase Public and Nonprofit Hospitals’ Access to High-Speed Internet. In response to the COVID-19 pandemic, the HEROES Act would increase
public and nonprofit hospitals’ access to broadband service. The HEROES Act
would appropriate $2 billion to expand the Federal Communications
Commission’s Rural Health Care Program to partially subsidize nonprofit and
public hospitals’ broadband service and extend the subsidies beyond rural
hospitals.
- Provide Temporary Medicaid Support to States, Tribes and Providers.
The HEROES Act would further relieve the financial burden on states by
increasing the Federal Medical Assistance Percentage (FMAP) payments (i.e.,
the federal share of certain medical and social service programs) to state
Medicaid programs by a total of 14 percentage points from July 1, 2020,
through June 30, 2021. Families First (described in a
March 25 alert), as amended by the CARES Act (described in an
April 29 alert), increased the FMAP payments, starting Jan. 1, 2020, to state Medicaid
programs by a total of 6.2 percentage points. Under the HEROES Act, the
FMAP payments to state Medicaid programs would return to 6.2 percentage
points starting July 1, 2021, through the last day of the emergency period.
The HEROES Act would also include clarifying language providing that for
services received through an “Urban Indian organization” the FMAP would be
100 percent for July 1, 2020, through June 30, 2021.
For Medicaid providers and state governments, the HEROES Act would also
provide temporary protection from additional regulatory burden. As a way to
combat Medicaid spending, CMS issued a proposed rule titled
Medicaid Fiscal Accountability Regulation
(MFAR) in November 2019, which would reform provider reimbursements and
establish more provider and state reporting requirements. Many providers
and states oppose the complex MFAR proposal. Given the already mounting
financial stress on healthcare providers, especially those treating
patients in underserved areas, the HEROES Act would prevent HHS from
finalizing MFAR or finalizing any similar regulation until the end of the
current public health emergency.
- Revise the Medicare Accelerated and Advanced Payment Program.
The HEROES Act would revise CMS’ Medicare accelerated and advanced payment
program, described in a
March 30 legal alert. The program, now suspended by CMS for new requests from Medicare Part B
providers and suppliers (as discussed in this
April 28 alert), allowed most Medicare Part A and Part B providers and suppliers to
request up to 100 percent (or more for certain hospitals) of anticipated
Medicare payment amounts for a three- or six-month period as a repayable
advance. Such advances provided necessary liquidity for many providers. CMS
intends to recoup accelerated and advanced funds under this program by
offsetting Medicare claims beginning 120 days after the payment was made to
the provider or supplier, with interest charged as soon as 210 days after
the payment date. The bill would (a) give providers a full year before
offsetting claims, (b) limit recoupment to no more than 25 percent of the
future Medicare reimbursement claim, (c) give providers two years from the
first advance payment to repay the balance in full, and (d) reduce the
interest rate for remaining balances at the end of such period to 1 percent
(instead of an interest rate above 10 percent).
- Expand Access to Health Insurance. The HEROES Act would
allow individuals eligible for COBRA coverage to maintain their
employer-sponsored coverage after a layoff, reduction in hours or furlough
without having to pay premiums through January 2021. The bill also would
provide two special enrollment opportunities for individuals to obtain
health insurance — (a) during the emergency period for Medicare-eligible
individuals residing in an emergency area who have not previously enrolled
in Medicare and (b) during an eight-week enrollment period for an
Affordable Care Act exchange for individuals who are uninsured for whatever
reason. The bill would authorize veterans without a disability or health
insurance to qualify for special enrollment in the VA healthcare system for
a 12-month period. Finally, the bill would expand the Medicaid expansion
pathway provided for in Families First, which covered 100 percent of
testing costs, as discussed in a
March 19 legal alert. The bill would expand this pathway to include full federal coverage for
COVID-19 treatment and vaccines without cost sharing for certain Medicaid
enrollees.
- Expand Federal, State and Local COVID-19 Testing and Tracing Efforts. The HEROES Act would provide financial support, as well as increased
mandates, in connection with testing for and tracing the COVID-19 virus.
Economically, the HEROES Act would:
- provide $75 billion to support testing and tracing efforts to detect and
reduce the spread COVID-19 through a national contact tracing initiative;
- provide grants to states and localities to increase COVID-19 testing
capacities;
- authorize $6 billion for public health departments to test for and
reduce the spread of COVID-19; and
- authorize $1 billion to the CDC to expand and improve its infrastructure
and activities to address public health needs.
In addition to providing economic support to the public health sector, the
legislation seeks to implement requirements and standards to combat the
spread of COVID-19. Specifically, the HEROES Act would:
- retroactively require free coverage of COVID-19 testing to the start of
the declared public health emergency (i.e., earlier than the retroactive
date set forth in previous legislation);
- require HHS to update the COVID-19 strategic testing plan to address
deficiencies in the availability of testing, testing materials, supplies
and personnel;
- require HHS to establish and maintain a centralized testing information
website;
- require in vitro diagnostic test manufacturers to notify HHS with
information regarding the status of the test distributions;
- require states to report to HHS on a weekly basis with relevant
information on testing capacities and other testing-related information;
- require states to create and implement a searchable website listing the
location and contact information for COVID-19 testing sites;
- require laboratories to submit daily reports to HHS with respect to
processed COVID-19 tests;
- require the Government Accountability Office (GAO) to report on the
nation’s response with respect to the development and deployment of
COVID-19 tests; and
- require HHS to expand, enhance and improve public health data systems
used by the CDC.
- Provide $500 Tax Deduction for First Responders and Front-Line
Employees for COVID-19-Related Expenses. The HEROES Act would create numerous tax deductions (most are temporary)
for individual and corporate expenses in connection with preventing,
preparing for and treating COVID-19. Specifically, the HEROES Act would
allow first responders and COVID-19 front-line employees who performed at
least 1,000 hours of essential work during the applicable taxable year to
utilize a $500 above-the-line tax deduction on their 2020 tax returns for
uniforms, supplies, equipment and training courses. Various states,
including New York and Illinois, have introduced similar state legislation
that would allow tax credits and deductions to first responders and
front-line workers in light of the COVID-19 outbreak in their respective
states.
- Increase Workplace Safety for Healthcare and Other Workers Through
Emergency OSHA Standards. The HEROES Act would require the Occupational Safety and Health
Administration (OSHA) to issue emergency temporary standards for employers
within seven days of the enactment of the bill to protect paramedics,
emergency medical service workers, employees in the healthcare sector and
any other worker at “occupational risk of exposure” to COVID-19. These
emergency OSHA standards would require the development and implementation
of a comprehensive infectious disease exposure control plan to protect
healthcare workers from exposure to the pathogens that cause COVID-19. In
addition, the secretary of the Department of Labor would be required to
promulgate permanent standards to protect workers from infectious pathogens
within two years. As drafted, the bill would also prohibit employers from
retaliating against employees who report publicizing health and safety
hazards. A similar effort was included in the initial House passage of the
Families First bill (as described in a
March 17 alert) but was removed before final enactment.
- Provide Funds for Government Oversight Efforts and to Combat Fraud and
Abuse. With the significant amount of grants, loans and payments to various
healthcare providers during the COVID-19 pandemic, specifically through the
CARES Act and proposed in the HEROES Act, providers should expect targeted
audits and stringent governmental oversight in connection with these funds
to fight fraud, waste and abuse. The HEROES Act re-emphasizes the
government’s agenda to combat fraud and abuse and the inappropriate use of
COVID-19-directed relief funding as it would provide $75 million to the HHS
Office of Inspector General. Funding would also be appropriated to the GAO,
the Department of Justice and other agencies to conduct audits, investigate
and generally oversee the funds associated with the COVID-19 response and
recovery efforts.
Next Steps. The Senate’s Republican leadership has stated that the Senate will not
vote on the HEROES Act in its current form and has questioned the timing of
additional legislation related to COVID-19, preferring to “wait and see”
how the U.S. economy reacts to previous stimulus packages. At the same
time, the White House has indicated that President Trump would veto the
legislation. Consequently and as noted above, the HEROES Act likely
represents a starting point for negotiations with the House’s Democratic
leadership using the bill to indicate its members’ priorities. Past
COVID-19-related legislation has passed with bipartisan support after
negotiations between House Speaker Nancy Pelosi and Treasury Secretary
Steven Mnuchin, among others.
McGuireWoods will continue to monitor these legislative efforts and how any
future negotiations may incorporate some of the healthcare provider-focused
provisions discussed above in a future COVID-19 stimulus and relief bill.
Please contact the authors for additional guidance on how the provisions in
this legislation could affect the delivery of patient care and the
operation of healthcare providers.
McGuireWoods has published additional thought leadership related to how companies across various
industries can address crucial COVID-19-related business and legal issues,
and the firm’s
COVID-19 response team
stands ready to help clients navigate urgent and evolving legal and
business issues arising from the COVID-19 pandemic.