McDermottPlus Check-Up: August 14, 2020 - McDermott+Consulting

McDermottPlus Check-Up: August 14, 2020

This Week’s Dose

Negotiations between Congress and the White House over a coronavirus (COVID-19) package stalled last weekend, prompting President Trump to take executive action to attempt to extend some expired relief provisions.


Negotiations on COVID-19 Relief Have Stalled. The biggest sticking point between Democratic leaders and the White House is federal spending, not program disagreements. House Democrats pushed for something close to the $3 trillion Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, which the House passed in May. Many Senate Republicans remained reluctant to spend more than $1 trillion. The two parties largely agree on the programs to fund to channel the money into the economy. Though some lawmakers continue to say they want a deal, it now appears further action may be on hold until next month. The likely driver for action will be the next legislative deadline, the end of the fiscal year (September 30), when lawmakers will have to reach a deal to fund the government. COVID-19 relief will be a factor in those negotiations, though House Speaker Nancy Pelosi (D-CA) has said she does not want to tie COVID-19 relief to an already contentious government funding battle.


White House Took Executive Action on COVID-19 Relief. President Trump took a series of executive actions to address expiring relief policies. These include an executive order directing federal agencies to take steps to reduce evictions and memoranda to extend student loan deferment, a delay of federal payroll taxes and federal unemployment benefits. The executive action on unemployment strives to extend the benefit at a rate of $400 per week, down from the $600 per week benefit created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, but requires states to pay 25% of the cost. Many states may be unwilling to cover their portion of the benefit. The other presidential directives are comparably flawed and may be practically ineffective. Additional questions remain about the constitutionality of the President’s actions, and court challenges are possible. On Monday, the President also announced that he is working on an executive order to protect individuals with preexisting conditions. However, when confronted with existing protections provided by the Affordable Care Act, the President quickly noted that it would be largely symbolic in nature, and that the order would be intended to show Republicans’ commitment to protecting people with preexisting conditions. Expect the President to campaign on these messages as the presidential election heats up.

CMS Announced Community Health Access and Rural Transformation (CHART) Model. The new model provides details following President Trump’s August 3 Executive Order on Improving Rural Health and Telehealth Access. The model has two tracks. Under the Community Transformation track, the Centers for Medicare and Medicaid Services (CMS) will select up to 15 Lead Organizations, single rural community entities, that will receive upfront cooperative agreement funding of up to $5 million and operational and regulatory flexibilities. CMS anticipates the Notice of Funding Opportunity for the Community Transformation track will be available in September on the Model website. Under the ACO Transformation track, CMS will select up to 20 rural-focused Medicare Shared Savings Program (MSSP) accountable care organizations (ACOs) to receive advanced payments. This model builds on the success of the ACO Investment Model, which allowed certain rural ACOs to receive pre-payment of their shared savings. The Request for Applications for the ACO Transformation track will be available in early 2021. The model continues to advance the Administration’s theme of encouraging pre-payment, capitation, and greater levels of financial risk for providers.

HHS Updated Provider Relief Fund (PRF) Guidance and Application Process. The Department of Health and Human Services (HHS) opened an application process for providers that missed the June 3 deadline to apply for funding from the PRF General Distribution, and for hospitals with a change in ownership in 2020. The application deadline is August 28, 2020. In addition, HHS provided additional information on a previously announced $5 billion distribution for nursing homes. Of this $5 billion, $2.5 billion will be designated to support increased testing, staffing and protective equipment needs at long-term care facilities. The remainder of the distribution will be linked to nursing home performance. This distribution was initially announced by CMS on July 22. It is not entirely clear how either funding component will be distributed, and specific details on the distribution are not yet included on the PRF website. Additional money for the PRF was one of the policies on the table for the next COVID-19 relief bill. With action on that bill stalled, HHS is likely to face increased pressure to distribute the approximately $50 billion that has yet to be allocated. More information on the PRF—including eligibility criteria, upcoming deadlines and additional distributions—can be found in our Toolkit.


CMS Approved New Hampshire Reinsurance Waiver. The approved Section 1332 waiver will allow New Hampshire to operate a state-based reinsurance program effective January 1, 2021, through December 31, 2025. The program will reimburse insurance providers that offer comprehensive coverage in New Hampshire’s single risk pool individual market for a percentage of certain claims. New Hampshire expects the program to lower insurance costs in the individual market by approximately 16% on average and to increase enrollment among unsubsidized individuals by approximately 6%. New Hampshire is the fourteenth state to receive CMS approval to create a reinsurance program. According to CMS, the programs have resulted in statewide average premium reductions ranging from 3% to 40%.

Quick Hits

  • Democratic leaders of the House Energy and Commerce Committee sent a letter requesting a briefing from the Centers for Disease Control and Prevention (CDC) on the impacts of COVID-19 on children.
  • Republican leaders of the House Energy and Commerce Committee sent letters to the CDC and Environmental Protection Agency requesting information on the agencies’ COVID-19 surveillance efforts, including the use of wastewater as a surveillance tool.
  • Bipartisan leadership of the House Energy and Commerce Committee requested a briefing from HHS on how the pandemic has exacerbated the substance use disorder crisis.
  • Senators Tammy Baldwin (D-WI) and Chris Murphy (D-CT) sent a letter urging the Congressional Budget Office to reevaluate its analysis of the use of short-term, limited-duration insurance plans.
  • HHS announced that it will distribute $1.4 billion from the PRF to almost 80 free-standing children’s hospitals beginning next week. Eligible hospitals will receive 2.5% of their net revenue from patient care. A preliminary state-by-state breakdown on validated distributions for next week is available here.
  • HHS released a new fact sheet on Operation Warp Speed, the Administration’s vaccine development effort.
  • Oklahoma withdrew its Medicaid block grant proposal, following passage of a ballot measure in June that directed the state to expand Medicaid without any additional restrictions or requirements such as a block grant.

M+ Resources

  • To provide additional financial support for Medicare providers responding to COVID-19, CMS expanded the Accelerated and Advance Payment Programs. Now, approximately four months after the first payments were distributed, early applicants are approaching the date when Medicare will begin recouping payments through zeroed out claims, absent congressional action. Our report details the current status of the program and considerations for providers.
  • Our consultants offer their key takeaways from the calendar year (CY) 2021 Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System proposed rule on this week’s episode of the Health Policy Breakroom.
  • Those interested in learning more about the CY 2021 Medicare Physician, Hospital Outpatient and Ambulatory Surgical Center proposed rules can join McDermottPlus for a one-hour webinar on Tuesday, August 18, 2020, at 1:30 PM ET. Register here.
  • Find our PRF Toolkit, along with all McDermottPlus analysis related to COVID-19, on our COVID-19 Resource Center.

Next Week’s Diagnosis

The Senate will technically remain in session instead of formally adjourning for August recess, but no activity is scheduled. The House also released an updated calendar with no votes scheduled until the week of September 14.


For more information, contact Mara McDermott, Rachel Stauffer, Emma Zimmerman or Katie Waldo.

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