McDermottPlus Check-Up: July 24, 2020 - McDermott+Consulting

McDermottPlus Check-Up: July 24, 2020

This Week’s Dose

Senate Republicans planned to introduce their proposed coronavirus (COVID-19) relief bill but, as of this writing, have not resolved differences with the White House. The Trump Administration won two federal appeals court cases related to short-term, limited-duration insurance plans and site-neutral hospital payments. The Secretary of Health and Human Services (HHS) extended the COVID-19 public health emergency.


Negotiations Continue on Next Relief Bill. Rumors continue to fly as to what will be included in the next COVID-19 relief and stimulus package, and when a deal will ultimately come together. On July 23, a draft topline summary agreement between Senate Republicans and the White House surfaced, and included an additional $25 billion for testing, $26 billion for vaccine research, distribution and use, $25 billion for the Provider Relief Fund (PRF), and an extension of the recoupment period for the Advance and Accelerated Payment Program. The draft also extended some of the telehealth flexibilities made available during the pandemic through 2021, though the proposal did not specify which flexibilities would be extended. This is still very much a draft and subject to change before being formally unveiled. Even then, it will be reflective of Republican priorities only. Expect negotiations on this bill to continue through early August as House Democrats push to have their priorities, as reflected in the HEROES Act, included.

Lawmakers Eye Telehealth Expansion. House Ways and Means Committee Republicans released draft legislation to make permanent some of the COVID-19 telehealth waivers and flexibilities. The bill would permanently remove restrictions that limit patients’ ability to access telehealth services from home, lift restrictions on the use of telehealth for Federally Qualified Health Centers and Rural Health Clinics, expand the types of providers who can offer telehealth services and allow for Medicare reimbursement of audio-only telehealth visits. Senator Ron Wyden (D-OR), Ranking Member of the Senate Finance Committee, also released a bill this week that would expand the ability to provide routine medical care and mental health services via telehealth in addition to lifting restrictions around the location of the patient. The proposals add to a growing list of bipartisan bills aimed at broadening use of and access to telehealth services. There are on-going efforts to include some of these changes in the next relief package. Additionally, stakeholders are expecting the Centers for Medicare and Medicaid (CMS) to include proposed telehealth policy changes in the upcoming Medicare Physician Fee Schedule update rule. Additional information on the current telehealth waivers under the authority of CMS and those requiring congressional action is available in this McDermottPlus analysis.

HELP Committee Chairman Introduced Pandemic Preparedness Bill. The Preparing for the Next Pandemic Act (S. 4231) was introduced by Senate Health, Education, Labor and Pensions (HELP) Committee Chairman Lamar Alexander (R-TN). The bill provides $5 billion over the next 10 years to support the improvement and expansion of domestic manufacturing during public health emergencies. It also provides $10 billion over the next 10 years to help states create and maintain their own stockpiles of supplies, and allows the Secretary of HHS to enter into agreements with private companies for the procurement, maintenance and storage of supplies for the national stockpile. The bill comes on the heels of a Request for Information, and a HELP Committee hearing several weeks ago, seeking feedback on policy solutions for appropriate preparation for a future pandemic. Senator Alexander plans to retire after this Congress and will likely fight hard to get his bill over the finish line this year, either as part of the next relief package or as stand-alone legislation.


Provider Relief Fund Updates

  • HHS announced that it is now distributing $10 billion in a second round of funding from the PRF to hospitals in areas highly affected by COVID-19 (“hotspots”). HHS previously distributed $12 billion for hotspot hospitals on May 1. For the second round, hospitals must have over 161 COVID-19 admissions between January 1 and June 10, 2020, have at least one COVID-19 admission per day, or have experienced a disproportionate intensity of COVID-19 admissions (exceeding the average ratio of COVID-19 admissions/bed). Eligible hospitals can expect to receive $50,000 per eligible admission. HHS will continue to publicly report the hospitals that receive funding through the high-impact distributions.
  • HHS posted a notice of reporting requirements for providers who received more than $10,000 from the PRF. The notice has few details but does indicate that detailed reporting instructions will be released by August 17, 2020, and that the reporting system will go live on October 1, 2020. In addition, 2020 expenditures must be reported within 45 days of the end of calendar year, and 2021 expenditures must be reported in a second and final report no later than July 31, 2021. However, throughout the PRF process, HHS has revised timelines and providers should continue to monitor the website for updated information.
  • HHS extended the PRF application deadline for Medicaid and dental providers to August 3, 2020.
  • CMS announced that it will direct $5 billion from the PRF to nursing homes to hire more staff, implement infection control programs, increase testing, and provide additional services, such as communication technology to help residents connect with their families remotely. Facilities must participate in a Nursing Home COVID-19 Training to receive the funding. In addition, the agency will begin requiring all nursing homes in states with a 5% positivity rate or greater to test all staff weekly.

For more detailed information on the PRF, see our Toolkit.


Federal Appeals Court Issued Two Wins for Trump Administration. The first decision upheld the Administration’s 2018 rule expanding the use of short-term, limited-duration insurance (STLDI) plans. Patient advocates and safety net health plans challenged the rule, arguing that STLDI plans offer insufficient coverage and undermine the Affordable Care Act (ACA). A federal district court held in July 2019 that the Administration was within its authority when it expanded STLDI plans, and the federal appeals court affirmed that ruling. Separately, a federal appeals court ruled that CMS acted within its authority when in 2019 and 2020 it implemented site-neutral payments for certain off-campus provider-based hospital departments. This ruling reverses a 2019 decision by a federal district court and means the payment policy stands unless the decision is reversed by the US Supreme Court. The plaintiff hospitals have not announced plans to appeal the decision. After the lower court ruling in favor of hospitals, CMS stated that it would repay hospitals impacted by the site-neutral payment cut. With the appeals court now ruling in the agency’s favor, CMS may go back to these hospitals to recoup these payments.

Quick Hits

  • The House Energy and Commerce and Education and Labor committees held hearings on COVID-19 vaccine development efforts and obstacles to safely reopening schools, respectively. The Senate Aging Committee held a hearing on racial health disparities among seniors.
  • Senators Roger Wicker (R-MS) and Tina Smith (D-MN) introduced the PPP Access for Rural Hospitals Act, which would allow not-for-profit critical access and rural hospitals to qualify for the Paycheck Protection Program. A similar bill was introduced in the House in June.
  • HHS Secretary Alex Azar extended the COVID-19 public health emergency until October 23, 2020. This extension is significant as many regulatory waivers and flexibilities issued during the pandemic are tied to this deadline.
  • HHS released a new public data system that will house data from the nation’s hospitals on COVID-19 cases, deaths, inpatient and intensive care unit bed capacity, staffing capacity and personal protective equipment supply.
  • CMS released the Early 2020 Effectuated Enrollment Report for the Federally-facilitated Health Insurance Exchange.
  • The Health Resources and Services Administration will hold a technical assistance webinar regarding the PRF payment portal for Medicaid and dental providers on July 27, 2020 at 3:00pm ET.
  • A group of 23 Democratic attorneys general filed suit against a final rule from HHS that eliminates certain non-discrimination protections under the ACA, arguing the rule violates the Administrative Procedure Act as well as the Equal Protection Clause of the Constitution.
  • The Office of Management and Budget began review of two along-awaited final rules regarding physician self-referral and the federal anti-kickback statute.

M+ Resources

  • The federal response to COVID-19 includes several financial relief opportunities for healthcare providers. Our chart highlights the major funding streams available.
  • The COVID-19 pandemic will shape health policy conversations for months and years to come. Our report delves into several policy discussions that intertwine with COVID-19 response efforts and are likely to dominate the health policy agenda for the balance of 2020 and maybe beyond.
  • The latest episode of the Health Policy Breakroom discusses the role of private equity in the healthcare industry.
  • Find all our analysis related to COVID-19 on our COVID-19 Resource Center.

Next Week’s Diagnosis

Expect to see text of the Republican COVID-19 relief package and for negotiations on the bill to begin in earnest as lawmakers work to reach an agreement before the scheduled August recess. The Senate Finance Committee will hold a hearing on the US medical supply chain.


For more information, contact Mara McDermottRachel StaufferKatie Waldo and Emma Zimmerman.

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