McDermottPlus Check-Up: May 29, 2020 - McDermott+Consulting

McDermottPlus Check-Up: May 29, 2020

This Week’s Dose: Negotiations over the coronavirus (COVID-19) response continued in the Senate with Democrats releasing a new proposal on health coverage expansion. The Trump Administration may push for a surprise billing fix in the next relief bill.


Senate Democrats Introduced Plan for Coverage Expansion During Pandemic. The white paper includes proposals that Democrats have called for in response to COVID-19, including covering all costs for COVID-19 treatment, subsidizing COBRA premiums for recently unemployed individuals and establishing a federal special enrollment period (SEP) for people to purchase individual coverage. The plan also includes longstanding Democratic priorities aimed at shoring up the Affordable Care Act (ACA), including expanding premium tax credits for those purchasing insurance on the exchange, incentivizing states to expand Medicaid and banning the sale of short-term, limited-duration insurance plans. The proposal, which is supported by over 30 Senate Democrats, comes as the Senate weighs action on another relief package. Although there could be a provision enhancing coverage of COVID-19 testing and treatment included in future legislation, Senate Republicans have so far been reluctant to include any provisions that would be seen as supporting an expansion of the ACA.


Administration May Push Surprise Billing Fix in Next Relief Package. The Administration is reportedly considering a proposal that would prohibit healthcare providers from balance billing patients for out-of-network care, but not establish a method to resolve payment disputes between insurers and providers. Disagreement over how to resolve such disputes was a leading reason why surprise billing legislation has stalled in Congress. The Administration has already included a ban on surprise billing specific to COVID-19-related care as part of the Terms and Conditions for the Provider Relief Fund. House Democrats also included similar COVID-19-specifc limitations on surprise billing in the Health and Economic Recovery Omnibus Emergency Solutions or “HEROES” Act (H.R. 6800) as a condition of receiving additional provider relief funds. However, it is not clear if a more sweeping prohibition will gain support in Congress at a time when lawmakers are focused on economic relief, and providers are reeling to respond to and from the effects of the pandemic. Providers and insurers have both raised concerns that resolving payment disputes could be costly.

Trump Administration Released a National Testing Strategy. The congressionally mandated report outlines broad goals for increasing the nation’s testing capacity, leaving much of the responsibility to states. It recommends that states test at least 2% of their population by the end of June and take steps to bring their test positivity rate below 10%. Democrats and some public health experts immediately responded that the goals are insufficient and unenforceable. House Speaker Nancy Pelosi (D-CA) and Senate Minority Leader Chuck Schumer (D-NY) issued a joint statement along with Democratic leaders of the House and Senate health committees calling the report disappointing. The Administration has maintained that states should be responsible for their own testing and reopening plans, and that testing approximately 2% of the population is enough to contain the outbreak.

Provider Relief Fund Updates

  • The Department of Health and Human Services (HHS) distributed $500 million to Indian Health Service (IHS) facilities through the Provider Relief Fund. IHS and tribal hospitals will receive a base payment of $2.81 million plus 3% of their total operating expenses. IHS and tribal clinics and programs will receive a base payment of $187,000 plus 5% of the average cost for the service population, and IHS urban programs will receive a base payment of $181,000 plus 6% of the average cost for the service population. With this announcement, HHS has $97.6 billion left to allocate through the Fund.
  • HHS announced a 45-day extension on accepting the Terms and Conditions for the Provider Relief Fund payments. Providers now have 90 days from the date they received a payment to accept the Terms and Conditions or return the funds. HHS continues to update frequently asked questions and other materials related to the Fund. Stakeholders are advised to frequently check the website.
  • HHS released a report to Congress on the money it distributed from the Provider Relief Fund as of April 30. According to the report, providers in California received the most money collectively from the initial distributions, followed by New York and Texas.
  • The HHS Office of the Inspector General (OIG) announced a new audit to examine the effectiveness of HHS controls over the awarding and distributing Provider Relief Funds through the general distribution.

CMS Announced Insurer Participation in Part D Senior Savings Model. According to the announcement, over 1,750 Medicare Part D and Medicare Advantage plans have agreed to participate in the Part D Senior Savings Model for plan year 2021. The voluntary model, which the Centers for Medicare and Medicaid Services (CMS) announced in March, would lower Medicare beneficiaries’ out-of-pocket costs for insulin to a maximum $35 copay per 30-day supply throughout the benefit year. CMS estimates $250 million in savings to the program over five years and an average 66% decrease in out-of-pocket costs for beneficiaries who join Part D plans participating in the model. For more information on the model, see the March 13 edition of the Check-Up.


Federal Appeals Court Will Hear Medicare Observation Status Challenge. The court will consider whether Medicare beneficiaries have a constitutional right to challenge being placed under observation after initially being admitted to a hospital as an inpatient. Medicare Part A covers hospital inpatient services, but does not cover patients who are placed on observation status (which are covered under Part B), often leading to higher out-of-pocket costs. Currently, CMS does not allow beneficiaries to appeal a provider’s decision to place them on observation, but a federal district judge ruled in March that this practice violates the constitutional rights of beneficiaries and ordered CMS to establish a regulatory appeals process. The ruling was seen as a major win for beneficiary advocates, who initially filed the class action suite more than eight years ago. CMS appealed the decision this week, arguing that establishing an appeals process would be overly burdensome. The case will be heard by the U.S. Court of Appeals for the 2nd Circuit, which ruled partially in favor of the beneficiaries at an earlier stage in the process.

Subscribe to the McDermottPlus Health Litigation Tracker. Over the last month, the Supreme Court received amicus briefs from stakeholders in the ACA case California v. Texas Case and heard oral arguments in the case questioning the Trump Administration’s rollback of contraceptive coverage. In the lower courts, the DC Court of Appeals struck down New Hampshire’s plan to  impose work requirements for Medicaid beneficiaries, while the state of New York returned to the district court to argue that the President’s public charge rule undermines the state’s ability to respond to the COVID-19 pandemic. These updates can be found in this month’s Health Litigation Tracker, alongside background in each case, next steps in the judicial process, and additional analysis. To download the tracker, please register here. Those who register will automatically receive the tracker each month as we publish updates in the cases.


States Have Seen a Surge in Coverage Through Special Enrollment Periods. Eleven states and Washington, DC, which operate state-based insurance exchanges under the ACA, have established SEPs due to the COVID-19 pandemic and have seen spikes in enrollment during this time. Approximately 123,000 people in California enrolled in marketplace plans since the state’s SEP opened in March, 2.5 times more than were enrolled this time last year, and enrollment is up 70% in Connecticut and 50% in Washington, DC. The Administration has so far resisted calls from congressional Democrats to establish a SEP under the federal exchange, leaving residents of 38 states unable to enroll in ACA coverage if they do not meet the limited life change circumstances established by the ACA. Access to coverage remains a central health policy issue and a priority for Democrats, as evidenced by the proposal released this week. The issue is likely to be at the forefront of the debate headed into the 2020 elections.

Oklahoma Submitted Medicaid Block Grant Waiver Request but Will Delay Expansion. The waiver is the first to be submitted under Trump Administration guidance that would allow states to convert their Medicaid program into a block grant system. The Oklahoma plan would expand Medicaid to adults age 19 to 64 with incomes at or below 133% of the federal poverty line and accept a federal per capita spending cap to cover the expansion population beginning in July 2021. For the expansion population, Oklahoma would require premiums of up to $15 per month based on household income, copays for services up to 5% of the out-of-pocket household maximum and $8 copays for non-emergency use of the emergency room. The waiver would also roll back certain benefits and impose work requirements. Oklahoma originally proposed expanding Medicaid beginning July 1, 2020, but announced this week that it would delay expansion due to the economic conditions caused by COVID-19. Oklahoma has been a vocal supporter of the Trump Administration’s block grant proposal since it was announced, and CMS is expected to approve the waiver. However, many legal experts have raised questions about whether CMS has the authority to implement Medicaid block grants, and work requirements like those proposed by Oklahoma have repeatedly been blocked in court. If approved, the Oklahoma plan will face legal challenges. CMS will accept comments on the proposal through June 27, 2020.

Quick Hits

  • The House Ways and Means Committee held a hearing on the impact of COVID-19 on communities of color, and the House Education and Labor Workforce Protections Subcommittee held a hearing on the federal government’s actions to protect workers from COVID-19. The House Committee on Oversight and Reform held a briefing with Christi Grimm, the Principal Deputy Inspector General for HHS.
  • Representatives Diana DeGette (D-CO) and Larry Bucshon (R-IN) introduced two bipartisan bills aimed at increasing testing capacity. The Diagnostic Testing for Public Health Labs Act would establish grants for labs to purchase high-throughput testing supplies, and the Rapid Testing for Communities Act would establish grants for healthcare providers to support testing in underserved areas.
  • House Energy and Commerce Committee leadership sent a letter urging the Trump Administration to develop a national plan to develop, manufacture and distribute a COVID-19 vaccine.
  • CMS released the 2021 Request for Applicationsfor the Maryland Total Cost of Care Model, which builds on the CMS Innovation Center’s current Maryland All-Payer Model by setting a per capita limit on Medicare total cost of care in Maryland.
  • The HHS OIG released its OIG Strategic Plan: Oversight of COVID-19 Response and Recovery, which details how the office will conduct oversight of the Administration’s COVID-19 response.

M+ Resources

  • As regulators make public statements in support of permanently expanding telemedicine uses, telehealth stakeholders are asking a key question: “What would it take for the recent changes to Medicare telehealth reimbursement to become permanent beyond the public health emergency?” Our report answers this question.
  • This week’s episode of the Health Policy Breakroom takes a look back at our 2020 predictions from the beginning of the year and where we are now.
  • As part of the ongoing White House Coronavirus Task Force efforts, CMS and other agencies have issued several resource documents, refocused activities related to state survey agencies and accrediting organizations and taken other related actions. Recent updates are available here.
  • Find all McDermottPlus analysis related to COVID-19 on our COVID-19 Resource Center.

Next Week’s Dose: The House Energy and Commerce Oversight and Investigations Subcommittee will hold a hearing on how governors are responding to COVID-19, and the Senate Finance Committee will hold a hearing to examine the Food and Drug Administration’s foreign drug manufacturing inspection process.


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

To subscribe to the McDermottPlus Check-Up, please contact Jennifer Randles.