COVID-19 Relief Legislation Offsets Portion of Physician Payment Cuts and Provides Other Financial Relief Opportunities

After months of debate and discussion, on December 21, 2020, Congress passed a $900 billion COVID-19 relief package that was attached to the $1.4 trillion Consolidated Appropriations Act, 2021 (H.R 133). H.R. 133 funds the government through the end of the current fiscal year (September 30, 2021). The bill provides some targeted relief for healthcare providers and further funds vaccine and testing distribution and offsets a portion of the physician payment reductions. Additionally, the massive bill served as a vehicle for dozens of non-COVID-19-related healthcare provisions.

A complete summary of the healthcare-related provision in H.R. 133 can be found here. Highlights of key provider relief and payment related healthcare issues included in the legislation is below.

Provider Relief Fund (PRF): The legislation allocated an additional $3 billion for the PRF for eligible healthcare providers for healthcare-related expenses and/or lost revenues associated with COVID-19. This amount is substantially less than the amounts included in earlier proposals that would have added $35 billion to the PRF. The legislation also includes statutory changes to the guidance governing what counts as lost revenue for purposes of using funds that may be helpful to some providers.

Paycheck Protection Program (PPP): The package infuses another $284 billion in additional funding into the PPP and extends the program through March 31, 2021, with modifications. This new round of PPP is expected to be enormously popular.

Payment for Physician Services: The legislation includes two provisions that significantly reduce, but do not eliminate, the scheduled 10.2%payment cut to Medicare physician services in 2021. The legislation directs Medicare to apply a 3.75% positive adjustment against the -10.2% scheduled update to 2021 physician payments and places a three-year moratorium (through CY 2023) on payment for a new code (G2211). Combined, these two provisions will reduce payment cuts by about two-thirds. The 3.75% offset is authorized for only one year, meaning physicians will face similar reductions in 2022 unless Congress takes further action.

As a result of these provisions, the Centers for Medicare and Medicaid Services (CMS) recently announced a revised Medicare Physician Conversion Factor (CF) of $34.8931. This represents a 3.3% reduction from the 2020 CF of $36.0869.

Payment to Physician Assistant (PAs): Under current law, PAs bill Medicare through their employers rather than billing Medicare directly. The legislation allows Medicare to make direct payments to PAs for services furnished to Medicare beneficiaries on or after January 1, 2022.

Medicare Sequestration: The CARES Act suspended the Medicare -2% sequestration payment reductions from May 1, 2020, through December 31, 2020. The new law extends the suspension of sequestration another three months. The sequester holiday provides some additional economic relief for providers who have been financially challenged due to increased COVID-related costs and declines in revenues.

Payment Innovation: The legislation included several provisions related to payment innovation.

  • In 2021, the advanced Alternative Payment Model (APM) revenue and patient thresholds were scheduled to increase dramatically, causing some providers to lose their 5% Qualifying Participant bonus payments. The legislation freezes APM thresholds at the lower 2020 levels for two years.
  • Earlier in 2020, CMS delayed the implementation of the mandatory Radiation Oncology Payment model from January 1, 2021, to July 1, 2021. The new law delays model implementation an additional six months, to January 1, 2022. The delay in the implementation affords stakeholders more time to work with the incoming Biden Administration to shape this demonstration before it is launched.
  • The legislation also extends the Independence at Home Demonstration through December 31, 2023, and expands the size of the demonstration from 15,000 to 20,000 beneficiaries.

Surprise billing: Under the new legislation, beginning January 1, 2022, plans and providers (including hospitals, facilities, individual practitioners, and air ambulance providers) are prohibited from billing patients more than in-network cost-sharing amounts in certain situations. The prohibition applies to emergency care and to certain non-emergency situations where patients cannot choose an in-network provider. To reconcile payment disputes between plans and providers, the legislation directs negotiation between the parties, and then a prescribed arbitration process if negotiations fail.

Stay up-to-date on COVID-19 emerging issues through the McDermottPlus Coronavirus Resource Center or the McDermott, Will & Emery Coronavirus Resource Center.


For more information visit the McDermottPlus Payment Innovation Resource Center or contact Sheila Madhani, Rachel Stauffer or Katie Waldo.