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CARES: Implications for the Healthcare Industry

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CARES: Implications for the Healthcare Industry

On March 25, the Senate passed the Coronavirus Aid, Relief, and Economic Security Act (“CARES”). The House is expected to vote on the legislation on March 27, 2020. The following is a summary of the significant provisions impacting the health care industry.

Medicare

  • CARES would provide for a Medicare hospital inpatient prospective payment system add-on payment for COVID-19 patients during the COVID-19 emergency period (“Emergency Period”). The add-on payment would be a 20% increase in the weighting factor that would otherwise apply to the diagnosis-related group to which the discharge is assigned.
  • During the Emergency Period, the United States Department of Health and Human Services (“DHHS”) would waive the requirement that patients of an inpatient rehabilitation facility receive at least 15 hours of therapy per week.
  • During the Emergency Period, DHHS would waive the site-neutral payment rate provisions for long-term care hospitals.
  • CARES would provide for coverage of any future licensed COVID-19 vaccine and its administration under Part B of the Medicare Program without any cost-sharing from beneficiaries.
  • During the Emergency Period, DHHS would require Medicare prescription drug plans to fill and refill covered Part D drugs for up to a 3-month supply.
  • CARES would allow for the provision of home and community-based services in acute care hospitals that are (a) identified in an individual’s person-centered service plan, (b) provided to meet the individual’s needs that are not met through the provision of hospital services, (c) not a substitute for services that the hospital is obligated to provide, and (d) designed to ensure smooth transitions between acute care settings and home and community-based settings.
  • CARES would allow for coverage of COVID-19 testing products without requiring the testing products to obtain approval, clearance or authorization from the Food and Drug Administration (“FDA”).
  • CARES would postpone certain reporting requirements with respect to clinical diagnostic laboratory tests by a year.
  • CARES would expand the Medicare Hospital Accelerated Payment Program during the Emergency Period to (a) hospitals whose inpatients are predominately individuals under 18 years of age, (b) critical access hospitals, and (c) certain hospitals involved extensively in treatment or research of cancer.
  • Extends the work geographic index floor under the Medicare program through December 1, 2020.
  • Extends funding for quality measure endorsement, input, and selection through fiscal year 2020 and provides $20 million funding for fiscal year 2020 approximately $3.3 million for October 1, 2020 – November 30, 2020.
  • Extends funding for state health insurance programs through fiscal year 2020 and provides $13 million funding for fiscal year 2020 and approximately $2.1 million for October 1, 2020 – November 30,2020.
  • Provides $7.5 million funding for area agencies on aging through fiscal year 2020 and approximately $1.2 million funding for October 1, 2020 – November 30, 2020.
  • Provides $5 million funding for aging and disability resource centers through fiscal year 2020 and approximately $833,000 funding for October 1, 2020 – November 30, 2020.
  • Provides $12 million funding for grant or contract with the National Center for Benefits and Outreach Enrollment through fiscal year 2020 and $2 million funding for October 1, 2020 – November 30, 2020.

Medicaid

  • Provides $337.5 million funding for The Money Follows the Person Rebalancing Demonstration Program from January 1, 2020 – September 30, 2020 and approximately $84.3 million for October 1, 2020 – November 30, 2020.
  • The Spousal Impoverishment Protections are extended through November 30, 2020.
  • The Medicaid DSH reductions will be delayed to December 1, 2020, and ending September 30, 2021. The aggregate reductions for all States will be $4 billion for December 1, 2020 – September 20, 2021 and $8 billion for each fiscal years from 2022 – 2025.
  • Expansion of the Community Mental Health Services Demonstration Program to include two new States, in addition to the eight States already selected, to participate in 2-year demonstration programs.
    • The two States to be selected will be States that were awarded planning grants and previously applied but were not selected. There will be no additional application requirements.
    • The two States selected must submit a plan to monitor certified community behavioral health clinics under the demonstration program to ensure compliance with certified community behavioral health criteria during the demonstration period.
    • The two States selected must also commit to collecting data, providing notice of any planned changes that would deviate from the prospective payment system methodology outlined in the State’s demonstration application, and obtaining approval before implementing any such changes.
    • The federal matching percentage for states participating in the demonstration program as of January 1, 2020 or newly selected to participate in the demonstration program is extended to apply to amounts expended by the state through the 8 fiscal quarter period that begins on January 1, 2020.
    • Within 18 months from enactment of CARES, the U.S. Comptroller General must submit to the House Committee on Energy and Commerce and the Senate Committee on Finance a report on the community and mental health services demonstration program. The report must contain information on the States’ experiences participating in the program, information on federal efforts to evaluate the program, and recommendations for improvements.

Telehealth

  • Amends the Internal Revenue Code (“IRC”) to clarify that the absence of a deductible for telehealth or remote services will not cause a plan to lose its classification as a “high deductible” health plan, effective for plan years beginning on or after December 31, 2020.
  • Grants the DHHS Secretary with authority to waive Medicare program requirements during a national emergency.
  • Requires Medicare reimbursement for telehealth services furnished by a Federally Qualified Health Center (“FQHC”) or Rural Health Clinic (“RHC”), despite the fact that the beneficiary is not located at the FQHC or RHC.
  • Permits FQHCs and RHCs to serve as telehealth “distant sites” eligible for Medicare reimbursement.
  • Requires DHHS Secretary to develop payment methods for FQHC and RHC telehealth services comparable to the Medicare physician fee schedule.
  • Directs that costs incurred by a FQHC or RHC for telehealth services will not be included in determining the FQHC’s payment rates or the RHC’s all-inclusive rate.
  • Gives DHHS Secretary authority to waive the Medicare requirement for a face-to-face visit between renal dialysis patients and physicians during the emergency period.
  • Permits use of telemedicine by a hospice physician or nurse practitioner to conduct the face-to-face encounter required prior to recertification of eligibility for the Medicare hospice benefit.
  • Requires DHHS Secretary to consider ways to encourage use of telecommunication systems   during the emergency period for Medicare-covered home health services, including remote patient monitoring, consistent with a patient’s plan of care.

Over The Counter Drugs and Supplies

  • Includes amounts paid for menstrual care products as “medical care expenses” under HSAs, Archer MSAs, Health Flexible Spending Arrangements, and Health Reimbursement Arrangements. Effective for expenses incurred after December 31, 2020.
  • Adds a new Section 505G that exempts certain non-prescription or over-the-counter (“OTC”) drugs from the new drug application requirement and FDA approvals depending on their safety and effectiveness category and the extent to which they conform to existing drug monographs, and extends the time period by which a new drug application must be filed for certain OTC drugs.
  • Permits the FDA Commissioner, subject to certain substantive, notice and procedural requirements, to issue an administrative order under 505G determining whether a specific drug, class of drugs or drug combination, or certain changes to a condition of use for a drug, may be determined safe and effective without requirement for a new drug application. The order may be issued on the FDA Commissioner’s initiative or at the request of another party (“Requestor”).
  • Directs that certain final and tentative drug monographs shall be deemed a Section 505G   administrative order of the FDA Commissioner regarding safety and effectiveness absent a new drug application.
  • Directs that the FDA Commissioner may include in a 505G administrative order requirements for packaging to encourage use in accordance with labeling.
  • Directs that certain federal regulations pertaining to non-prescription drugs are deemed final 505G administrative orders of the FDA Commissioner under the Act.
  • Orders the FDA Commissioner to withdraw regulations establishing final monographs for OTC drugs and the procedure for OTC review, or make technical corrections to same to comport with the Act. All such withdrawals and corrections shall be effective immediately upon publication, without notice and comment.
  • Directs that with certain exceptions, a Requestor who seeks and obtains a 505G administrative order, is granted exclusivity to market the drug in question, or to make the requested change in condition of use, for 18 months from the date of the administrative order. A Requestor granted exclusivity must notify the FDA Commissioner within 1 year of the order if the drug that is the subject of the order will not be available for sale within 1 year of the order.
  • Permits a Requestor to make a minor change in the dosage form of a drug subject to a 505G administrative order or exempted by the Act from the new drug application requirement, provided the Requestor keeps documentation that the change will not affect the safety or effectiveness of the drug or materially change absorption, and the dosage change is in compliance with the 505G administrative order. Failure to meet these requirements may result in a determination of misbranding, and necessitate a new drug application.
  • Provides for an expedited procedure for a 505G administrative order by the FDA Commissioner that a drug, class of drugs or drug combination poses an imminent hazard to public health, including directions for revised labeling designed to mitigate the unreasonable risk of a serious adverse event.
  • Permits a OTC sunscreen manufacturer subject to a prosed sunscreen order under Section 586C to elect to transition to review under new Section 505G, subject to certain procedural and substantive requirements. The election must be made within 180 days of enactment of the Act.
  • Directs the Comptroller General to publish a study within 4 years of the overall impact and effectiveness of the OTC exclusivity provisions of new Section 505G.
  • Requires the DHHS to issue reports to Congress on the progress of the FDA in evaluating the cough and cold medication monograph as it applies to persons under 6 years of age, and revising the monograph to address children through the order process of Section 505G.

Supply Shortages

  • Requires the DHHS Secretary to work with the National Academies of Sciences, Engineering, and Medicine to examine and issue a report on the state of the country’s medical supply chain. The report and any resulting recommendations would focus on the country’s dependence on foreign made drugs and devices, potential public health and national security risks inherent in the supply chain, gaps in information, and the potential economic impact of increased domestic manufacturing.
  • Revises provisions of the Public Health Act to require the Strategic National Stockpile of pharmaceuticals to specifically stockpile certain medical supplies, including personal protective equipment and medical supplies necessary for the administration of drugs, vaccines, biological products, and diagnostic tests.
  • Expands the requirement that drug manufacturers report the discontinuance or interruption in manufacture of life-saving drugs to include drugs critical for public health during a public health emergency and discontinuance or interruption in manufacture of an active pharmaceutical in a life-saving drug. The act would require the FDA Commissioner to prioritize the review of a new drug application when that drug is necessary to address such a shortage.
  • Adds a new section to the Food, Drug and Cosmetics Act that would require device manufacturers to inform the FDA Commissioner of a discontinuance or interruption in manufacture of a device critical during a public health emergency. A manufacturer facing a discontinuance or interruption in manufacture of such a device would generally need to inform the FDA Commissioner at least 6 months in advance of the anticipated discontinuance or interruption. CARES would also allow the FDA Commissioner to prioritize the review of an application for a new device that could mitigate a shortage.

Access to Care

  • Requires group health plans and insurers to cover the cost of a COVID-19 diagnostic test for which the developer has requested, or intends EUA from the FDA, unless the EUA is denied, or the developer fails to request approval within a reasonable time. Group health plans and insurers must also cover COVID-19 tests developed and authorized by a State.
  • Requires group health plans and insurers paying for COVID-19 diagnostic tests to adhere to previously negotiated rates. If the health plan or insurer does not have a negotiated rate with a provider, the health plan or insurer must pay the provider at the rate advertised on the provider’s website. CARES would grant authority to the DHHS Secretary to impose a civil monetary penalty on any provider that fails to publish its price to administer a COVID-19 diagnostic test on its website.
  • Requires group health plans and insurers to cover preventative services, including any evidence-based item or service recommended by the United States Preventative Services Task Force or any immunization recommended by the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention.
  • Limits liability for volunteer licensed health professionals during the COVID-19 response for an act or omission that occurs when the individual is providing healthcare within his/her licensed scope of practice. The limitation would not apply if the harm was the result of willful or criminal conduct, gross negligence, reckless misconduct, or the individual was under the influence of alcohol or drugs.
  • Updates requirements related to the confidentiality of substance use disorder records to more closely mirror the Health Insurance Portability and Accountability Act of 1996. It would require the DHHS Secretary to revise regulations to implement the changes.
  • Permits a State agency or area agency on aging the flexibility to use funds earmarked for congregate and home based nutrition services as the agency deemed appropriate to meet the needs of the State or area served. It would also expand the definition of home-bound individual for purposes of home-delivered nutrition to include an individual who is practicing social distancing.

Healthcare Workforce

  • Requires DHHS to develop a comprehensive and coordinated plan with respect to health care workforce development programs, including assessment of those programs, identifying gaps between those programs and projected health care workforce needs, actions to address those gaps, and barriers to implementing those actions.
  • Requires HHS to work with other federal agencies to evaluate their health care workforce development programs and identify opportunities to improve the quality and consistency of those programs.
  • Provides grants for health profession training programs in geriatrics and awards to promote career development of health professionals who practice geriatrics.
  • Reauthorizes Title VIII Nursing Workforce Development Programs.

Human Services and Other Health Programs

  • Continues to extend federal funding through 2020 to States that participate in a sexual risk avoidance education program. The purpose of this allotment is to enable States to implement education on voluntarily refraining from sexual activity, as well as limited research to build an evidence base for such education.
  • Continues to extend federal funding through 2020 to States that participate in a personal responsibility education program. Personal responsibility education programs are designed to educate adolescents on both abstinence and contraception for the prevention of pregnancy and sexually transmitted infections, as well as adulthood preparation subjects.
  • Continues to extend federal funding through 2020 to eligible entities that conduct demonstration projects that (i) provide low-income individuals with opportunities for education, training, and career advancement to address health professions workforce needs, or (ii) develop training and certification programs for personal or home care aides.
  • Continues to extend federal funding through November 30, 2020 to States (as well as Puerto Rico, the Virgin Islands, Guam, and American Samoa) operating a program designed to (i) provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives; (ii) end the dependence of needy parents on government benefits by promoting job preparation, work, and marriage; (iii) prevent and reduce the incidence of out-of-wedlock pregnancies and establish annual numerical goals for preventing and reducing the incidence of these pregnancies; and (iv) encourage the formation and maintenance of two-parent families.

Funding

  • $140.4 billion for DHHS.
  • $127 billion for grants to hospitals, public entities, nonprofit entities and Medicare and Medicaid providers and suppliers, including funds to help procure PPI, ventilators and other medical supplies.
  • $250 million to increase capacity of health care facilities.
  • $275 million to increase capacity of rural hospitals, telehealth, the Ryan-White HIV/AIDS program.
  • $425 million to the Substance Abuse and Mental Health Services Administration for mental health and substance abuse orders, including $250 million allotted to community behavioral health centers.
  • $200 million to CMS to support infection control surveys for facilities with high risk population.
  • $1.2 Billion for the detection of SARS-CoV-2 and the prevention, diagnosis, and treatment of COVID-19.  

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