COVID-19 Legislative and Regulatory Updates

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By Peter W. Thomas, JD; Leela Baggett, JD; and Joe Nahra

As the federal government continues to respond to the COVID-19 pandemic, there are a number of legislative and regulatory developments of importance to O&P providers. The United States Congress has passed four major bills to address the pandemic and bolster the American economy, and additional legislation is expected. Further, the US Department of Health and Human Services (HHS) and other federal agencies have implemented various programs to assist healthcare providers, including O&P practitioners. Finally, the Trump administration has implemented regulatory waivers and promulgated interim final rules to help healthcare providers care for patients during the public health emergency. This article outlines the most important legislative and regulatory updates and what can be expected in the future.

COVID-19 Legislation

In response to the COVID-19 crisis, Congress has enacted an unprecedented level of economic aid and policy changes. These legislative efforts have injected nearly $3 trillion into the US economy; provided supplemental funding to federal, state, and local governments for crisis response; and expanded authorities for healthcare providers to treat patients; among other things. The legislative efforts are as follows.

COVID 1.0: The Coronavirus Preparedness and Response Supplemental Appropriations Act

The first COVID-19 legislation, signed into law on March 6, included more than $8 billion in emergency funding for federal agencies, state and local governments, and community health centers to bolster their pandemic response. In addition, the legislation increased the authority for HHS to expand telehealth under the Medicare program.

COVID 2.0: The Families First Coronavirus Response Act (FFCRA)

Signed into law on March 18, the second COVID-19 legislation included more than $2 billion in additional appropriations, especially for COVID-19 testing for uninsured patients. It expanded paid family, medical, and sick leave for certain businesses and increased unemployment benefits nationwide. The FFCRA also required all healthcare providers to provide diagnostic testing for COVID-19 without any patient cost-sharing in most cases. Uninsured patients will receive the same protections for testing, and the legislation increased the federal share of funding for state Medicaid programs.

COVID 3.0: Coronavirus Aid, Relief, and Economic Security (CARES) Act

The CARES Act, signed into law March 27, included more than $2.2 trillion in emergency relief to address the crisis and bolster the economy. The legislation expanded healthcare coverage for eventual COVID-19 vaccines, enhanced healthcare workforce training programs, broadened existing telehealth waivers, extended expiring healthcare program authorizations through December, and provided new flexibilities for post-acute care providers. In addition, the CARES Act appropriated $340 billion for public health programs at the federal and state levels, including $100 billion for hospitals and providers to address COVID-19-related expenses (the Provider Relief Fund, outlined below). The bill also included further expansions to unemployment benefits (including federal funding for an additional $600 per week for workers receiving benefits), new tax credits for businesses impacted by COVID-19, and direct payments to most Americans. In addition, the legislation authorized the Small Business Administration's (SBA) Paycheck Protection Program (PPP), initially funded at $349 billion, to provide loans for small businesses to maintain their payrolls.

COVID 3.5: The Paycheck Protection Program and Health Care Enhancement Act

The most recently enacted legislation, signed into law April 24, served as an interim funding package, providing more than $400 billion in additional appropriations for existing programs. This package included an additional $310 billion for the PPP, as the first round of funding had been almost entirely exhausted within a matter of weeks. There was also an additional $60 billion directed to the SBA's Economic Injury Disaster Loan (EIDL) program, including $10 billion expressly for $10,000 Emergency EIDL Grants, which do not need to be repaid. Additionally, the legislation funded another $75 billion for the Provider Relief Fund (for a total of $175 billion), and $25 billion for state and local governments, federal research agencies, and community health centers for COVID-19 testing-related expenses.

COVID 4.0 and Beyond

The House and Senate are expected to move more slowly in advancing the next COVID-19 bill. House Democrats are expected to release their proposal for a multi-trillion dollar COVID 4.0 package in mid-May, although the Senate will likely take longer to negotiate a compromise bill.

Key priorities for Democrats in the next round of legislation include major COVID-19 funding for state and local governments, many of which expect to face significant budgetary shortfalls due to reduced tax revenue and increased COVID-19 expenses and unemployment claims. Additionally, they are expected to propose changes to and additional funding for the PPP and other SBA loan programs to help ensure that more money is directed to particularly small businesses and nonprofits. Notably, one proposal, the Heroes Fund, would provide hazard pay for healthcare and other essential workers, though details are hazy on exactly who would qualify.

On the Republican side, there is significantly less momentum on a fourth package, and both House and Senate GOP leadership have stated a need to avoid rushing into the next bill. However, one priority that will be championed by Republicans is liability protection for businesses, including healthcare providers, that choose to reopen as social distancing guidelines and stay-at-home orders are relaxed. Senate Majority Leader Mitch McConnell has called such protections a "red line" for Senate Republicans and suggested that no bill would pass his chamber without liability provisions.

Government Funding Programs Available to Healthcare Providers

Provider Relief Fund

The CARES Act and subsequent legislation appropriated a total of $175 billion to be distributed to healthcare providers. The legislation gave broad authority to HHS to distribute these funds, which have been designated as the Provider Relief Fund. The funding is intended to support healthcare-related expenses and/or lost revenue attributable to COVID-19.

On April 10, HHS began distributing the first round of funding from this appropriation, delivering $30 billion to healthcare providers via direct deposit. O&P providers and suppliers were among the recipients of these funds. HHS has made it clear that these payments are not loans and will not need to be repaid. Most providers, including O&P practices and individual practitioners, received these funds via direct deposit into their accounts, paid through HHS' distribution partner, UnitedHealth Group. For providers that normally receive a paper check for Medicare reimbursement, payments were made automatically and should arrive shortly if not yet received. This first round of payments was based on the provider's share of total 2019 Medicare Fee-for-Service (FFS) reimbursements. HHS has begun distributing a second round of funding—totaling $20 billion—to Medicare providers that requested additional funding after receiving Provider Relief Fund payments in the first round.

The payments come with an attached set of terms and conditions, and recipients are required to sign an attestation. All recipients should carefully review the terms, conditions, and attestation language. HHS has also begun publicly sharing information about providers who have received payments from the general distribution. Visit www.hhs.gov/coronavirus/cares-act-provider-relief-fund/index.html to view the information.

In addition, HHS is distributing targeted allocation payments to rural providers, providers in COVID-19 high-impact areas, Indian Health Service facilities, and providers treating the uninsured. HHS has distributed approximately $10 billion to rural acute care hospitals and critical access hospitals, rural health clinics, and community health centers in rural areas. An additional $12 billion is being distributed to approximately 400 hospitals in hot spots that have treated a high number of COVID-19 patients, and $400 million has gone to facilities in the Indian Health Service. Finally, a portion of the Provider Relief Fund will be used to reimburse healthcare providers at Medicare rates for COVID-19-related treatment of the uninsured. Providers who have offered such treatment can request reimbursement through a claims submission portal operated by the Health Resources and Services Administration (HRSA) at https://coviduninsured claim.linkhealth.com.

Paycheck Protection Program

As previously mentioned, the PPP is operated through the SBA and has thus far received a total appropriation of more than $650 billion. These loans are available to small businesses and 501(c)(3) nonprofits to incentivize businesses to keep their employees on payroll. Generally, eligible small businesses have fewer than 500 employees and must have been in operation as of February 15. The loans, available through SBA-approved lending institutions, are to be applied to payroll costs between February 15 and June 30, including the costs of benefits (including healthcare and retirement), employee leave, insurance premiums, state and local taxes on employee compensation, mortgage interest, rent, and interest on outstanding debt.

Once an application is submitted and approved, the loan will carry an interest rate of 1 percent for a maximum term of two years. No personal guarantee or collateral is required, and the borrower pays no fees. Loans do not have to begin to be repaid for six months, but interest accrues during that time. Importantly, loan funds used for payroll costs, mortgage interest payments, rent, and utility payments, up to and including the full amount of the loan (and interest) may be forgiven. At least 75 percent of the forgiven amount must be used for payroll costs (as defined by the SBA). If the borrower cuts its staff during the eight weeks after the origination date of the loan or reduces salaries or wages of any employee by more than 25 percent, the loan forgiveness amount will be reduced. The PPP was intended to keep workers employed, so borrowers are incentivized to do so via the loan forgiveness option.

Lenders in the program began processing applications April 3, and the PPP will remain open to applicants (pending any potential extensions in legislation) through June 30. However, the loan availability is dependent on the availability of funds. The first round of funding for the PPP was exhausted in its entirety by April 16, and the program was paused until the COVID 3.5 legislation provided additional funds to guarantee the loans. It is expected that the second round will expire in a similarly quick fashion, and that Congress may have to authorize a third tranche of funding. O&P providers who intend to apply for a PPP loan are encouraged to do so as soon as possible if they have not already applied. For more information on the program, visit www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program.

Accelerated and Advance Payment Programs

(Author's note: As of April 26, the Centers for Medicare & Medicaid Services (CMS) is suspending the Advance Payment Program in light of the additional funding authorized for the Provider Relief Fund. A brief overview of the program is provided for O&P providers and suppliers.)

CMS previously announced a nationwide expansion of the Medicare Accelerated and Advance Payment Programs. Under these programs, providers were able to borrow against their expected future Medicare payments, with most providers able to request up to 100 percent of their expected payments for a three-month period.

Any providers who received advance Medicare payments before the program was suspended will face the same terms for repayment of these funds. For those receiving funds, the standard claims submission and payment process will continue for 120 days after the payment was received. After that period, newly submitted claims will not be paid out, but will be automatically offset against the entity's outstanding balance on the advance payment. After 210 days from the date the payment was issued, the entity's Medicare Administrative Contractor will send a repayment request for any remaining balance, and interest will begin to accrue at a rate of approximately 10 percent annually.

Regulatory Waivers

In addition to the programs previously discussed, HHS has issued a series of waivers and implemented flexibilities, most authorized for the duration of the declared public health emergency, to ensure that healthcare providers are able to continue to provide care. CMS has provided a complete accounting of COVID-19 waivers and flexibilities as well as a fact sheet specific to durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) suppliers.

To access these resources, visit https://go.cms.gov/2Zum4co, and https://go.cms.gov/3d1MZAw.

Notably, CMS has paused the Medicare Prior Authorization program for DMEPOS items, including the six prosthetic codes scheduled to be subject to prior authorization, and is postponing accreditation for newly enrolling DMEPOS suppliers. Expiring accreditations will be extended for 90 days. More recently, CMS has announced a significant expansion of telehealth authority, allowing all providers that traditionally bill Medicare for in-person services to perform telehealth during the public health emergency. It is unclear whether this authority extends to O&P providers, and clarification from CMS should be coming soon. Additionally, CMS has demonstrated a willingness to continue rapid action on regulatory issues and to listen to concerns from stakeholders, so it is expected that new waivers and flexibilities will continue to be issued for the duration of the crisis.

Peter W. Thomas, JD., is a principal with the Powers Law Firm and general counsel for the National Association for the Advancement of Orthotics and Prosthetics (NAAOP), and counsel to the Orthotic and Prosthetic Alliance.

Joe Nahra is the director of Government Relations at the Powers Law Firm, and Leela Baggett is an associate with the firm.