Today on the Hill: Senate Fails to Advance Additional Paycheck Protection Program Funding

Capitol Hill Update

Moments ago, Senators failed to pass a roughly $250 billion funding bill to bolster the Small Business Administration’s (SBA) Paycheck Protection Program amid disagreements over additional funding for COVID-19 response efforts. Majority Leader Mitch McConnell (R-KY) attempted to pass additional funding for the PPP by voice vote during a “pro forma” session this morning, but was met with opposition by Senate Democrats who objected to unanimous consent passage. The Democrats’ latest offer calls for additional funding priorities beyond the small business loan funding in the “Phase 3.5” effort, calling for: (1) $100 billion for health care providers; (2) $150 billion for state and local governments; and (3) a 15 percent increase in SNAP benefits. Speaker Nancy Pelosi (D-CA) and Senate Minority Leader Chuck Schumer (D-NY) have also expressed displeasure with Leader McConnell for allegedly refusing to negotiate with Democratic leadership on this next tranche of funding.

Washington is currently at a crossroads with the Phase 3.5 measure as officials from both sides of the aisle continue to jostle for positioning. Speaker Nancy Pelosi (D-CA) emphasized that the Senate’s proposal cannot pass the House in its current state, and could ultimately be blocked by Rep. Thomas Massie (R-KY) who has expressed concerns about passing this funding package absent a quorum. Conversely, White House officials have stated that President Donald Trump will not sign a bill that includes priorities beyond the PPP, saying that he prefers to handle additional funding for hospitals, state, and local governments in the “Phase IV” legislation. As such, timing for passage of the Phase 3.5 measure is in flux. Senators will convene for their next pro forma session on Monday, Apr. 13 at 10 AM.

COVID-19: What We’re Hearing

• Additional COVID-19 Legislation. Policies that currently enjoy bipartisan support include funding for health care needs, additional money for the Paycheck Protection Program, more unemployment insurance and direct payment relief, and a fix for struggling pension programs. 
  • It remains to be seen whether both parties can strike an agreement on big-ticket legislative items such as infrastructure, as Republicans on Capitol Hill are pushing back against using COVID-19 legislation as a vehicle to carry unrelated policy priorities.
  • A bipartisan group of House lawmakers have introduced legislation that would allocate $250 billion in direct funding for local governments of all sizes. The measure would provide funding for all local governments with fewer than 500,000 people, and would also allow governments to offset lost revenue due to the pandemic.
  • Energy and Commerce Ranking Member Greg Walden (R-OR) expects another push for action on surprise billing in the next round of relief. During the Phase III negotiations, Chairman Frank Pallone (D-NJ) and Senate Health, Education, Labor, and Pensions (HELP) Chairman Lamar Alexander (R-TN) were actively trying to tack their surprise billing legislation onto the package.
  • Speaker Pelosi penned a “Dear Colleague” letter to members outlining her priorities for the Phase IV legislation. She has been advocating for additional health care provider funding, election support, stronger workforce protections, and repealing the 2017 tax law provision that caps the State and Local Tax deduction. The Speaker hopes to craft and consider the legislation by the end of this month. 

• Provider Funding. CMS Administrator Seema Verma announced that the agency has already distributed $34 billion to Medicare providers over the course of the past week and is set to begin pushing out $30 billion more from a major funding stream made possible by the CARES Act. 
  • $34 billion has already starting flowing to providers via the Accelerated/Advance Payment Program. These payments must be returned and carry a 10.25 percent interest rate, which CMS says it cannot change unilaterally.
  • $30 billion will come from the CARES Act’s $100 billion Public Health and Social Services Emergency Relief Fund (PHSSEF) and would be no-strings-attached grants to providers based on Medicare fee-for-service revenue.
  • The Administration is reaching out to providers with a lower percentage of their revenue coming from Medicare fee-for-service to gather feedback on how best to distribute additional funds from the $100 billion fund. 
  • Administrator Verma foreshadowed a second round of CMS distributions with first priority going to providers such as nursing homes and children’s hospitals that do not derive a large portion of their revenue from Medicare fee-for-service.
  • An additional chunk in the neighborhood of $30 billion will be set aside from the $100 billion to fund COVID-19 care for the uninsured. Kaiser Family Foundation estimated yesterday that care for the uninsured, reimbursed at Medicare rates, would run between $13.9 and $41.8 billion.

• Appropriations. With Congress’s schedule in flux for the balance of the year, Appropriations leaders are delaying the start of their fiscal year (FY) 2021 funding work amid the uncertainty surrounding the COVID-19 outbreak. Congressional appropriators have pushed their expectations for completing FY 2021 spending work past the late spring-early summer dates that leadership targeted earlier this year.

• COVID-19 Response Guidance. With the Phase III bill signed into law, implementation guidance for certain provisions contained in this sweeping package, as well as other relevant federal guidance pertaining to COVID-19 response efforts, is expected to trickle out in the coming days and weeks.
  • TRP will keep clients apprised on the latest developments on the federal government’s implementation of COVID-19 response legislation. As always, please feel free to follow up with the TRP team with any specific questions or feedback.

COVID-19: What’s Happened

• Legislative Response. TRP’s newest COVID-19 policy memo looks at the substance use and mental health policies contained in the CARES Act. This includes new funding for SAMHSA, new funding for Certified Community Behavioral Health Centers, relaxed disclosure requirements for SUD-related health records, and more. Click here to read the memo.
  • TRP has published a memo that examines the provider-related provisions contained in the CARES Act. This includes critical funding for hospitals and providers impacted by the COVID-19 pandemic, greatly expanded flexibilities for providers to operate through the pandemic, and mandated coverage of coronavirus-related therapies and testing. Click here to read the memo.
  • TRP’s has published an analysis of the medical device-related provisions in the CARES Act, including new reporting requirements, a study on the security of the medical device supply chain, and storage requirements. Click here to read the memo.
  • TRP has published a memo on the Medicare and Medicaid provisions in the CARES Act and other COVID-19-related legislation. This analysis examines new telehealth policies, emergency payment provisions, new flexibilities on prescription drug fills, and more. Click here to read the memo.
  • TRP’s memo on the COVID-19 relief packages dives into how the pharmaceutical industry may be impacted by provisions on therapy and vaccine development, drug supply chain transparency, over-the counter drug regulation reform and more. Click here to read the memo.
  • President Donald Trump signed the Phase III legislation into law on Mar. 27. TRP’s analysis of the Phase III legislation can be read here. Our memo on the bill’s provisions pertaining to the Public Health and Social Services Emergency Fund (PHSSEF) can be read here.
  • The Phase II legislative response bill was signed into law on Mar. 18. TRP’s full analysis of the Phase II bill can be read here.
  • An $8.3 billion emergency supplemental appropriations bill cleared both chambers and was signed into law on Mar. 6. TRP’s analysis of the Phase I legislation can be read here.
  • The Treasury Department and IRS announced the implementation of certain paid sick and family leave requirements mandated by the second COVID-19 legislative response package. TRP’s breakdown of the paid leave provisions can be found here.

• CMS. The Centers for Medicare & Medicaid Services (CMS) has issued a series of updated guidance documents focused on infection control to prevent the spread of the COVID-19 for certain inpatient and outpatient care settings. 
  • Administrator Verma and Dr. Deborah Birx held a call on Apr. 3 with officials from the FDA, CDC, and FEMA to discuss COVID-19 flexibilities.
  • CMS has published additional frequently asked questions for state Medicaid and CHIP agencies regarding COVID-19 response efforts.
  • CMS has issued a series of regulatory changes that seek to provide flexibility and bolster the health care system to address the COVID-19 outbreak. TRP’s analysis of the rule can be read here.
  • CMS posted a transcript of its Mar. 31 national stakeholder call. A full list of CMS call transcripts and recordings can be found here.
  • CMS sent a letter to hospitals on behalf of Vice President Mike Pence requesting they report data in connection with their efforts to fight the COVID-19.
  • CMS issued guidance for health care providers regarding the expansion of the accelerated and advance payments program for providers and suppliers during COVID-19 emergency.
  • CMS approved Medicaid Section 1135 Waivers for states in response to the COVID-19 outbreak. A full list of the 1135 waiver approval letters can be accessed here.
  • CMS announced that it is taking steps to implement provisions of the Families First Coronavirus Response Act that provide states with additional Medicaid funding.
  • CMS released a new targeted plan for health care facility inspections in light of the outbreak.
  • CMS announced that it is granting exemptions from reporting requirements and granting extensions for clinicians, providers, and facilities participating in Medicare quality reporting programs.
  • CMS posted Frequently Asked Questions to aid state Medicaid and Children’s Health Insurance Program (CHIP) agencies in their response to the outbreak.

• SBA. The Small Business Administration (SBA) and Treasury Department updated their list of frequently asked questions on the Paycheck Protection Program.
  • SBA issued an interim final rule outlining additional guidance for the paycheck protection program. TRP’s comprehensive analysis of the small business provisions contained in COVID-19 response bills can be read here. The loan application form can be accessed here.

• The Fed. The Federal Reserve announced a series of emergency actions today that would provide more than $2 trillion in COVID-19 loans to businesses, state, and local governments.
  • The Federal Reserve announced the creation of a lending facility that will provide liquidity for lenders for the purposes of funding up to to $349 billion authorized by the CARES Act. The interim final rule can be read here.
  • Federal regulators announced they will temporarily allow community banks with a lower leverage ratio to skirt certain prescriptive capital requirements.
  • The Federal Reserve and four other financial agencies announced they will consider comments on Volcker rule modifications until May 1.
  • On Mar. 24, The Federal Reserve will be scaling back its examination of banks to focus more intently on the potential risks that arise from the outbreak.
  • The Federal Reserve announced on Mar. 23 a series of emergency moves aimed at stemming the economic impact of the outbreak. These actions include three new emergency lending facilities, as well as a new program that will support lending to eligible small-and medium-sized businesses that support efforts by the Small Business Administration (SBA).
  • The Federal Reserve announced that it will establish a Primary Dealer Credit Facility to support dealers’ market-making as the economy continues to slow due to the COVID-19 pandemic.
  • The Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) outlined actions aimed at providing banks additional flexibility to support households and businesses during the outbreak. Details on these steps can be read here.

• Funding Requests. Office of Management and Budget (OMB) Director Russell Vought submitted a letter to Congress requesting $251 billion in funding for the SBA’s Paycheck Protection Program.

• DOT. The Department of Transportation (DOT) issued a final order on service obligations for air carriers receiving financial relief through the CARES Act.
  • DOT and the Federal Transit Administration (FTA) announced a total of $25 billion in federal funding allocations to help the public transit systems respond to the COVID-29 outbreak.

• Telehealth. TRP has published a comprehensive analysis of the telehealth policies for the COVID-19 national emergency. Click here to read the telehealth memo.
  • The Federal Communications Commission (FCC) proposed a $200 million program aimed at bolstering telehealth services for health care providers.

• Supreme Court. SCOTUS announced that it will postpone its previously-scheduled oral arguments for the month of April.

• Social Distancing. The Trump administration has recommended the use of cloth masks for those who need to go out in public.
  • Surgeon General Jerome Adams stated that he anticipates the Trump administration’s social distancing guidelines to be extended past Apr. 30.
  • President Trump announced that the administration will be extending its social distancing guidelines through Apr. 30.
  • The guidance outlines a series of steps — including avoiding social gatherings of 10 or more people — aimed at mitigating the spread of the virus.
  • Centers for Disease Control and Prevention (CDC) issued guidance on Mar. 16 recommending that Americans cancel or postpone gatherings of 50 more people for the next eight weeks.

• DOL. TheDepartment of Labor issued a temporary rule implementing the paid family and medical leave provisions of the Families First Coronavirus Response Act. TRP’s analysis of the rule can be read here.
  • The Trump administration offered a broad definition of “health care providers” that may be excluded from paid sick and family leave, as well as broad exceptions to family leave for companies with fewer than 50 workers in the rule. This led some Members of Congress to say that the rule veers away from what Congress intended when it passed the law.

• HHS. The Department of Health and Human Services (HHS) announced that it will not penalize HIPAA-covered business associates for sharing patient information intended to assist the government combat COVID-19. 
  • HHS issued an emergency use authorization declaration stating that circumstances exist to justify the authorization of emergency use of drugs and biological products during the COVID-19 outbreak.

• HUD. The Department of Housing and Urban Affairs (HUD) has begun allocating $3 billion in funding for communities through the Community Development Block Grant, Emergency Solutions Grant, and Housing Opportunities for Persons With AIDS programs to address COVID-19 issues.

• Treasury. The Treasury Department issued a statement clarifying that Social Security recipients will not need to file an abbreviated tax return to receive direct payment relief.
  • The Treasury Department has issued guidance for airlines to apply for up to $58 billion in grants and loans as mandated by the Phase III COVID-19 legislative response bill.

• CFPB. The Consumer Financial Protection Bureau (CFBP) issued guidance urging lenders to provide information to credit reporting agencies about the work they are doing to provide relief to consumers during the COVID-19 emergency.

• USTR. The Office of the United States Trade Representative (USTR) published a list of exemptions on certain medical items from the tariffs imposed by President Donald Trump on Chinese goods.
  • USTR opened a comment docket for members of the public, businesses, and government agencies to submit comments if they believe further modifications to the 301 tariffs may be necessary in response to the outbreak. 

• FDA. The Food and Drug Administration (FDA) issued an update on steps the agency is taking to help mitigate supply interruptions of food and medical products.
  • FDA announced actions to increase U.S. supplies to support COVID-19 response efforts by providing instructions to manufacturers importing personal protective equipment (PPE) and other devices.
  • FDA has provided new guidance on patient access to certain Risk Evaluation and Mitigation Strategy (REMS)-requited drugs during the COVID-19 public health emergency.
  • FDA issued guidance allowing manufacturers of certain non-invasive, FDA-cleared devices to expand their use so that health care providers can use them to monitor patients remotely.  
  • FDA is suspending routine surveillance inspections for food, drugs, medical devices and tobacco to protect its workers from COVID-19 and because of industry concerns about visitors. Inspections triggered by specific reasons, like contamination, outbreaks or other emergencies, will continue.

• EO on Medical Resources. President Trump signed an executive order that seeks to stymie hoarding of health and medical resources to respond to the spread of COVID-19.
  • President Trump issued an executive order on prioritizing and allocating resources to respond to the spread of COVID-19.

• SEC. The Securities and Exchange Commission (SEC) has extended its conditional exemptions from reporting and proxy delivery requirements for public companies, funds, and investment advisers affected by the outbreak. 

• REAL ID. President Trump announcedthat the federal government would be extending the compliance deadline for REAL ID, responding to concern from the travel industry as well as lawmakers, who have been increasingly worried that a rush to DMVs to meet the Oct. 1 deadline could put people at risk.

• Tech. The White House announced the launch of a COVID-19 High Performance Computing Consortium aimed at providing researchers with access to computing resources needed to bolster scientific research on the virus.
  • The Trump administration issued a call to action urging the tech industry to collaborate and utilize data on COVID-19 and related viruses using artificial intelligence (AI). It includes curated articles and data compiled by the Allen Institute for AI. Additional information on this database can be found here.

• National Emergency. President Trump declared a national emergency in response to the COVID-19 outbreak, invoking the Stafford Act that allows the administration to provide more federal aid for states and municipalities.
  • This declaration would allow the states to request a 75 percent federal cost-share from the Federal Emergency Management Agency (FEMA) for expenses related to the outbreak, including medical tests and supplies, vaccinations, emergency workers, etc.
  • The national emergency declaration will also allow CMS to utilize Section 1135 waivers to provide flexibility to health care providers and state agencies during the outbreak.