Today on the Hill: Lawmakers Look to Clinch Deal on COVID ‘Phase 3.5’

Capitol Hill Update

Congressional leadership and White House officials are closing in on an agreement for the next round of COVID-19 legislation after funding for the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) lapsed late last week. Following days of tense negotiations and partisan messaging exercises, the deal is expected to include a boost in funding for the PPP with language that aims to offset Democratic concerns about access to the loan program for minority owned and disadvantaged small businesses. The two sides have also coalesced around additional funding for health care providers and COVID-19 testing. However, more financial support for state and local government, as well as a hike in Supplemental Nutrition Assistance Program (SNAP) benefits, appears to be off the table as of right now.

Once lawmakers strike a deal on this next round of funding, the Senate would likely move to pass the bill by unanimous consent during its pro forma session this afternoon, with the House convening as soon as Wednesday to pass the bill and place it on President Donald Trump’s desk. However, a path forward in the House is clouded by the fact that Rep. Thomas Massie (R-KY) is expected to object to unanimous consent passage in the lower chamber over concerns about moving a large package of funding absent a quorum. As such, the timing for consideration and enactment on the Phase 3.5 measure remains in flux.

COVID-19: What We’re Hearing

• Provider Funding. Health officials in the Trump administration are deliberating next steps on allocating the second tranche of CARES Act health care provider funding. Recent reports out of the Centers for Medicare and Medicaid Services (CMS) suggests that the next tranche of the $100 billion Public Health and Social Services Relief Fund (PHSSEF) will likely be distributed later this week or early next week. 
  • Health and Human Services Secretary Alex Azar told lawmakers on the House Appropriations Committee last week that the next wave of emergency funding to health care providers could take another week and a half to calculate and distribute. House Labor-HHS-Education Appropriations Chairwoman Rosa DeLauro (D-CT) highlighted this development in her April 16th letter to the Secretary. This news comes after CMS Administrator Seema Verma stated on Wednesday that this second tranche of relief funding would start going out last week. 
  • Verma stated that a portion of the $70 billion will be targeted at providers in areas that have been hit hardest by COVID-19 and aim to help providers that might not have benefited from the first round of funding. 
  • The first round of funding, which included $26 billion for hospitals and providers, was released via electronic transfer. The remaining $4 billion will be disbursed by paper check for providers for whom that is how they normally receive payment.
  • Providers receiving funds must agree to a set of terms and conditions, including reporting and documentation requirements, charging only in-network rates for COVID-19 care, and certifying that the funds will only be used to prevent, prepare for, and respond to the outbreak. Those that do not agree must contact HHS within 30 days to remit the payment.
  • HHS is expected to release a list of frequently asked questions to clarify that the intention for this funding is to support providers that have lost revenue. Providers who ceased operation as a result of the pandemic will likely still be eligible to receive funds if they provided diagnoses, testing, or care for individuals with possible or actual cases of COVID-19. 
  • The Administration had also previously announced that 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 that care for the uninsured, reimbursed at Medicare rates, would run between $13.9 and $41.8 billion.
  • $34 billion has already started flowing to providers via the Accelerated/Advance Payment Program. These payments are separate from the PHSSEF funding and must be returned and carry a 10.25 percent interest rate, which CMS says it cannot change unilaterally.

• COVID 4.0. Democrats have outlined numerous priorities for the COVID-19 “Phase IV” legislation. Specific policy items include: (1) addressing additional health care needs and bolstering health infrastructure; (2) more funding for unemployment insurance and another round of direct payments; (3) stabilizing the U.S. postal service; (4) additional funding for election support; (5) strengthened oversight and protections for inspector generals; and (6) “technology modernization.” 
  • 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.

• Appropriations. House Appropriators are working to draft fiscal year (FY) 2021 spending bills by the first week of May. Markups and full consideration of the bills are not expected to occur until Congress returns to Washington.
  • House Appropriations Chairwoman Nita Lowey (D-NY) has sent each of the 12 Appropriations Subcommittee the preliminary 302(b) allocations for FY 2021.
  • Appropriators have pushed their expectations for completing FY 2021 spending work past the late spring-early summer dates that leadership targeted earlier this year. 
  • Leader Hoyer expects the House to take up fiscal year (FY) 2021 bills in June so long as lawmakers are able to return to Washington.

COVID-19: What’s Happened

• CMS. The Centers for Medicare & Medicaid Services announced new regulatory requirements that mandate nursing homes to report cases of COVID-19 directly to the Centers for Disease Control and Prevention (CDC).
  • CMS issued new recommendations that outline how certain health care systems can resume non-essential surgeries and medical procedures in areas with low incidence of COVID-19.
  • CMS has proposed to permanently codify a change to its inpatient rehabilitation facility (IRF) policy that dispenses with the requirement that IRFs provide and document a post-admission physician evaluation within 24 hours of admission.
  • CMS is preparing to issue another interim final rule that will address additional policy and regulatory revisions in response to the COVID-19 public health emergency. The rule is expected to include narrow and technical changes to Medicare and Medicaid policies, and will be effective upon publication.
  • CMS announced that they would nearly double Medicare payment for lab tests that use high-throughput technologies to rapidly diagnose large numbers of COVID-19 cases. 
  • CMS and the Departments of Labor and Treasury issued guidance that ensures Americans with private health insurance have access to free COVID-19 testing.
  • 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. A list of new frequently asked questions can be read here.
  • CMS published a list of frequently asked questions on the enhanced Medicaid Federal Medical Assistance Percentage (FMAP). A list of FAQs for state Medicaid and CHIP agencies regarding COVID-19 response efforts can be read here. A list of FAQs for state Medicaid and Children’s Health Insurance Program (CHIP) agencies 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.

• Legislative Response. TRP’s newest COVID-19 policy memo explores the “health extenders” that the CARES Act reauthorized through Nov. 2020, what’s on the table for these programs in the fall, and the questions that will shape the conversation. Click here to read the memo.
  • TRP has published a memo that analyses telehealth and rural health policies in the COVID-19legislative response packages. This includes expanded capabilities and funding for telehealth, funding for community health centers and other rural health supports, backing for telehealth and rural health infrastructure, and more. Click here to read the memo.
  • TRP has published a memo that 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.

• NIH. The National Institutes of Health (NIH) and the Foundation for the NIH (FNIH) announced that they will launch a new public-private partnership with more than a dozen biopharmaceutical companies aimed at speeding COVID-19 vaccine and treatment options.

• Social Distancing. The Trump administration issued new federal guidelines entitled “Opening Up America Again,” outlining a three-phase process for when states can begin restarting their economies once the outbreak begins to slow.

• The Fed. The Federal Reserve announced that its PPP Liquidity Facility is fully operational and able to provide liquidity to eligible financial institutions.
  • The Federal Reserve announced a series of emergency actions 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.
  • 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).

• FDA. The Food and Drug Administration (FDA) issued guidance that will temporarily allow hospitals to compound certain sedatives used for COVID-19 patients during the public health emergency.
  • 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.

• HHS. HHS announced a new contract with General Electric and Ford under the Defense Production Act (DPA) that would allow for production of 50,000 ventilators by Jul. 13.
  • TRP’s memo on the bill’s provisions pertaining to the PHSSEF can be read here.
  • 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.

• USDA. The U.S. Department of Agriculture (USDA) and Department of Homeland Security (DHS) issued a temporary final rule allowing for flexibilities on certain agricultural-related employment regulations.

• SBA. SBA published a detailed breakdown of the PPP funding that has been distributed thus far.
  • SBA issued a interim final rule clarifying the process of applying for PPP loans for individuals who report self-employed income on a 1040 Schedule C
  • The 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.

• DOT. The Department of Transportation (DOT) awarded $10 billion in grant funding for airports to certain operating expenses during the COVID-19 pandemic. A breakdown of the disbursements can be read here. A list of frequently asked questions on this funding can be read here.
  • 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.

• Ed. The Department of Education announced the availability of $3 billion in emergency education relief funding for states to allocate in support of institutions that have been adversely impacted by the outbreak. A breakdown of the funding allocations can be read here.

• Treasury. Secretary Mnuchin announced that the Treasury Department reached an agreement in principle with ten airlines on grant funding to cover certain operating expenses.
  • The Treasury Department released eligibility guidance for State, Local, and Tribal government funding from the CARES Act.
  • 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.

• Telehealth. The Federal Communications Commission (FCC) launched its COVID-19 Telehealth Program application portal. Click here for details.
  • TRP has published a comprehensive analysis of the telehealth policies for the COVID-19 national emergency. Click here to read the telehealth memo.

• DOL. The Department 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.

• 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.

• 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.

• Trade. 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. 

• 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.