COVID-19 Manatt Health Update

COVID-19 Update

House Passes COVID Stimulus Bill

Early Saturday morning, the U.S. House of Representatives passed—by an overwhelming 363–40 vote—the Families First Coronavirus Response Act, a COVID stimulus package. In addition to the healthcare provisions described below, which are focused largely on ensuring access to free testing, H.R. 6201 includes emergency supplemental appropriations to agencies on the front lines of the response to the pandemic, $1 billion in food aid, the establishment of an emergency paid leave benefits program, and the extension of sick leave benefits.

House Speaker Nancy Pelosi (D-CA) negotiated the package throughout the day on Friday with Treasury Secretary Mnuchin; House passage was assured following a tweet of support from President Trump late on Friday evening. The Senate is expected to pass the package as early as Monday so that it can be swiftly enacted into law.1 Provisions in the current bill on the scope of the paid leave and sick leave benefits have proven controversial and could change. To understand the employment implications of the bill, see the summary from Manatt’s Employment and Labor Group. For an explanation of major provisions of the bill, see the summary from our Government and Regulatory Practice Group.

Notably, while the bill eliminates cost sharing for coronavirus/COVID-19 testing and testing-related services across all payers, these protections may not be sufficient to protect patients from cost-sharing obligations. Today, healthcare providers are following strict protocols and algorithms to determine when to test patients for coronavirus. Typically, a test is available only after a patient has tested negative for the flu because coinfections with influenza and COVID are rare. Patients who test positive for the flu would never get the COVID test and presumably would be billed for all of their care and treatment as a regular visit, not based on the special coverage provisions in the legislation. The gap in protection that this scenario exposes may become less important in the coming weeks as the current shortage of supplies eases. 

Medicare Provisions

Sections 6002 and 6003. Waiving Cost Sharing Under the Medicare Program for Certain Visits Relating to Testing for COVID-19; Coverage of Testing for COVID-19 at No Cost Sharing Under the Medicare Advantage Program. Medicare has been covering SARS-CoV-2 and COVID-19 testing at zero cost sharing for dates of service on or after February 4, 2020, thanks to an interpretation that the tests fall under Part B’s coverage of clinical diagnostic laboratory services. This bill confirms that coverage in the original Medicare and Medicare Advantage programs. It also inserts provisions that provide for zero cost sharing for certain evaluation and management services that result in or relate to COVID-19 testing or evaluation. Prior authorization and utilization management requirements for these services are prohibited in the Medicare Advantage program. These provisions are effective upon enactment and are applicable for the duration of the public health and national emergency period.

Section 6010. Clarification Relating to Secretarial Authority Regarding Medicare Telehealth Services Furnished During COVID-19 Emergency Period. The bill includes a technical correction to the Medicare telehealth waiver provisions of the recently passed Coronavirus Preparedness and Response Supplemental Appropriations Act of 2020  that inadvertently excluded coverage of telehealth services for some new Medicare beneficiaries. (Please see Manatt Health’s summary here.)  That bill allowed additional Medicare coverage of telehealth, but limited coverage to services from any provider who had treated the enrollee within the past three years, or from members of that provider’s practice. The bill accomplished this by requiring the provider to have a prior Medicare claim on file for those services. This inadvertently excluded new Medicare beneficiaries whose prior relationship with physicians may have been paid for under commercial coverage. The new language permits coverage of telehealth services for a beneficiary who had been seen by a provider (or a member of the provider’s practice) within the past three years and had received a service that could have been paid for by Medicare if the person had been enrolled in Medicare; the new bill does not require an actual Medicare claim for the service. This provision is effective upon enactment; it is possible that the Centers for Medicare & Medicaid Services (CMS) will issue guidance to providers regarding how to claim for telehealth services rendered since P.L. 116-123 was enacted on March 6.

Medicaid, CHIP, and Uninsured Provisions

Section 6004. Coverage at No Cost Sharing of COVID-19 Testing Under Medicaid and CHIP. The bill amends Titles XIX and XXI to specify that during the public health and national emergency period, tests to detect or diagnose, respectively, SARS-CoV-2 and COVID-19 are Medicaid and the Children’s Health Insurance Program (CHIP) covered benefits, and that Medicaid and CHIP cannot charge cost sharing for the administration of such tests or any testing-related services. (The CHIP changes apply to children as well as targeted low-income pregnant women in states that opt to cover them.) Without this change, states were faced with eliminating cost sharing for other services in order to provide COVID-19 testing without a copay. The bill also prohibits states (and territories) from charging “alternative cost sharing” under Section 1916A for testing services and related visits.

Section 6004 also gives states the option to extend Medicaid eligibility to uninsured individuals for purposes of SARS-CoV-2/COVID-19 diagnostic testing and testing-related services during the duration of the public health emergency. States that elect this option would see their medical and administrative costs fully matched by the federal government. The bill also provides for payment of outstationed eligibility workers and the use of streamlined applications for uninsured individuals covered by this new provision. “Uninsured individuals” in this context are defined in the bill as those individuals who are not eligible for Medicaid under a mandatory group (e.g., children, pregnant women) and not enrolled in other public or commercial coverage. Additional guidance will be needed from CMS to understand how this provision will be implemented.

These provisions are effective upon enactment and are applicable for the duration of the public health and national emergency period.

Division A, Title V. Second Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, Department of Health and Human Services. The bill also separately includes $1 billion to the Public Health and Social Services Emergency Fund, specifically for the National Disaster Medical System (NDMS). Under this Department of Health and Human Services (HHS) authority, the funding is directed to be used to pay claims for providers for reimbursement of SARS-CoV-2/COVID-19 testing and testing-related visits for uninsured individuals. This appears to cover uninsured individuals in states that do not elect the Medicaid option to cover uninsured populations, authorized in Section 6004 of the bill. Additional guidance from HHS will be needed to understand how this provision will be implemented, but it appears that reimbursement could occur through the NDMS Definitive Care Reimbursement Program. The program is activated during a public health emergency, and participating institutions and practitioners are reimbursed for care to patients referred by a Federal Coordinating Center. The funding is available until September 30, 2020.

Section 6008. Temporary Increase of Medicaid FMAP. The bill includes a temporary 6.2 percentage point increase in the regular (e.g., non-expansion) Medicaid matching rate for both states and territories, retroactive to March 13, 2020, and lasting through the last day of the calendar quarter in which the emergency ends. To qualify for the increased matching rate, states would have to satisfy a maintenance of effort (MOE) requirement. There are several notable aspects to the MOE. States would need to provide Medicaid coverage without cost sharing for testing and treatment of COVID-19, including vaccines, equipment, and therapies for its Medicaid beneficiaries. With respect to Medicaid program eligibility, states would not be able to impose more restrictive eligibility standards, methodologies, or procedures, or to charge higher premiums than those in effect on January 1, 2020; nor would they be able to conduct automated income checks or eligibility redeterminations more frequently than once every 12 months or to deny enrollment to any individuals for reasons other than failure to satisfy financial, categorical, and residency requirements. In other words, states that disenroll people for failure to pay premiums or to comply with work requirements would not meet the MOE.

As was the case with the American Recovery and Reinvestment Act’s 2009 increase in the Federal Medical Assistance Percentage (FMAP), states may not require a political subdivision to pay a greater percentage of the nonfederal share of expenditures than the political subdivision would have been required to pay under regular FMAP rules as of March 11, 2020. In other words, to qualify for the increased FMAP, states must ensure that the required nonfederal share contributions by localities decline in recognition of the increased federal contribution. While this provision is targeted to ensure states do not cost-shift to localities in response to the increased federal match, it would also restrict potential changes in states like New York, which had been considering increasing local contributions for Medicaid due to budgetary challenges.

Section 6009. Increase in Medicaid Allotments for the Territories. In addition to the 6.2 percentage point increase in the FMAP, the bill also includes increased funding for Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa for the remainder of Fiscal Year (FY) 2020 and FY 2021.

Marketplace and Private Insurance Provisions

Section 6001. Coverage of Testing for COVID-19. Group health plans (including self-insured ERISA plans) and health insurance issuers in the individual and group markets (including grandfathered plans) must cover, without cost sharing, SARS-CoV-2 and COVID-19 testing and items and services related to testing and screening furnished during provider office visits, urgent care center visits, and emergency room visits that result in testing for COVID-19. The provision is effective on or after the date of enactment of the act and is applicable for the duration of the public health and national emergency period.

Other Healthcare Provisions

Section 6005. Treatment of Personal Respiratory Protective Devices as Covered Countermeasures. Some personal respiratory protective devices are declared in the bill to be “covered countermeasures” for purposes of the Public Readiness and Emergency Preparedness (PREP) Act. The bill specifically includes the N95 respirators for which the Food and Drug Administration (FDA) issued an emergency use authorization on March 4, 2020, and leaves room for HHS to include others. The designation of these respirators as covered countermeasures will add them to the drugs and devices enjoying PREP Act protection from liability arising from their manufacture and use under some circumstances, in accordance with the Secretary of HHS’s PREP Act declaration on March 10, 2020. The provision applies to covered devices that are used from January 27, 2020, through October 1, 2024, and in response to the coronavirus public health emergency.

Section 6006. Application with Respect to TRICARE, Coverage for Veterans, and Coverage for Federal Civilians. In keeping with the provisions described above, the bill prohibits TRICARE and the Department of Veterans Affairs from charging cost sharing for SARS-CoV-2 or COVID-19 testing. Similarly, such cost sharing may not be imposed on federal civil servants, including but not limited to those enrolled in the Federal Employees Health Benefits Program. The provision is effective on or after the date of enactment of the act and is applicable for the duration of the public health and national emergency period.

Section 6007. Coverage of Testing for COVID-19 at No Cost Sharing for Indians Receiving Purchased/Referred Care. The bill prevents cost sharing for testing and testing-related visits for American Indians and Alaskan Natives who receive services through the Indian Health Service (IHS), including through contracted health services providers. The provision is effective on or after the date of enactment of the act and is applicable for the duration of the public health and national emergency period.

General Healthcare Appropriations

In addition to the funding appropriated in the March 6 Coronavirus Preparedness and Response Supplemental Appropriations Act, H.R. 6201 appropriates a second round of funding to several agencies and offices within HHS, including:

  • $64 million for the IHS for health services related to SARS-CoV-2 or COVID-19 (available until September 30, 2022)
  • $250 million for Aging and Disability Services Programs provided by the HHS Administration for Community Living, including Home-Delivered Nutrition Services, Congregate Nutrition Services, and Nutrition Services for Native Americans (available until September 30, 2021)

The bill provides that state and local governments receiving funds or assistance under the bill shall ensure that the respective State Emergency Operations Center receives regular and real-time reporting of aggregated data on testing and results from state and local public health departments, as determined by the Centers for Disease Control and Prevention (CDC), and that such data is transmitted to the CDC.

1 Technical corrections to the House-adopted version of H.R. 6201 are anticipated prior to a Senate vote on the legislation.

President Declares National Emergency, Paving the Way for New Authorities Under Section 1135 and Other Assistance

On March 13, President Trump declared a national emergency in response to the effects of the COVID-19 outbreak. Coupled with the Department of Health and Human Services (HHS) Secretary’s public health emergency declaration in January, this new declaration provides the HHS Secretary with expanded authority—under Social Security Act Section 1135—to temporarily waive or modify certain federal Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) requirements and Health Insurance Portability and Accountability Act (HIPAA) privacy rules. The authority is intended to ensure that sufficient healthcare items and services are available to meet the needs of Medicare, Medicaid, and CHIP beneficiaries and that providers who deliver such services in good faith can be reimbursed and exempted from sanctions (absent any determination of fraud or abuse).

Following the Presidential declaration, HHS Secretary Alex Azar issued a broadly phrased Section 1135 waiver that temporarily lifts sanctions for certain HIPAA violations and authorizes the Centers for Medicare & Medicaid Services (CMS) to issue waivers with respect to Medicare, Medicaid and CHIP. Pursuant to that authority, CMS issued a provider fact sheet that defined an initial set of Medicare “blanket waivers” pertaining to provider enrollment and other program requirements, effective immediately for all applicable providers. The fact sheet also listed potential flexibilities for Medicaid and CHIP, which must be requested and approved on a state-by-state basis. CMS has already granted such waivers for Florida and Washington. States and provider groups have written to CMS requesting a variety of Medicare and Medicaid waivers beyond those already approved; CMS has indicated that future waivers may be forthcoming.

These waivers and modifications became effective on March 15 and are retroactive to March 1. These waivers end no later than the termination of the national or public health emergency; until that time, Secretary Azar may renew the waiver authority in 60-day increments.

Given the complexity of requirements, Manatt continues to analyze the blanket waivers that have been granted; which additional flexibilities states or providers may wish to seek for Medicare, Medicaid, and CHIP; and whether those additional waivers or modifications should be requested pursuant to an 1135 waiver, 1115 waiver, or another available authority. States are actively considering the flexibilities that have been granted and additional flexibilities they may require. Providers and other healthcare stakeholders should coordinate with their states in seeking additional flexibilities in responding to COVID-19 needs.

The HHS Secretary’s March 13 declaration also provides a time-limited waiver for hospitals of sanctions and penalties arising from non-compliance with HIPAA privacy requirements related to: obtaining a patient’s agreement to speak with family members or friends, distribution of privacy practices, and a patient’s right to request privacy restrictions or confidential communication. These HIPAA waivers become effective for 72 hours from the implementation of a hospital disaster protocol and are available only for the duration of the national or public health emergency, or 60 days from the date of the waiver publication. For more information about the HIPAA waivers, see Manatt Insights’ analysis.

In addition to the healthcare implications of President Trump’s national emergency declaration, the declaration also authorizes the President to provide financial and other assistance to state and local governments, certain private nonprofit organizations, and individuals to support response, recovery, and mitigation efforts.

CMS Issues Guidance to States, Plans, and Providers Regarding COVID-19 Response

The Centers for Medicare & Medicaid Services (CMS) and other agencies released a plethora of guidance and frequently asked questions (FAQs) documents aimed at supporting healthcare stakeholders as they navigate the growing COVID-19 pandemic. Below, we highlight some of the key guidance documents issued as of this writing.

  • CMS issued FAQs for state Medicaid and Children’s Health Insurance Program (CHIP) agencies regarding the flexibilities available to them as they address COVID-19. These flexibilities include those available in current statutes, through state plan amendments, through 1915(c) waiver authority, and through Section 1115 waivers. The toolkit also outlines operational flexibilities that states have with respect to eligibility and enrollment, benefits, cost sharing, and the provider workforce.
  • In a memorandum to Medicare Advantage organizations and Part D Plan (PDP) sponsors, CMS announced flexibilities and expectations for beneficiaries enrolled in Medicare Parts C and D.
    • For Medicare Advantage, CMS is allowing Medicare Advantage organizations (MAOs) to waive or reduce cost sharing for beneficiaries impacted by the outbreak and expand the scope of telehealth coverage by implementing a midyear benefit change, ordinarily not permitted in the Medicare Advantage program. The agency also notes that it has consulted with the Department of Health and Human Services (HHS) Office of Inspector General (OIG) and confirms that these coverage changes would fall under safe harbors to the federal anti-kickback statute. Organizations also may remove prior authorization requirements for COVID-19 testing. Finally, CMS reminded organizations that when emergencies are declared, plans must cover services out of network at in-network cost sharing and waive gatekeeper/referral requirements.
    • PDP sponsors may relax “refill too soon” edits and provide extended days’ supplies of drugs, must reimburse for prescriptions filled out of network if in-network pharmacies are not accessible, can relax requirements that could discourage home or mail delivery, and may relax prior authorization requirements.
  • In separate memoranda, CMS issued guidance to hospices, nursing homes, and hospitals with emergency departments on infection control and screening for COVID-19 infections.
  • Addressing concerns about coverage for COVID-19 testing, CMS has issued subregulatory guidance declaring that the tests will be covered by Medicare as covered clinical laboratory diagnostic tests, effective February 4. This means beneficiaries can access them without cost sharing. Providers must wait until April 1 to submit claims.
  • CMS has suspended nonemergency health facility inspection activities and is reorienting state survey inspections around priority areas. The top two priorities are immediate jeopardy complaints and allegations of abuse, and infection control concerns.
  • The IRS announced that high deductible health plans can cover health benefits associated with testing for and treatment of COVID-19 without a deductible, or with a deductible below the minimum deductible.
  • HHS Secretary Alex Azar signed a declaration under the Public Readiness and Emergency Preparedness (PREP) Act to support development of medical countermeasures against COVID-19. The declaration will activate provisions of the PREP Act that immunize manufacturers, distributors, program planners, and other qualified persons from liability in the development, distribution, administration, and use of covered COVID-19 countermeasures under certain circumstances. It will also allow some injured persons to seek compensation through the Countermeasures Injury Compensation Program, a federal injury compensation fund.

Congress Passes First COVID-19 Bill

On March 6, President Trump signed into law an $8.3 billion emergency supplemental appropriations bill for prevention, preparation, and response to coronavirus—domestically and internationally—“Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020” (H.R. 6074) (the Act or the legislation). Tripling the amount of the Administration’s initial proposal, the legislation provides funding for state and local responses, vaccine development, and international aid, and also makes telehealth services more widely available to Medicare enrollees during a declared emergency.

Manatt Health’s summary and analysis below focus on the $6.7 billion appropriated to the Department of Health and Human Services (HHS) and the Medicare provisions that are estimated to result in increased spending of $490 million. The legislation directs funding for vaccine development and medical supplies and grants to states, localities, tribal organizations, and healthcare providers. The money will in large part be delivered as an infusion to several existing funds and grant programs, including the Public Health and Social Services Emergency Fund, Public Health Emergency Preparedness cooperative agreements, and Section 330 Primary Health Care grants to community health centers.

Recognizing current investments being made to respond to the coronavirus and the urgency for additional resources, the Act requires that the grants to states, localities, tribal organizations, and healthcare providers also include reimbursement for preparedness and response activities starting from January 20, and that $475 million of these grants be allocated within 30 days of enactment (by April 5). Perhaps anticipating coronavirus response efforts will be required over a longer term, much of the funding in the Act overall will remain available through September 30, 2024.

In addition, the Act includes $1.25 billion in funding to the Department of State, the U.S. Agency for International Development, and the Small Business Administration for global health programs and assistance, economic support, and disaster loans.

Public Health and Social Services Emergency Fund—$3.4 billion

The largest portion of funding in the Act is directed to the Public Health and Social Services Emergency Fund, managed under the HHS Office of the Secretary, with a broad charge of response, including research and development of countermeasures; purchase of vaccines, therapeutics, diagnostics, and medical supplies; manufacturing innovations; and facility construction, alteration, and renovation to improve preparedness and response capability at the state and local levels. A total of $3.4 billion is appropriated; $3.1 billion is available immediately and an additional $300 million may be triggered for purchasing vaccines, therapeutics, and diagnostics if HHS Secretary Alex Azar certifies to Congress that the initial amount will be obligated imminently and additional funds are needed. This provision is reportedly the congressional compromise for ensuring vaccine affordability, which had been a sticking point in gaining agreement on the legislation.

Within the $3.1 billion, $100 million is earmarked for Health Resources and Services Administration (HRSA) Public Health Service Act Section 330 Primary Health Care grants to community health centers.

The remaining funds may be leveraged by HHS to bring in staff for critical work relating to coronavirus or transferred to the Centers for Disease Control and Prevention (CDC) and the National Institutes of Health (NIH) to augment their coronavirus response activities. Up to $2 million will also be transferred to the HHS Office of Inspector General (OIG) for oversight of the coronavirus response funds managed by HHS agencies under the legislation.

CDC—$2.2 billion

The next largest portion of funding under the Act is directed to the CDC. Within this $2.2 billion allocation, $950 million is earmarked for grants or cooperative agreements to states, territories, localities, tribes, tribal organizations, urban Indian Health organizations, and health services providers for surveillance, epidemiology, laboratory capacity, infection control, mitigation, communications, and other preparedness response activities. Half of the $950 million—or $475 million—must be allocated within 30 days of enactment, or by April 5. While the CDC has flexibility to use a variety of grants or cooperative agreements to make these funds available, the primary funding mechanism is likely to be the Public Health Emergency Preparedness cooperative agreement, which has provided resources to public health departments since 2002. The legislation guarantees that each of the existing 62 Public Health Emergency Preparedness grantees1 will receive at least 90% of their fiscal year 2019 funding levels ($4 million) and directs that $40 million must be allocated to tribes and tribal providers. Each grantee must submit a spending plan to the CDC within 45 days of enactment, or by April 20.

In addition to these grants, the Act dedicates $300 million for global disease detection and emergency response and $300 million to support the Infectious Diseases Rapid Response Reserve Fund at the CDC.

NIH—$836 million

The Act directs $836 million to the National Institute of Allergy and Infectious Diseases, with $10 million apportioned to the National Institute of Environmental Health Sciences for worker training to prevent and reduce exposure of hospital employees, emergency first responders, and other workers at risk of exposure.

Food and Drug Administration (FDA)—$61 million

The Act directs $61 million to FDA salaries and expenses for the development of vaccine and medical countermeasures, manufacturing of medical products, and monitoring of medical product supply chains.

Medicare Telehealth

The legislation includes a change to Medicare coverage in response to the coronavirus crisis: Telehealth services are now more widely available to Medicare enrollees in their homes during a declared emergency. The change does not take effect until the Centers for Medicare & Medicaid Services (CMS) issues guidance implementing the new authority, which it has not yet done. See the further update in the House stimulus above.

Under long-standing law, Medicare covers telehealth for beneficiaries enrolled in fee-for-service coverage only under limited circumstances. Most notably, statutory restrictions limit coverage generally to telehealth services that originate from healthcare facilities in nonurban areas or areas with physician shortages, and not from patients’ homes. And by regulation, CMS has declined to pay for telehealth services delivered by telephone, other than some “virtual check-in” services. While recently enacted laws have slowly chipped away at these restrictions by giving more telehealth coverage options to enrollees in Medicare Advantage plans, and to individuals with end stage renal disease (ESRD) or substance use disorders, the overall limitations have continued to apply.

The Act makes two changes to existing Medicare telehealth coverage policies under emergency circumstances. First, the Act allows CMS to extend coverage of telehealth services to beneficiaries regardless of where they are located. This means even if the enrollee is not in a healthcare facility or located in a nonurban or physician shortage area, a beneficiary can receive a covered telehealth visit. This new provision should allow beneficiaries to access telehealth from their homes or from other community locations. Second, the Act allows CMS to extend coverage to telehealth services provided by “telephone,” but only those with “audio and video capabilities that are used for two-way, real-time interactive communication.” To deliver the services, a provider or member of the provider’s practice must have treated the patient within the past three years.

The new telehealth coverage is not a permanent change to the Medicare program, only a waiver flexibility that federal officials may implement in emergencies, adding to the toolbox of other emergency authorities available to regulators under federal law. Regulators can typically only exercise these authorities with the issuance of two declarations: a presidential declaration of an emergency or disaster and a declaration of a public health emergency by the Secretary of HHS. But under a special provision for COVID-19, a presidential declaration is not required in order to authorize the new emergency telehealth measures. Instead, Congress has allowed federal regulators to implement the telehealth coverage waivers solely on the basis of a public health emergency declaration. The Secretary of HHS already issued such a declaration in January.

1The recipients are public health departments in all 50 states, four major metropolitan areas (Chicago, Los Angeles County, New York City, and Washington, D.C.), and eight U.S. territories and freely associated states (American Samoa, Guam, U.S. Virgin Islands, Northern Mariana Islands, Puerto Rico, Federated States of Micronesia

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