The U.S. House of Representatives and the Senate passed H.R. 133, a compromise to fund the government as well as provide further relief for the COVID-19 pandemic. The $1.4 trillion omnibus appropriations legislation, passed by Congress on Dec. 21, 2020, and signed by President Donald Trump on Dec. 27, 2020, funds the government through Sept. 30, 2021, and was attached to a $900 billion COVID-19 relief package, totaling $2.3 trillion. Of the $900 billion in COVID-19 relief, $73 billion was allocated to the U.S. Department of Health and Human Services (HHS).
Some policies in this legislative package include $3 billion in funding for the Provider Relief Fund (PRF) as well as clarification for the definition of lost revenues of providers who receive PRF funds, specifically allowing the use of 2020 budgets when calculating revenue. While the $3 billion increase is small, it is expected that additional funding beyond the $3 billion will be provided to the PRF in a subsequent COVID package in the spring. On Dec. 16, 2020, HHS announced that it would begin distributing $24.5 billion to providers in the latest funding round from the PRF. We expect that the Trump Administration will try to deplete the fund before the Biden Administration takes over but are awaiting information on where this remaining funding will go. There is a possibility the remaining funds could be dedicated to vaccine costs (outside of existing reimbursement for uninsured vaccine coverage). We also expect Congress will add additional funds to the PRF in a COVID package in early 2021.
The compromise also partially mitigates the significant cuts that many Medicare providers expected on Jan. 1, 2021, due to proposed changes to evaluation and management (E/M) codes. Surprise medical billing is also addressed, along with a delay of the Medicaid Disproportionate Share Hospital (DSH) payment reduction and a three-month delay of 2 percent Medicare sequester cuts.
I. Additional Authorizing Provisions
Surprise Medical Billing
After several years of working to enact a ban on surprise medical billing, Congress included the “No Surprises Act,” a far reaching agreement, in the end-of-year legislation. The legislative language amends three different statutes – Public Health Service Act, Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (IRC) – and thus appears duplicative and is lengthy. Major areas of disagreement were resolved among the varying committees of jurisdiction as follows below.
Healthcare Plans and Providers
First, and most significantly, the legislation bans surprise medical billing for emergency and nonemergency care. For out-of-network emergency medical care and certain ancillary services provided by out-of-network providers at in-network facilities, patients are only required to pay to the in-network cost-sharing, including any applicable co-payment, coinsurance and deductible. For nonemergency care, patient-informed consent is required for patients to be balance billed.
Second, the legislation establishes a process for resolving out-of-network provider claims to be paid by health plans.
There is a 30-day open negotiation period for providers and payers to settle out-of-network claims.
If parties cannot reach agreement, either party may access the Independent Dispute Resolution (IDR) process. Providers are allowed to batch similar services into a single proceeding when claims are for the same payer. The IDR process is administered by an objective entity. The IDR entity may not consider billed charges and public payer rates. The IDR entity must consider the market-based median in-network rate and relevant information offered by either party including the following:
- provider’s training and experience
- patient acuity and complexity of the item or service
- if a hospital – teaching status, case mix and scope of services of the facility
- demonstrations of good faith efforts (or lack thereof) to enter into a network agreement
- prior contracted rates during the four prior years
- other items requested by the reviewer or deemed relevant by the parties
Following IDR, the initiating party is excluded from taking the same party to IDR for 90 days to encourage settlement of similar claims; after 90 days, IDR is available.
Third, health care providers and facilities that are out-of-network are prohibited from sending patients bills for more than the in-network cost-sharing amounts unless a patient has provided informed consent after receiving a notice of their network status and an estimate of charges 72 hours prior to receiving out-of-network services. For appointments within 72 hours of receiving services, the patient must receive notice the day the appointment is made and provide informed consent to receive out-of-network care.
Air and Ground Ambulances
The legislation has specific sections addressing surprise billing within the ambulance context.
First, the legislation generally follows the contours of the balance billing prohibition and IDR process as the sections described above.
The IDR entity must consider the qualifying payment amounts for items or services that are comparable to the qualified IDR air ambulance service and that are furnished in the same geographic region as determined by the HHS Secretary. The IDR entity is prohibited from considering public payer rates and charges.
The additional factors for consideration by the IDR entity include the following:
- the quality and outcomes measurements of the provider that furnished air ambulance services
- the acuity of the individual receiving such services or the complexity of furnishing such services to that patient
- the training, experience and quality of the medical personnel that furnished such services
- the ambulance vehicle type, including the clinical capability level of such vehicle
- the population density of the pickup location, such as urban, suburban, rural or frontier
- demonstrations of good faith efforts, or lack thereof, of the provider or plan to enter into network agreements
Second, the legislation also includes extensive reporting requirements for air ambulance providers to submit cost data and insurers to submit claims data to the Secretaries of HHS and Transportation. The Secretaries are required to publish a comprehensive report on the cost and claims data submitted.
Third, the legislation establishes the Advisory Committee on Air Ambulance Quality and Patient Safety for the purpose of reviewing options and making recommendations to the Congress regarding establishing quality, patient safety, service reliability and clinical capability standards for each clinical capability level of air ambulances. More specifically, the duties of the Committee include recommendations regarding each of the following:
- qualifications of different clinical capability levels and tiering of such levels
- patient safety and quality standards
- options for improving service reliability during poor weather, night conditions or other adverse conditions
- differences between air ambulance vehicle types, services and technologies and other flight capability standards and the impact of such differences on patient safety
- clinical triage criteria for air ambulances
Fourth, the legislation establishes an Advisory Committee on Ground Ambulance and Patient Billing, including reviewing options to improve disclosure of charges and fees for ground ambulance services, inform consumer of insurance options for such services, and protect consumers from surprise billing.
The bill includes several additional healthcare authorizing provisions. Topline provisions of note:
Radiation Oncology Model Delay: Provides a six-month statutory delay to the start of the Centers for Medicare & Medicaid Services (CMS) Model until Jan. 1, 2022, six months beyond what CMS advanced in recent rulemaking.
Two -Year Freeze on Advanced Alternative Payment Model (APM) Thresholds: Congress reformed the qualification thresholds for the Advanced APM program. As currently implemented, 50 percent of providers’ revenue must be received through an Advanced APM, e.g., NextGen. This 50 percent threshold would have increased to 75 percent in January. Congress reduced these thresholds for payments years 2023 and 2024 (performance years 2021 and 2022) to reflect actual market conditions, which would, in turn, result in increased Advanced APM participation.
Work Geographic Practice Cost Index Floor: Extends the work geographic index floor under the Medicare program through Dec. 31, 2023.
Telehealth Mental Health Services: Expands access to mental health services furnished through telehealth past the expiration of the COVID-19 public health emergency.
Graduate Medical Education (GME) Provisions: Provides for the creation of 1,000 new Medicare-funded GME residency positions.
E/M Changes: By law, any changes to the Medicare Physician Fee Schedule (MPFS) cannot increase or decrease expenditures by more than $20 million. To comply with this budget neutrality requirement, any increases must be offset by corresponding decreases. CMS estimated that the 2021 policies would increase Medicare spending by $10.2 billion, necessitating steep cuts by reducing the Medicare conversion factor from $36.0896 to $32.4085, or a 10.2 percent decrease.
To blunt these cuts, all codes receive a 3.75 percent increase for 2021 paid for by $3 billion from the Trust Fund. Additionally, a complexity add-on G-code is delayed for three years until 2024. Specifically, the HHS Secretary is prohibited from making payments under the MPFS for services described by code G2211 (or any successor or substantially similar code) prior to Jan. 1, 2024. The savings from the delay will be applied across the board to the MPFS. The delay savings are intended to reduce the budget neutrality cuts by a third.
Extension of the Sequester Moratorium: Provides a three-month extension of the Medicare sequester moratorium to help providers affected by the COVID-19 pandemic and by changes to the 2021 physician fee schedule.
Other Medicare provisions include:
Improving measurements under the skilled nursing facility value-based purchasing program under the Medicare program
- allows the Secretary to add up to 10 quality measures to the skilled nursing facility value-based purchasing program
- authorizes a Medicare Payment Advisory Commission (MedPAC) study on establishing a prototype value-based payment program
- authorizes $5 million per year for 2023 through 2025 to carry out this subsection
Providing the Medicare Payment Advisory Commission and Medicaid and CHIP Payment and Access Commission with access to certain drug payment information, including certain rebate information (i.e. H.R. 1781)
- allows both MedPAC and the Medicaid and CHIP Payment Advisory Commission (MACPAC) access to certain drug pricing data for analysis and the provision of program recommendations; specifies the confidentiality of said data when collected
Permitting occupational therapists to conduct the initial assessment visit and complete the comprehensive assessment with respect to certain rehabilitation services for home health agencies under the Medicare program (i.e. H.R. 3127)
- requires the HHS Secretary to allow occupational therapists to conduct initial assessments and complete comprehensive assessments for certain home health services if the physician referral includes occupational therapy and physical therapy or speech language pathology (but does not included skilled nursing care)
Requiring CMS provider outreach and reporting on cognitive assessment and care plan services (i.e. H.R. 1873)
- requires the HHS Secretary to conduct outreach to Medicare providers regarding Medicare payment for cognitive assessment and care plan services for those with cognitive impairment (HCPCS Code 99483)
- requires HHS submit a report within a year of enactment on the aforementioned outreach to Congress
- requires the U.S. Government Accountability Office (GAO) to publish a study within three years on the number of Medicare beneficiaries who were furnished cognitive assessment services and barriers that exist to such services
Continuing coverage of certain temporary transitional home infusion therapy services (i.e. H.R. 6218)
- continues coverage of home infusion therapy services for those beneficiaries taking self-administered and biological drugs included in the temporary transitional home infusion therapy benefit when the permanent home infusion therapy benefit takes effect Jan. 1, 2021
Transitional coverage and retroactive Medicare Part D coverage for certain low-income beneficiaries (i.e. H.R. 3029)
Increasing the use of real-time benefit tools to lower beneficiary costs (i.e. H.R. 3408)
- requires Medicare Part D and Medicare Advantage plans to implement real-time benefit tools that can integrate with electronic prescribing and electronic health record (EHR) systems
- requires real-time benefit tools to comply with technical standards adopted by HHS in consultation with the Office of the National Coordinator for Health Information Technology
- qualifies the use of real-time benefit tools as applicable under the Merit-based Incentive Payment System (MIPS) program
Beneficiary enrollment simplification (i.e. H.R. 2477)
- eliminates coverage gaps in Medicare by ensuring that Medicare Part B coverage begins the first of the month following an individual’s enrollment
- provides a special enrollment period in Medicare Parts A and B similar to the authority in Medicare Advantage and Medicare Part D plans for exceptional circumstances
- authorizes a report to Congress by Jan. 1, 2023 on how to align existing Medicare enrollment periods
Waiving budget neutrality for oxygen under the Medicare program (i.e. H.R. 8158)
- waives application of the budget neutrality requirement for establishing new payment classes of oxygen and oxygen equipment, which increases payment for certain oxygen equipment
Waiving Medicare coinsurance for certain colorectal cancer screening tests (i.e. H.R. 1570)
- beginning Jan. 1, 2022, gradually eliminates cost sharing for Medicare beneficiaries by Jan. 1, 2030 (2022: 80 percent; 2023-2026: 85 percent; 2027-2029: 90 percent) for colorectal screening tests where a polyp is detected and removed
Expanding access to mental health services furnished through telehealth.
- expands Medicare telehealth services to allow beneficiaries to receive mental health services via telehealth if the beneficiary has been seen in person at least once by the qualifying practitioner during the six-month period prior to the first telehealth service
Public-private partnership for health care waste, fraud and abuse detection (i.e. H.R. 525)
- codifies an existing mechanism for CMS to establish a partnership coordinated by a third-party contractor to combat waste, fraud and abuse in CMS-administered healthcare programs
- specifies that the third-party contractor shall perform an analysis of fraudulent billing practices with respect to providers and suppliers of substance-use disorder treatments
- authorizes a report within two years detailing the work of such partnership
Medicare payment for Rural Emergency Hospital services
- creates a voluntary Medicare payment designation to allow Critical Access Hospitals or rural hospitals with fewer than 50 beds to convert to a Rural Emergency Hospital in rural areas that cannot support a fully operational inpatient hospital
- facilities may provide other services to the community, including ambulance and telehealth services
- facilities are subject to quality measures and must submit quality data dependent on case volume levels; HHS will establish procedures to make these data public
Promoting rural hospital GME funding opportunity (i.e. H.R. 8892)
- beginning in reporting periods that start Oct. 1, 2022, the Secretary shall make adjustments in the Medicare GME Rural Training Tracks to provide flexibility to both rural and urban hospitals that participate in the Rural Training Tracks program
Five-year extension of the Rural Community Hospital Demonstration (i.e. H.R 6793)
Extension of the Frontier Community Health Integration Project demonstration (i.e. S. 3399).
- reauthorizes and extends the program for a five-year period beginning on July 1, 2021
- includes $10 million from the Hospital Insurance Trust Fund to fund the extension
Improving Rural Health Clinic (RHC) payments.
- amends the payment for RHCs by phasing in an increase in the RHC statutory payment cap over an eight-year period ($100 per visit in 2021 to $190 per visit in 2028)
- prevents a reduction in reimbursement for RHCs but those RHCs with an all-inclusive rate above the upper limit would experience annual growth constrained to the prior year’s reimbursement adjusted by the Medicare Economic Index
Medicare GME treatment of hospitals establishing new medical residency training programs after hosting medical resident rotators for short durations (i.e. H.R. 3425).
- allows hospitals to host a certain number of medical residents for short-term rotations without triggering the permanent full-time equivalent resident cap or Per Resident Amounts (PRAs)
Medicare payment for certain Federally Qualified Health Center (FQHC) and RHC services furnished to hospice patients (i.e. H.R. 2594)
- beginning with services furnished on or after Jan. 1, 2022, allows RHCs and FQHCs to bill for hospice attending physician services when patients in these facilities become terminally ill and elect the hospice benefit
- currently, attending physicians in these facilities may only provide hospice services outside of work hours and other limitations
Improve access to skilled nursing facility (SNF) services for hemophilia patients (i.e. H.R. 5954)
- increases access to skilled nursing facility care (rather than solely inpatient care) for certain hemophilia patients by adding blood clotting factors and related items and services to high-cost, low-probability services currently excluded from the skilled nursing facility per diem prospective payment system
The legislation provides for the extension or modification of several healthcare programs. In addition to the aforementioned delay in DSH reductions for FY 2021, other extenders include, among other things:
- extends funding for Community Health Centers at $4 billion per year through FY 2023
- extends National Health Service Corps (NHSC) funding at $310 million per year through FY 2023
- extends funding for Teaching Health Centers at $27.4 million per year through FY 2023
- extends diabetes programs through 2023
- extension of protections against spousal impoverishment for partners of Medicare beneficiaries who receive certain services through FY 2023
- extension of the community mental health services demonstration program through FY 2023
- extension of the Personal Responsibility Education Program through FY 2023
- extension of the Sexual Risk Avoidance Education program through FY 2023
- extension of the Temporary Assistance for Needy Families (TANF) program through FY 2021
- extension of the Intravenous Immunoglobulin (IVIG) demonstration through FY 2023
- extension of the Independence at Home medical practice demonstration program through Dec. 31, 2023 and expands the program from 15,000 to 20,000 beneficiaries
- provision of $66 million in funding to CMS for quality measure selection as well as inclusion of additional reporting requirements
The legislation includes offset provisions funded and authorized through the legislation, including:
- requiring certain manufacturers to report drug pricing information with respect to drugs under the Medicare program (i.e. HR 2087)
- requiring all manufacturers of drugs covered under Medicare Part B to report average sales price (ASP) data to HHS beginning on Jan. 1, 2022, or be subject to civil monetary penalties
- requiring manufacturers without a Medicaid rebate agreement to report ASP data to the Secretary
- authorizes an HHS Office of the Inspector General report on information submitted by manufacturers under this section
Extended months of coverage of immunosuppressive drugs for kidney transplant patients and other renal dialysis provisions (i.e. HR 5534)
- provides Medicare coverage for immunosuppressive drugs to post-kidney transplant individuals whose coverage under Medicare Part A ends on or around Jan. 1, 2023, and whose drugs are not covered by other insurance.
- authorizes a GAO study and report to Congress on this provision by Jan. 1, 2025
Permitting direct payment to physician assistants under Medicare (i.e. HR 1052)
- permits direct payment under the Medicare program to physician assistants for services furnished to Medicare beneficiaries on or after Jan. 1, 2022
Adjusting calculation of hospice cap amount under Medicare
- extends the update to the hospice aggregate cap made in the IMPACT Act of 2014 and continues to apply the hospice payment update percentage rather than the Consumer Price Index for FYs 2026-2030
Special rule for determination of ASP in cases of certain self-administered versions of drugs
- authorizes the HHS Office of Inspector General to perform periodic studies to identify National Drug Codes for self-administered drugs not covered under Medicare Part B
- authorizes HHS to exclude payments for non-covered drugs under Part B as determined by the OIG for calculation of the ASP for covered drugs
Medicaid Improvement Fund
- rescinds $3.46 billion from the Medicaid Improvement Fund; these funds are used to assist states with activities related to mechanized claims systems
Hospice program survey and enforcement procedures (i.e. H.R. 5821)
- extends requirements that hospice programs be surveyed no less frequently than every 36 months and allows the secretary to use remedies to enforce compliance with such requirements
- requires the survey information to be published not later than Oct. 1, 2022
- includes monetary resources to train surveyors for hospice programs and to develop focus programs, as needed
Medicare Improvement Fund
- provides $165 million for the Medicare Improvement Fund, which was originally made duplicative by the Center for Medicare and Medicaid Innovation (CMMI)
Rare Pediatric Disease Priority Review Voucher (RPDPRV) Extension
- Extends the RPDPRV program through FY 2026, with a designation date of no later than Sept. 30, 2024
Conditions of use for biosimilar biological products
- Clarifies that biosimilar product applicants may include information to show that the proposed indications of use for the biosimilar have been reviewed and approved for the biosimilar reference product
Orphan drug clarification
- Clarifies that the clinical superiority standard applies to all orphan drug applications approved after the enactment of the FDA Reauthorization Act of 2017
Modernizing the labeling of certain generic drugs
- Authorizes the U.S. Food and Drug administration (FDA) to identify certain covered generic drugs where labeling changes may improve the public health and require sponsors of those drugs to make said labeling changes
- Authorizes a report on the number of drugs selected under the provision and the changes requested
Biological product patent transparency
- Requires patent information on biological products to be published in the public FDA reference guide “Purple Book”
- Codifies certain search and publication criteria for future version of the Purple Book
II. Healthcare Appropriations Provisions
The legislation includes funding for healthcare programs for FY 2021 through Sept. 30, 2021. This funding includes additional tweaks to the PRF, funding to states and other entities for the COVID-19 response, and funding historical healthcare programs. Additional details may be found below.
Provider Relief Fund
The legislation includes several changes to the PRF rules originally established under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Public Law 116-136), for the reimbursement for healthcare-related expenses or lost revenue directly attributable to the public health emergency. These include:
- allowing the use of the 2020 budget when calculating lost revenues in relation to funding requests, utilizing HHS June 2020 frequently asked questions guidance
- distributing reimbursements, included “targeted distribution” payments, to eligible healthcare entities that are subsidiaries of a parent organization
- distributing not less than 85 percent of unobligated PRF funds to target losses incurred in the third and fourth quarters
The legislation also provides an additional $3 billion to the PRF fund in addition to the unobligated funding currently sitting in the fund. While a small amount, it is expected that additional funding will be provided to the PRF in a subsequent COVID package in the spring.
COVID-Specific Supplemental Healthcare Appropriations
In addition to regular appropriations for healthcare programs in FY 2021 (see below), the legislation included additional funding for programs to combat COVID-19 in a similar vein to additional funding included in the CARES Act and other COVID legislation at the beginning of the public health emergency. These funding provisions include, among others:
- $73 million to support the public health; research, development, manufacturing, procurement and distribution of vaccines and therapeutics; diagnostic testing and contract tracing; and mental health and substance abuse prevention and treatment services
- $8.75 billion to support efforts at the federal, state, local, territorial and tribal levels to track the COVID-19 vaccination and ensure broad access to the vaccine, including $4.5 billion for state, local, territorial and tribal public health departments; $300 million will be available specifically for high-risk and underserved populations
National Institutes of Health (NIH)
- $1.25 billion to support research and clinical trials into the long-term effects of COVID-19
- $55 million to respond to COVID-19, including $30.5 million for advanced manufacturing for medical products, $1.4 million for data operation tools and $1.5 million for monitoring of medical product supply chains
Public Health and Social Services Emergency Fund
- $25.4 billion to support testing and contact tracing to monitor and combat COVID-19, including $22.4 billion for testing, contact, tracing and $2.5 billion to improve testing capabilities and contact tracing in high-risk and underserved populations
Office of the HHS Assistant Secretary for Preparedness and Response (ASPR)
- $22.945 billion to respond to COVID-19, including $19.695 billion for the Biomedical Advanced Research and Development Authority (BARDA) for manufacturing of vaccines and therapeutics and ancillary supplies and $3.25 billion for the Strategic National Stockpile
Substance Abuse and Mental Health Services Administration (SAMHSA)
- $4.25 billion to provide increased mental health and substance abuse services, including $1.65 billion each to the Substance Abuse and prevention Treatment Block Grant and the Mental Health Services Block Grant; the legislation also provided $600 million for Certified Community Behavioral Health Clinics
Regular FY 2021 Labor-Health and Human Services-Education Appropriations
In addition to supplemental appropriations specific to the COVID-19 response, the legislation also included $1.4 trillion in regular FY 2021 appropriations to fund the federal government through Sept. 30, 2021. Health-specific highlights of these appropriations may be found below.
- $96.5 billion in discretionary funding, a $97.3 million increase over FY 2020
- $7.874 billion for the CDC, an increase of $125 million over FY 2020
- $964 million for Domestic HIV/AIDS Prevention and Research, an increase of $36 million over FY 2020
- $6.5 million for prion disease research, an increase of $500,000 over FY 2020
- $63 million for the Safe Motherhood Initiative, an increase of $5 million over FY 2020
- $26.961 million for Prevention Research Centers, an increase of $400,000 over FY 2020
- $50 million for public health data modernization, flat funding from FY 2020
Health Resources and Services Administration (HRSA)
- $24.846 million for poison control centers, a $2 million increase over FY 2020
- $2.423 billion for the Ryan White HIV/AIDS Program, an increase of $35 million over FY 2020
- $350 million for the Children’s Hospital Graduate Medical Education (CHGME) Program, an increase of $10 million over FY 2020
- $286 million for the Title X Family Planning Program, flat funding from FY 2020; Note: the agreement does include language related to provide new funding to terminated recipients or sexual abstinence
- $6.5 million for Telehealth Centers of Excellence, a $500,000 increase over FY 2020
- No less than $15 million for the Health Start Program
- $42.9 billion in funding, a $1.25 billion increase
- $1.67 billion in funding for the Eunice K. Shriver National Institute for Child Health and Human Development, an increase of $113.5 million over FY 2020
- $6.9 billion for the National Cancer Institute, an increase of $468 million over FY 2020
- $300 million increase for targeted Alzheimer’s research
- $195 million for 21st Century Cures Act authorizations
- $195 million to the National Cancer Institute (NCI) to carry out the Cancer Moonshot Initiative
- $270 million for the HEAL Initiative related to research to combat the opioid epidemic
- $12.5 million for firearm prevention research, flat funding from FY 2020
- $6.015 billion for SAMHSA, an increase of $133 million over FY 2020
- $487 million for the Programs of Regional and National Significance, which includes a number of mental health services programs, such as mental health awareness training and $4 million for Comprehensive Opioid Recovery Centers
- $35 million increase for Mental Health Block Grant
- $2.451 billion for the ASPR outside of set-aside supplemental appropriations related to COVID
- $300.5 million for the Hospital Preparedness Program, an increase of $25 million over FY 2020; the agreement includes $11 million for the National Emerging Special Pathogens Training and Education Centers