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March 23, 2020

Health Headlines – March 23, 2020


President Trump Signs Phase II COVID-19 Legislation and Senate Continues to Negotiate Phase III Stimulus Bill – President Trump signed the Families First Coronavirus Response Act, H.R. 6201, on March 18th, 2020 after it passed in the Senate without amendment. The Act, Public Law 116-127, has become known as “Phase II” of the legislative response to COVID-19. As discussed in Health Headlines for the week of March 16, 2020, the Phase II law expands paid leave for certain workers, mandating two weeks of paid sick leave and up to three months of paid family and medical leave, while excluding certain health care providers and emergency responders. The Phase II law also provides that testing will be covered by private insurers and government payors without cost-sharing payments. On Thursday, March 19, 2020, Senate Republicans introduced the “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act”, S. 3548, which has become known as the “Phase III” legislative response. The CARES Act remains a work in progress after twice failing procedural votes in the Senate yesterday and today, but a draft of the bill reveals the types of relief that might be included in the final version. We also anticipate that a supplemental appropriations package will be included as a component of CARES. The most recent draft included $75 million to “reimburse, through grants or other mechanisms, eligible health care providers for health care related expenses or lost revenues that are directly attributable to coronavirus.

The general purpose of the CARES Act is to support the U.S. healthcare system during the COVID-19 public health emergency and to provide relief to individuals and businesses. In the most recent version of the CARES Act, which was unveiled on Sunday, most of the provisions that specifically apply to the healthcare industry are located in Division A, Title III. These generally include (1) provisions intended to mitigate shortages of medical supplies, drugs and devices, (2) provisions intended to increase access to care and the availability of healthcare services, and (3) various changes with respect to Medicare and Medicaid services and reimbursement. Set forth below is a summary of these provisions. Although these provisions remain subject to ongoing negotiations, they are illustrative of the types of relief that may be included in the final bill.

Summary of Draft Healthcare Relief Provisions

  • Medical Supplies, Drugs, and Devices
  • Clarifying the Strategic National Stockpile (SNS)  include certain types of medical supplies such as personal protective equipment and supplies necessary for administering drugs, vaccines, and diagnostic tests.
  • Granting liability protection for manufacturers of personal respiratory protective devices where such devices are determined to be a priority for use during a public health emergency. Note, however, that the CARES Act does not address how devices that are permitted during the current crisis that would otherwise be considered sub-standard should be treated after the crisis has ended (i.e., steps that manufacturers and providers will need to take to identify and remove sub-standard devices from circulation at some point in the future).
  • Requiring the FDA to prioritize and expedite reviews of drug applications and inspections to mitigate emergency drug shortages.
  • Adding new reporting requirements for drug manufacturers to submit information regarding interruptions in supply and requiring manufacturers to adopt risk management plans to ensure adequate supply.
  • Adding new requirements for medical device manufacturers to report shortages of devices or related components during a public health emergency.
  • Access to Healthcare Services
  • Requiring insurers to pay providers either a contracted rate or a cash price posted by a provider (if no contracted rate exists) for COVID-19 tests covered at no cost to patients. Providers that do not post their cash price for the test on their website are subject to civil monetary penalties.
  • Requiring insurers to cover any COVID-19 vaccine that meets certain qualifications without imposing any cost-sharing on patients.
  • Providing $1.32 billion for FY2020 for community health centers for testing and treating COVID-19.
  • Reauthorizing certain Health Resources and Services Administration (HRSA) grant programs intended to promote telehealth and strengthen rural community health.
  • Establishing a “Ready Reserve Corps” to ensure availability of trained physicians and nurses during public health emergencies.
  • Shielding volunteer health care professionals from liability for harm caused in the course of providing services during the COVID-19 public health emergency, subject to certain exceptions including, among others, gross negligence, willful misconduct, and services rendered under the influence of alcohol or intoxicating drugs.
  • Expanding the authority of the Secretary of HHS with respect to assignments of members of the National Health Service Corps during the COVID-19 public health emergency.
  • Requiring HHS to issue guidance within 180 days regarding the sharing of protected health information (PHI) under HIPAA during the COVID-19 public health emergency, and also revising confidentiality and disclosure requirements for records relating to substance use disorder.
  • Reauthorizing certain health professions workforce development programs, requiring HHS to develop a comprehensive workforce development plan.
  • Permitting a high-deductible health plan (HDHP) with a health savings account (HSA) to cover telehealth services for patients who have not yet reached their deductibles.
  • Allowing Federally qualified health centers and rural health clinics to provide telehealth during the COVID-19 public health emergency.
  • Medicare and Medicaid Services and Reimbursement
  • Waiving requirements for face-to-face visits between Medicare home dialysis patients and physicians during the COVID-19 public health emergency.
  • Permitting the use of telehealth for a face-to-face encounter prior to recertifying eligibility for hospice care under Medicare during the COVID-19 public health emergency.
  • Allowing physician assistants, nurse practitioners, and certain other professionals to order home health services for Medicare and Medicaid beneficiaries.
  • Temporarily suspending Medicare sequestration from May 1 through December 31, 2020.
  • Increasing the Medicare add-on payment for COVID-19 patients by 20% during the emergency.
  • Waiving the requirement under Medicare for an inpatient rehabilitation facility (IRF) to provide at least 3 hours of therapy per day.
  • Requiring HHS to exercise enforcement discretion during the emergency with respect to (i) the payment adjustment for a long-term care hospital (LTCH) that does not have a discharge payment percentage of at least 50% and (ii) LTCH exclusion criteria from the site-neutral inpatient prospective payment system (IPPS) payment rate.
  • Revising payment rates for durable medical equipment (DME) under Medicare during the COVID-19 emergency.
  • Providing for COVID-19 vaccines to be covered under Medicare Part B without any cost sharing.
  • Requiring Medicare and Medicare Advantage prescription drug plans to allow for refills of covered Part D drugs for up to a three-month supply during the COVID-19 emergency.
  • Permitting State Medicaid programs to pay for direct support professionals to provide personal assistance services to individuals with disabilities during hospital stays.
  • Extending the Medicare work geographic index floor to January 1, 2022.
  • Delaying scheduled reductions of disproportionate-share hospital (DSH) payments.

A copy of the most recent draft version of the CARES Act, which was current as of Sunday, March 22, is available in two parts: the first is available here and the second here.

Reporters, J. Gardner Armsby, Atlanta, +1 404 572 2760, garmsby@kslaw.com, and David Tassa, Los Angeles, +1 213 443 4335, dtassa@kslaw.com.

CMS Approves Emergency Medicaid Waivers for Florida, Washington to Address COVID-19; Expects Other States to Apply – On March 13, 2020, President Trump declared the COVID-19 virus a national emergency.  Section 1135 of the Social Security Act allows CMS to waive certain regulatory requirements during national emergencies.  As of March 19, 2020, CMS has approved Section 1135 waivers for Florida and Washington, aiming to assist those states in combating the virus by granting flexibility and suspending penalties related to certain federal Medicaid requirements.  CMS has fast-tracked these waiver approvals and expects other states to request similar waivers.

When the President declares a disaster or emergency under the Stafford Act or National Emergencies Act and the HHS Secretary declares a public health emergency under Section 319 of the Public Health Service Act, the Secretary is authorized to take certain actions.  Under Section 1135, the Secretary may temporarily waive or modify Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) requirements to ensure that sufficient healthcare items and services are available.

In the Medicaid context, Section 1135 waivers give states flexibility to administer their Medicaid programs in a manner that allows healthcare providers who, as a result of a national emergency, are otherwise unable to strictly comply with certain federal Medicaid requirements.  Additionally, providers are exempted from sanctions and reimbursement penalties from noncompliance with those Medicaid requirements, absent fraud or bad faith action.  Examples of flexibilities that states may seek through Section 1135 waiver requests include:

  • Streamlining processes to ramp up provider enrollment;
  • Allowing care to be provided in alternative settings in the event a facility is evacuated or is filled to capacity;
  • Extending deadlines for appeals and state fair hearing requests;
  • Waving prior authorization requirements in fee-for-service programs;
  • Permitting providers located out of state/territory to provide care to another state’s Medicaid enrollees impacted by the emergency;
  • Suspending certain provider enrollment and revalidation requirements to increase access to care;
  • Waiving requirements that physicians and other healthcare professionals be licensed in the state in which they are providing services, so long as they have equivalent licensing in another state; and
  • Suspending requirements for certain pre-admission and annual screenings for nursing home residents.

Florida became the first state to submit a Section 1135 waiver request in response to COVID-19, receiving approval from CMS on March 16, 2020.  A few days later, Washington—one of the states most affected by the virus thus far—also received CMS approval for its Section 1135 waiver.  With the COVID-19 virus now affecting all 50 states, CMS expects that more states will submit similar requests.  Additional Section 1135 approval letters will be posted here as they are issued. Florida’s Section 1135 waiver approval letter is available here.  Washington’s Section 1135 waiver approval letter is available here.

While CMS has issued “blanket” Section 1135 waivers for all providers, described here, state-specific Medicaid waivers like the ones sought by Florida and Washington may prove to be one of the critical steps states take in addressing the COVID-19 virus. 

Reporter, Michael L. LaBattaglia, Washington, D.C., +1 202 626 5579, mlabattaglia@kslaw.com.

CMS Issues FAQs on Catastrophic Health Coverage for COVID-19 On March 18, 2020, CMS issued Frequently Asked Questions (FAQs) to clarify that the diagnosis and treatment of Coronavirus Disease 2019 (COVID-19) is covered by catastrophic health plans.  CMS also confirms that the agency will not take any action against a catastrophic plan that amends its terms to change or waive cost-sharing requirements for COVID-19 related services.

Catastrophic health plans, which offer coverage in times of emergencies as well as for preventive care, must cover essential health benefits (EHB) under Section 1302 of the Affordable Care Act.  Exact coverage details, preauthorization requirements and cost-sharing requirements may vary by plan.  However, catastrophic plan coverage of EHBs are subject to certain limitations, including deductible requirements. 

CMS’s FAQs clarify that EHB coverage includes coverage for the diagnosis and treatment of COVID-19.  CMS further confirms that in light of the ongoing COVID-19 crisis, the agency will not take enforcement action against any health issuer that amends its catastrophic plans to provide coverage for services associated with the diagnosis or treatment of COVID-19 before an enrollee meets their catastrophic plan deductible.  The agency also expressly encourages states to take a similar approach to permit catastrophic plans to waive cost-sharing limitations to coverage.

The CMS press release announcing the FAQs is available here. The FAQs are available here.

Reporter, Jonathan Shin, Los Angeles, + 1 212 443 4334, jshin@kslaw.com.

State of California Greenlights Up to $1 Billion for COVID-19 Response – California Gov. Gavin Newsom (D) signed a spending package of more than $1 billion on Tuesday, March 17, 2020, to help California hospitals and communities grappling with the COVID-19 pandemic.

Both houses of the California legislature—the California State Senate and Assembly—passed a pair of bills, S.B. 89 and S.B. 117, on unanimous votes—32-0 and 69-0, respectively—with some older members absent from the proceedings for their protection.  The swift action put the legislative package on Newsom’s desk in just two days, thanks to a waiver of California requirements for legislation to be in print for three days before lawmakers can act.

The funds will allow hospitals to purchase more beds and medical equipment as coronavirus cases inevitably rise, Newsom said in a statement.  Newsom said that California right now has only about 74,000 hospital beds, including 11,500 intensive care unit (ICU) beds.  It also has “surge capacity” of 8,661 more beds, and about 7,600 ventilators in the existing hospital system, with perhaps 700 more as backup.

S.B. 89 sets aside $500 million for the emergency response, with the possibility of later increases to $1 billion.  S.B. 117 appropriates $100 million to help schools and child care centers address the pandemic and ensure they receive funding despite closures, helping the facilities pay for personal protective equipment, supplies, and labor for cleanup.  A copy of S.B. 89 can be found here, and a copy of S.B. 117 can be found here.

As of the time of signing, the state had approximately 500 people who tested positive for the virus and 11 deaths—as of 12:08 p.m. Eastern on March 23, that number has more than tripled to 1,828 infected and 35 deaths.

Newsom also authorized emergency aid to local governments and implemented emergency protective measures to mitigate the spread of COVID-19 among the homeless population, many of whom have no option to self-quarantine or isolate.  As a result of Newsom’s actions, California will procure 1,309 travel trailers from FEMA and private vendors to provide quarantine capacity for the homeless.  The press release from Tuesday can be found here.

Newsom’s administration also sent a letter to CMS requesting a Section 1135 waiver to allow more flexibility in how healthcare providers can treat Medi-Cal patients, as well as patients enrolled in other federally approved healthcare delivery systems, including county health and mental health programs, Drug Medi-Cal Organized Delivery Systems (DMC-ODS) and the Children’s Health Insurance Program (CHIP).  The requested flexibilities include those with respect to provider participation, billing requirements, conditions for payment, service authorization and utilization controls, state fair hearing requests and appeal deadlines for managed care enrollees, benefits, telehealth and virtual visits, payment rates, eligibility, and administrative activities.  The letter to CMS can be found here.  California joins several states seeking such waivers, including Washington and Florida, as reported in this issue.

Reporter, Yujin Chun, Los Angeles, +1 213 443 4322, ychun@kslaw.com.

CMS Releases Tools to Support States’ Medicaid and CHIP Programs During the COVID-19 Outbreak – On March 22, 2020, CMS announced a suite of four new tools intended to help states combat the coronavirus by allowing states to streamline enrollment into long-term care and home-based services and by expediting application processes for waivers and temporary amendments to state Medicaid plans.  States may request that these authorities be applied retroactively, to March 1, 2020—the effective date of the national emergency declared by President Trump.  The CMS press release announcing these tools is available here.  A summary of these four new tools is below.

1115 Waiver Opportunity and Application Checklist

CMS released a new Section 1115 demonstration opportunity to allow states to waive requirements for home and community-based services for beneficiaries receiving long-term supports and services under Medicaid.  CMS will expedite its review process, so states applying for a COVID-19 Section 1115 demonstration waiver are not required to conduct the public notice and input process that is normally required.  CMS also provided a template for states to request a Section 1115 waiver demonstration project.  The 1115 Application Process announcement is available here.  The State Medicaid Director Letter providing additional detail on the application process and template is available here.  

1135 Waiver Checklist

As previously reported, the President’s national emergency declaration, coupled with Secretary Azar’s earlier declaration of a public health emergency under Section 319 of the Public Health Service Act, authorized the Secretary to waive certain Medicare, Medicaid and CHIP requirements under Section 1135 of the Social Security Act.  Pursuant to this authority, CMS activated blanket waivers of several Medicare and Medicaid requirements to provide healthcare providers more flexibility in responding to the pandemic.

CMS has now created a Section 1135 waiver checklist and template with commonly requested 1135 waivers relevant to COVID-19, such as temporarily suspending prior authorization requirements, granting beneficiaries more time for appeals and hearings, relaxing rules to enroll providers, and allowing providers to bill for services provided out of state.  The Section 1135 checklist and template is available here.

1915(c) Appendix K Template

Section 1915(c) Appendix K may be utilized by states to request amendments to Section 1915(c) home and community-based services waivers and to request amendments in times of emergency.  CMS has developed an Appendix K template that is pre-populated with flexibilities that states have begun requesting to address COVID-19, such as adding an electronic method of service delivery for certain services and addressing needs of waiver recipients during the time of emergency through additional services.  The Section 1915(c) template and toolkit is available here.

Medicaid Disaster State Plan Amendment Template

To respond to a state of emergency or a natural disaster, a state may change its Medicaid state plan—the document that describes the state’s eligibility, benefits, and payment rules—through temporary amendments.  To streamline the application process for review of temporary amendments, CMS developed a Disaster State Plan Amendment template that will allow a state to submit one document with all its requested amendments.  These amendments may include temporarily expanding temporary coverage, adding specialized benefits, expanding telehealth coverage, and increasing provider reimbursement.  The template and instructions are available here.

Reporter, Rebecca Gittelson, Atlanta, +1 404 572 4679, rgittelson@kslaw.com.

Also In The News

Supreme Court and D.C. Circuit Court Suspend Oral Arguments - The Supreme Court announced on March 16, 2020, that it is postponing oral arguments scheduled for the March session (March 23-25 and March 30-April 1) due to COVID-19 and will release an updated schedule at a later date.  On March 17, 2020, the D.C. Circuit also suspended all onsite oral arguments.  The Supreme Court’s announcement is available here.  The D.C. Circuit’s order is available here.  Other federal circuit and district courts have also published visitor restrictions, notices, and announcements related to COVID-19, which are available here.

CMS Recommends That All Elective Surgeries and Non-Elective Procedures Be Delayed - CMS announced on March 18, 2020, that it recommends all elective surgeries, as well as non-essential medical, surgical, and dental procedures be delayed so the healthcare workforce, personal protective equipment (PPE), beds, and ventilators can be available for the COVID-19 outbreak.  The recommendations also aim to encourage patients to remain at home, unless there is an emergency, in an attempt to limit the spread of the virus.  The recommendations outline factors that should be considered in deciding whether to postpone elective surgeries and procedures.  The CMS press release is available here.  The recommendations are available here.

CMS Quality Programs Extend Deadlines and Allow Reporting Exceptions - CMS announced on Sunday, March 22, 2020, that it is extending Medicare quality reporting deadlines and granting exceptions from reporting requirements, in an effort to support providers’ and facilities’ focus on COVID-19.  Notably, the deadline to report quality data to the Quality Payment Program, in which 1.2 million clinicians participate, is extended from March 31, 2020 to April 30, 2020.  The deadline for the Medicare Shared Savings Program Accountable Care Organization (ACO) program is also extended to April 30.  Additional information on the Quality Payment Program and ACO deadlines, as well as extended deadlines and data submission exceptions for other CMS quality programs, is available here.