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March 8, 2021

Health Headlines – March 8, 2021


Senate Passes $1.9 Trillion American Rescue Plan Act; Bill Heads to House and Then to President Biden – On Saturday, March 6, 2021, by a vote of 50-49, the Senate amended and approved the American Rescue Plan Act of 2021, which is reconciliation legislation to provide $1.9 trillion in COVID-19 relief.  The House of Representatives is scheduled to vote on the Senate-passed version on Tuesday before the bill moves to President Biden for his signature.  Congressional Democrats are aiming to have the legislation enacted before March 14, 2021, when current unemployment benefits would expire.

The bill provides a variety of economic relief provisions, including $1,400 in direct payments to individuals; $400 per week in supplemental unemployment insurance benefits (up from $300 per week); an expanded child tax credit of $3,000 (and $3,600 for children under the age of six) that is fully refundable and paid on a monthly basis; an expansion of the child and dependent care tax credit; and a tripling of the earned-income tax credit.  For state and local governments, the bill provides $360 billion.  To help schools reopen safely, the bill provides $130 billion to K-12 schools and $40 billion to colleges and universities.

The American Rescue Plan also contains a number of healthcare-related provisions, including:

  • $14 billion for vaccine distribution;
  • $49 billion for COVID-19 testing, tracing, and genomic sequencing;
  • $25 billion to expand community health centers, tribal health programs, and public health workforce programs;
  • $8.5 billion added to the Provider Relief Fund, designated for rural hospitals;
  • Full coverage, without beneficiary cost-sharing, for COVID-19 vaccines and treatments for up to a year after the public health emergency ends (the federal medical assistance percentage (FMAP) is increased to 100% for vaccine costs during the same time period);
  • $10 billion under the Defense Production Act to purchase, manufacture, and distribute critical medical supplies and equipment;
  • A temporary 2-year increase in Medicaid funding to incentivize the 12 states that have yet to expand Medicaid coverage to do so, which would be paid for by removal of a cap, effective in 2024, on Medicaid inflation rebates for brand drugs; 
  • 100% subsidization of COBRA coverage, through September, for laid-off workers;
  • Expansion of Affordable Care Act (ACA) premium tax credits to 400% of the federal poverty level (FPL), elimination of premiums for individuals at 150% of FPL, and allowance of individuals who receive unemployment compensation in 2021 to qualify for reduced cost-sharing;
  • A directive to CMS to recalculate the annual Medicaid Disproportionate Share Hospital (DSH) payments to address an unintended consequence of the temporary increase in FMAP and DSH spending during the COVID-19 public health emergency (the recalculation would ensure that total DSH payments a state may make in a fiscal year are equal to the total payments it could have made absent the FMAP pandemic increase); and
  • $5 million for the HHS OIG to oversee the disbursement and use of COVID-19 funds.

The Senate-passed American Rescue Plan Act did not include an extension of the Medicare sequester cuts beyond March 31, 2021.  Stakeholders are pressing for Congress to address this issue before the current moratorium expires.

Reporter, Allison Kassir, Washington, D.C., +1 202 626 5600, akassir@kslaw.com.

Report: $10 Billion in Provider Relief Funds Diverted to Operation Warp Speed For Vaccine Development – According to an exclusive report from STAT, sometime last year, federal officials decided to redirect billions in funds from the $175 billion CARES Act’s Provider Relief Fund to the “Operation Warp Speed” (OWS) vaccine initiative. Specifically, the report’s sources determined that the Office of General Counsel for HHS approved the administration’s decision to use $10 billion from the Provider Relief Fund to assist with OWS projects.  According to the report, it is unclear how much remains in the Provider Relief Fund, and it is uncertain whether the Fund will be replenished to make up for the $10 billion in diverted funds, which Congress had made available to eligible healthcare providers to cover their pandemic-related expenses and lost revenues.

Under the terms of the CARES Act, the Provider Relief Fund is intended for healthcare providers and facilities affected by the COVID-19 pandemic, and specifically to reimburse providers for expenses or lost revenues attributable to COVID-19.  As the healthcare industry enters year two of the pandemic, providers will continue to require support through mechanisms like the Provider Relief Fund, although it is unclear how much funding remains available.  Agencies have provided unclear data, as STAT reports, with the Government Accountability Office noting at the end of 2020 that the Fund has $33.4 billion available and the Health Resources and Services Administration (HRSA) more recently reporting that remaining funds are closer to $24 billion.

Meanwhile, HHS’s tracking of Provider Relief Fund spending currently reports approximately $107 billion (of $175 billion) being “attested to” by providers around the country, although the funds may not yet have been received by those providers.  According to USASpending.gov data, approximately $117 billion has been awarded to “a single entity, located in Utah” that makes direct Provider Relief Fund payments to recipients around the country, but it is unclear how much of that award has actually been disbursed to recipients.

As STAT reports, former officials from the Trump administration have suggested that Provider Relief Funds can be used for OWS purposes, despite the fact that OWS was not established by Congress. The Biden administration has not yet provided its views on this subject.

The Trump administration established Operation Warp Speed as a public-private partnership between various federal agencies and private firms. The initiative was launched on May 15, 2020, to “accelerate the development, manufacturing, and distribution of COVID-19 vaccines, therapeutics, and diagnostics (medical countermeasures).”  The project was intended to produce and distribute millions of doses of vaccines by January 2021.  The Biden Administration retired the “Operation Warp Speed” program, at least in name, on January 15, 2021.

King & Spalding’s Healthcare team will continue to monitor and report on updates related to use of the Provider Relief Fund.  The original report from STAT is available here.  More information regarding Operation Warp Speed is available here.

Reporter, Lee T. Nutini, Chicago, + 1 312 764 6910, lnutini@kslaw.com.

FTC Drops Philadelphia-area Hospital Merger Challenge — After a years-long run of successfully challenging hospital mergers, the Federal Trade Commission (FTC) has voted to withdraw an appeal related to its attempt to block the merger of two healthcare providers in the greater Philadelphia area, Jefferson Health (Jefferson) and Albert Einstein Healthcare Network (Einstein). The FTC initially brought this action against Jefferson and Einstein in February 2020, claiming the transaction would reduce competition.

In December 2020, the Eastern District of Pennsylvania refused to grant the FTC’s request for a preliminary injunction to enjoin the merger until the resolution of an administrative proceeding to determine the merits of the case.  The court found that the FTC had not met the burdens required to establish its case and denied its request.  The FTC appealed to the Third Circuit and filed an Emergency Motion for an Injunction Pending Appeal.  The Third Circuit denied the Motion.

Following this losing streak, as of March 2, 2021, the FTC’s webpage tracking its administrative proceeding against Jefferson and Einstein reflects that the Commissioners voted 4-0 to voluntarily dismiss the FTC’s Third Circuit appeal. This signals that the FTC is dropping its attempts to block the merger of Einstein and Jefferson, its first unsuccessful attempt to block a hospital merger in years.  Although this does not mean the FTC will lose focus on the healthcare industry, it provides favorable precedent for healthcare providers hoping to merge in the future.

Reporters, Norm Armstrong, Jr., Washington, D.C., +1 202 626 8979, narmstrong@kslaw.comJeffrey Spigel,Washington, D.C., +1 202 626 2626, jspigel@kslaw.com, and Meaghan Griffith, Washington D.C., +1 202 626 5412, mgriffith@kslaw.com. 

ALSO IN THE NEWS

King & Spalding Webinar- Issues Facing California Healthcare Providers: Class Action Litigation in the Wake of the COVID-19 Pandemic and Developing Legislation – King & Spalding will host a webinar on Wednesday, March 17, 2021 from 9:00 am PT to 10:00 am PT. This webinar serves as the second session of the California Healthcare Roundtable Series to discuss recent developments in class action litigation targeting healthcare providers.  Over the last 10 years, healthcare providers have been subjected to increasing numbers of high-stakes class action lawsuits on a variety of issues. The COVID-19 pandemic has only given additional fuel to these class action and representative lawsuits and expanded the issues that form the basis of plaintiffs’ allegations.  To register for the event, click here.