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A Look Inside the $2 Trillion COVID-19 Stimulus Bill

The President just signed H.R.748, the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. The bill was passed by the Senate 96-0 shortly before midnight on March 25th and the House passed it by voice vote on March 30th.

The unprecedented $2 trillion bill will provide:

  • $532 billion for distressed businesses and local government loans and financial assistance
  • $377 billion for small business loans and grants
  • $290 billion in direct payments to families. Workers with incomes up to $75,000 per year will receive $1,200 in direct payments (phased out payments for incomes between 75,000 and $99,000). Families will receive an additional $500 per child.
  • $290 billion in tax cuts
  • $260 billion in unemployment insurance expansion (additional $600 per week payment to each recipient of unemployment insurance for up to four months)
  • $150 billion for aid to state, local, and tribal governments
  • $126 billion for hospitals, veterans’ health care or other health care systems

The bill would provide $140 billion to the Department of Health and Human Services (HHS), including:

  • $100 billion for the Public Health and Social Services Emergency Fund to reimburse eligible health-care providers for health-care expenses or lost revenue directly attributable to the coronavirus.
  • $27 billion for the Public Health and Social Services Emergency Fund for coronavirus preparation and response, such as vaccines, countermeasures, and medical surge capacity. The bill would set aside at least $3.5 billion for the Biomedical Advanced Research and Development Authority (BARDA), and as much as $16 billion for the Strategic National Stockpile (SNS).
  • $4.3 billion for the Centers for Disease Control and Prevention, of which at least $1.5 billion would be provided to state, local, and tribal entities. Another $500 million would be reserved for global disease detection and response and $500 million for public health data surveillance and analytics infrastructure.
  • $945 million for the National Institutes of Health, including $706 million for the National Institute of Allergy and Infectious Diseases.
  • $200 million for the Centers for Medicare and Medicaid Services program management account.
  • $80 million for the Food and Drug Administration for countermeasure development, advanced product manufacturing, and supply monitoring.

Select Health Care Provisions

Drug & Device Shortages: Drug and device manufacturers that are “critical to public health during an emergency” would have to notify the FDA of supply chain interruptions (and the reason for the interruption) and maintain risk management plans for facilities to evaluate supply risks.

The FDA will prioritize the reviews of new drug and device applications and prioritize inspections of an establishment that could help mitigate or prevent the shortage of drugs and devices.   

Drug manufacturers are required to report to the Secretary of HHS the amount of the drug manufactured for commercial distribution. The FDA could require the information to be submitted during a public health emergency. Biological products could be exempt if the FDA determines they’re not necessary to protect public health.

Medical Supplies: The bill would expand the Strategic National Stockpile (SNS) to include personal protective equipment and supplies used for COVID-19 testing. It would make permanent a provision in the second coronavirus package extending liability immunity to manufacturers of respiratory protective devices, such as masks and ventilators, which HHS designates for use during a declared public health emergency. It also would require a report on the United States medical supply chain from the National Academies of Sciences, Engineering and Medicine (“the National Academies”).

Animal Drugs: The FDA would expedite the review of animal drugs at the request of a sponsor if it has the potential to prevent animal-to-human transmission of life-threatening diseases.

Over-the-Counter (OTC) Drugs: The measure would modify the FDA’s regulatory framework for OTC drugs and establish user fees to support the new pathway. The user fees would be authorized from FY2021-2025 and include facility fees and fees for administrative order requests. There would also be expedited pathways for drugs that pose an imminent public health hazard and for safety labeling changes. The bill provides for 18 months of market exclusivities.

Testing: Health insurers would have to reimburse providers for all coronavirus testing and related visits based on the cash price that the provider lists online, unless they have a previously negotiated rate or negotiate a new rate that’s less than the cash price. Testing providers that don’t list their prices online during the emergency could be penalized a maximum of $300 per day.

The measure also would expand the types of coronavirus lab tests that would have to be fully covered by insurance, including tests that haven’t yet received an emergency use authorization from the Food and Drug Administration.

Laboratory reporting: Labs that run coronavirus testing would have to report the results from each test to HHS during the emergency period. The measure would repeal a provision in the second coronavirus package requiring state and local governments to ensure State Emergency Operations Centers receive reporting on aggregated data on testing from public health departments.

Vaccine Coverage: Health insurers would have to cover vaccines and other services intended to prevent COVID-19 without any cost-sharing. Medicare Part B would fully cover a COVID-19 vaccine without any cost-sharing.

Telehealth: The bill continues to loosen existing restrictions on telehealth – including geographical location, originating site, and type of transmission-, eliminates the preexisting relationship requirement between a provider and patient for telehealth services, and encourages the inclusion of other health technologies such as remote patient monitoring into patients’ care. The measure would allow telehealth services to be covered under a high-deductible health plan before a patient reaches the deductible for plan years beginning on or before December 31st, 2021.

Medication supply: Drug plans would have to allow Medicare Part D prescription drug beneficiaries to receive a 90-day supply of medication during the public health emergency.

Spending Accounts: The measure would permanently allow spending accounts such as health savings accounts and flexible spending arrangements to be used for OTC medicines.

Medicare Payments: Hospitals would receive a 20% increase in their Medicare payments for treating a patient with COVID-19 during the coronavirus emergency.

The measure would prevent a scheduled reduction in Medicare payments for durable medical equipment, such as wheelchairs or other equipment used at home, for the duration of the emergency.

It would eliminate a 15% reduction in payments for clinical diagnostic lab tests for 2021 and extend the 15% reduction through 2024. It also would delay an associated payment rate reporting requirement for labs for a year.

The Medicare hospital accelerated payment program would be expanded during the emergency period so that it applies to more types of hospitals and to cover as long as six months. HHS could increase the amount of payment that would otherwise be made up to 100%, or 125% for critical access hospitals.

Sequestration and health extenders: The bill suspends Medicare sequestration until the end of the year and extends for one year, through 2030, the sequestration of mandatory funding, including Medicare payments. The bill also extends certain health programs scheduled to expire on May 22nd through November 30th.

Select Business Provisions

Payroll Tax Credits: Eligible employers will receive a refundable credit against employment taxes of 50% of the qualified wages of each employee, up to $10,000 per employee. Qualified employers are those whose businesses were partially or completely shut down due to a government restriction related to coronavirus, or suffered a reduction of over 50% in gross receipts as compared to the same quarter in 2019.

For employers with over 100 employees, qualified wages are those paid when employees were not providing services because operations were partially or completely shut down or gross receipts declined. For employers with under 100 employees, qualified wages include all wages paid during period in which operations cease due to government order, and wages paid during a quarter with significantly reduced gross receipts. Unlike the second supplemental, there is no requirement that the employee actually be affected by the virus.

Paycheck Protection Program: The bill creates a Paycheck Protection Program (PPP) for small businesses with fewer than 500 employees, which gives them access to federal government guaranteed loans to pay for the costs of keeping their employees and continuing to make lease and utility payments, as a result of uncertain economic conditions caused by COVID-19. The PPP increases the existing federal guarantee of loans under Section 7(a) of the Small Business Administration loan program to 100 percent through December 31st, 2020. The covered loan period is February 15th, 2020 to June 30th, 2020.

Payroll Tax Deferral: Payment of payroll taxes due from enactment until December 31st, 2020 is deferred, with half due December 31st, 2021 and the remainder due December 31st, 2022

Business Losses: The measure would allow business losses from tax years after Dec. 31, 2017, and before January 1st, 2021, to be carried back five years. The measure would allow the full amount of net operating loss carryovers and carrybacks to be used for tax years beginning before January 1st, 2021. The deduction was limited to 80% of taxable income under the 2017 tax overhaul. A separate deduction limit would be established for tax years beginning after December 31st, 2020.

The bill would modify the effective date of changes to the net operating loss deduction included in the 2017 tax overhaul. The measure would also modify net operating loss deduction limits for pass-through businesses and sole proprietorships.