Health provisions in the year-end pandemic response bill

Congress regularly serves up omnibus bills as the calendar year draws to a close, but the behemoth it passed this week might become the standard against which future wrap-up deals get compared. After months of doing very little, House and Senate leaders decided to attach a year’s worth of work (and in some cases two) to the only train leaving the station. The result is a bill that is so voluminous (5,593 pages), and so wide-ranging in the subjects it addresses, that no member of the House or Senate could possibly understand all of what it contains.

 

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Included among its many provisions are several with important consequences for the health sector. The main focus of the bill — beyond providing annual funding for the entire federal government — is to improve the public health response to COVID-19 and to stabilize the economy. However, it also contains non-pandemic health changes that will be consequential as well.

The following is a brief summary of some of the bill’s more significant health-related items:

Public Health Funding. The legislation provides $58 billion in added funds for the public health response to the pandemic. These funds are in addition to what are provided in regular 2021 appropriations for many of the same purposes. The added funds are for: purchasing vaccines and therapeutics ($23 billion); supporting the Centers for Disease Control and Prevention (CDC) and state and local governments in their vaccine distribution efforts ($9 billion); expanded testing and tracing programs ($22 billion); increased COVID research at the National Institutes of Health ($1 billion); and direct grants for health providers to compensate for losses incurred due to the pandemic. This last pot is a small add-on to the $100 billion made available to providers in an earlier COVID response bill.

Surprise Billing Restrictions. After months of wrangling, the key committees overseeing health insurance regulation agreed on provisions to rein in surprise medical bills. Consumers will no longer face the risk of large out-of-pocket charges from providers who refuse to join insurance plan networks. Instead, consumers will pay in-network cost-sharing for all ancillary services occurring in conjunction with care delivered by in-network facilities and lead practitioners. Insurers and out-of-network providers must settle billing disagreements through a dispute resolution process. Press reports indicate that hospital and physician groups successfully altered the terms of this process by precluding it from referencing Medicare and Medicaid rates when determining appropriate compensation levels.

Medicare Pay Boost for Physicians. Earlier this year, the Centers for Medicare and Medicaid Services (CMS) published a final rule for 2021 physicians fees that would have boosted compensation for primary care by cutting payments for specialists performing high-volume procedures. The rule called for a 10.6 percent reduction in the conversion factor that is used as the basis for calculating all fees to make room for increases in the weighted relative values of evaluation and management codes, which are associated with primary care services. The outcry from the medical community pushed Congress to step in and set-aside the CMS plan. Instead of redistributing fees, Congress provided a uniform 3.75 percent fee increase across-the-board for all physician services. It also transferred $3 billion from the general fund of the Treasury to Medicare’s Supplementary Medical Insurance (SMI) trust fund to ensure the added costs from these higher fees do not push up beneficiary premiums.

Delay in the Resumption of the Medicare Sequester. Under the Budget Control Act of 2011, and subsequent amendments to it, Medicare fees for hospitals, physicians, and other providers are supposed to be reduced each year by 2 percent below the levels that would otherwise apply. In an earlier COVID response bill, Congress suspended this 2 percent cut for the period May to December 2020. The new law will push its resumption out until April 2021, unless it gets delayed again. Once it resumes, the sequester is supposed to remain in effect through 2030.

Miscellaneous “Extenders” and Related Provisions. The legislation extends several health-related provisions in current law that were scheduled to expire at year end, including the suspension of a scheduled cut in Medicaid disproportionate share hospital (DSH) payments and provisions authorizing the Money Follow the Person demonstration project for disabled beneficiaries. Scores of other provisions make minor adjustments in the reimbursement rules for hospice care, skilled nursing facilities, and much else, some of which are intended to reduce spending and thus offset the costs associated with reimbursement liberalizations.

The stated cost of the entire package is $2.3 trillion, although the Congressional Budget Office (CBO) has yet to provide a comprehensive analysis of the entire bill. The regular 2021 appropriations are estimated to cost $1.4 trillion, and COVID-19 response another $0.9 trillion.

This latest bill will not be Congress’ last word on COVID-19 response. The incoming Biden administration has signaled it believes another bill will be needed in early 2021. The current legislation all but guarantees that Congress will have to act at some point in 2021, as it includes many provisions (such as the suspension of the Medicare sequester) that otherwise will expire well before pandemic’s destructive effects are expected to subside.

James C. Capretta is a columnist for State of Reform and is a resident fellow at the American Enterprise Institute.