March 10, 2021

Over the weekend, the United States Senate narrowly passed a revised version of the American Rescue Plan Act (ARPA) that had been previously passed by the House of Representatives. The measure, which provides some $1.9 trillion in federal funding, will now go back to the House for a possible final vote before heading to the president’s desk. Few doubt that the bill, in some form, will be enacted into law. The question is, what is it likely to contain in terms of help for the American hospital? The following will act to summarize what we know so far.

PROVISIONS OF THE BILL

The following reflects a summary of some of the most pertinent components of the bill, from a hospital perspective. The summary is based in-part on a document published by the American Hospital Association (AHA).

Financial Relief for Rural Providers
The bill designates $8.5 billion for rural healthcare providers, meant as compensation for lost revenue attributable to the pandemic.

Supplies and Equipment
ARPA allocates $10 billion for the obtaining of medical supplies and equipment the government sees as critical to address COVID. This includes diagnostic products, personal protective equipment (PPE), applicable drugs, medical devices and biological products.

Vaccines
The bill provides over $70 billion for COVID-19 mRNA injections (commonly referred to as “vaccines”), testing and workforce. Of this, over $15 billion will go toward efforts to increase national availability of vaccines. Another $6 billion is dedicated to research, development, manufacturing, production and purchasing of vaccines and other products. In addition, the government looks to set aside $1 billion for the purpose of boosting the public’s confidence in the vaccine.

Testing
The legislation would provide $47.8 billion to continue implementation of an evidence-based national testing strategy with a focus on detection, diagnosis, tracing and monitoring. In addition, a further $1.75 billion would go toward the support of genomic sequencing and “surveillance initiatives.”

Medicaid Coverage
Several financing and eligibility rules pertaining to Medicaid are revised by ARPA. These changes, which are intended to increase access to coverage, are highlighted below:

Postpartum Coverage. States will have the option for five years to extend Medicaid and Children’s Health Insurance Program (CHIP) eligibility to pregnant individuals for 12 months postpartum. States choosing this option must provide the full Medicaid benefit for pregnant and postpartum individuals during the 12-month postpartum period.

Expansion Incentive. The bill provides an incentive for states to expand Medicaid by temporarily increasing the state’s Federal Medical Assistance Percentage (FMAP) for their base program by 5 percentage points for two years.

Coverage of Vaccines. The bill would require Medicaid and CHIP coverage of COVID-19 vaccines and treatment without beneficiary cost sharing. Vaccines and vaccine administration costs would be matched at a 100% FMAP until one year after the end of the PHE. States also would have the option to provide coverage to the uninsured for COVID-19 vaccines and treatment without cost sharing at 100% FMAP.

Drug Rebate Cap. Provisions within ARPA include an elimination of the Medicaid drug rebate cap, which, under current law, is set at 100 percent of the average manufacturer price. Outpatient drugs used for COVID-19 prevention or treatment are to be included in the Medicaid Drug Rebate Program.
Public Health Workforce
The bill includes $100 million for the Medical Reserve Corps, $800 million for the National Health Service Corps, $200 million for the Nurse Corps, and $330 million for teaching health centers that operate graduate medical education.

Medicare Wage Index
The bill would establish a minimum wage index for hospitals in “all-urban states” for purposes of Medicare hospital payments, beginning Oct. 1, 2021.

Rural Health Care Grants
This bill sets aside $500 million in grants to eligible entities, including certain rural hospitals, based on needs related to the pandemic. Awardees may use the grant to cover COVID-related expenses and lost revenue so as to enable them to maintain capacity for such activities as vaccine distribution, or to enhance telehealth capabilities.

Child Care Provisions
ARPA provides $15 billion through Sept. 30, 2021 for the Child Care and Development Block Grant. These funds could be used for health care workers, regardless of income.

Paid Family and Medical Leave
The bill would reinstate until Sept. 30, 2021 the mandatory paid family and medical leave provisions that were established by the Families First Coronavirus Response Act but that had expired on Dec. 31, 2020. It also increases the total value of the new family leave provisions to $12,000.

Paycheck Protection Program (PPP)
The legislation provides that 501(c)(3) organizations employing up to 500 employees per physical location of the organization would become eligible for the program. The bill also provides an additional $7.25 billion for the program.

RESPONSE TO THE BILL

In reacting to the proposed legislation, the AHA issued a statement that included the following excerpt:

While the bill will help provide much-needed relief for rural hospitals, the association also is disappointed that it does not deliver more overall funding for the Provider Relief Fund. AHA also is concerned that the bill does not include an extension of relief from Medicare sequester cuts and fails to provide loan forgiveness for Medicare accelerated payments for hospitals.
The bill may be passed by Congress and perhaps signed into law by the time this alert is published. Therefore, there may not be time for any last-minute lobbying. All hospitals can do at this point is to make the most out of this latest attempt to address the difficulties brought on by the public health emergency. Nearly $2 trillion is nothing to sneeze at. This massive infusion of funds into the national healthcare economy will hopefully translate to an improved financial standing for many of our nation’s hospitals.

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