December 22, 2020

Inside the $900B spending package: A ban on surprise medical bills, Covid relief funds, and more

Daily Briefing

    Congress on Monday approved a $900 billion spending package that extends funding for the federal government through the current fiscal year, provides some Americans and businesses with financial assistance intended to offset economic hardships caused by the novel coronavirus epidemic, and includes measures intended to prevent patients from receiving so-called "surprise" medical bills.

    Coronavirus relief funding

    The bill includes funding to provide more financial assistance to some Americans and businesses to help offset economic hardships brought on by America's persisting coronavirus epidemic.

    For example, the bill includes $166 billion in funding to send qualifying Americans another round of direct stimulus payments, though the total amounts will be smaller than what many Americans received earlier this year. Under the new bill, the federal government will disperse payments totaling $600 to individuals with an adjusted gross income up to $75,000 or totaling $1,200 for married couples with a combined adjusted gross income of up to $150,000 based on their 2019 tax returns. People with incomes above those levels would receive partial payments that decline by $5 for every $100 in income above those thresholds. In addition, qualifying Americans will receive payments totaling $600 for each of their children. Department of the Treasury Secretary Steven Mnuchin has said the federal government could begin distributing those payments by the end of this year.

    The bill also includes a $300-per-week bump in federal unemployment benefits, which is scheduled to remain in place through March 14, and extends the amount of time people can receive unemployment benefits by an additional 11 weeks. Further, the legislation extends eligibility for self-employed individuals, so-called "gig" workers, and individuals who've exhausted their state unemployment benefits to qualify for federal unemployment benefits. In addition, the bill includes $25 billion in rental-assistance funding and extends a federal moratorium on evictions through the end of this year.

    The legislation includes $325 billion in relief funds for small businesses, as well. Under the measure, the federal government would provide $284 billion in new funding for loans provided under the federal Paycheck Protection Program (PPP), $20 billion intended to help businesses in low-income areas, and $15 billion intended to help movie theaters, museums, and other live venues. The bill also includes targeted relief funding for the transportation and farming industries.

    In addition, the legislation allows businesses to deduct expenses associated with forgiven PPP loans from their taxes, and the bill expands the employee-retention tax credit. The measure also extends a payroll-tax subsidy for businesses that offer their workers paid sick leave, increases the Earned Income Tax Credit, and provides a two-year tax break on business meals.

    The bill further includes billions of dollars in funding other relief for schools and childcare organizations. In addition, the legislation allocates an additional $3 billion for the federal Provider Relief Fund and gives health systems more flexibility in how they use those dollars.

    Other health care funding

    The spending measure includes several provisions to fund certain health care priorities and programs.

    For example, the bill includes about $20 billion in funding to purchase vaccines against the novel coronavirus and nearly $9 billion for efforts to distribute those vaccines. The measure also includes about $22 billion to help states conduct coronavirus testing and contact tracing and to support efforts to mitigate the virus's spread.

    The bill also extends funding for certain Medicare and Medicaid programs, community health centers, the National Health Service Corps, and other programs, and it delays scheduled cuts to Medicaid disproportionate-share hospital payments through fiscal year 2023. In addition, the bill extends a suspension of the Medicare sequester, which had been scheduled to end on Dec. 31, for three months and boosts payments for specialty and other physicians for calendar year 2021. The legislation also delays the start of CMS' planned Radiation Oncology Model by six months, until Jan. 1, 2022.

    Provisions targeting surprise medical bills, 'gag clauses'

    The legislative package also includes language intended to protect patients from receiving surprise medical bills, which can range from a few hundred dollars to more than $100,000, the New York Times reports.

    Under the bill, out-of-network providers and air ambulance providers are prohibited from billing patients for more than they would be charged by in-network providers, and health plans are prohibited from requiring patients to pay extra for care unknowingly provided by out-of-network providers. The protections do not apply if a provider notifies a patient of their estimated costs of out-of-network care at least 72-hours prior to the patient receiving the care, and the patient consents to the care.

    The bill requires insurers to make up-front payments to providers for any applicable out-of-network care, but the it does not call on the federal government to set any payment benchmarks for out-of-network care. Instead, the bill creates a "baseball-style" arbitration process for providers and insurers to settle payment disputes over out-of-network claims.

    Providers and insurers will have a "30-day open negotiation period" to settle such disputes. If providers and insurers are not able to reach a resolution during that timeframe, they can use the new, binding arbitration process that will be known as Independent Dispute Resolution (IDR) and administered by independent entities that have no affiliations with insurers or providers.

    During the IDR process, the insurer and provider will submit a proposed payment rate for the services provided. The independent entity will then determine a fair amount based on what other providers are paid for similar services. However, according to Politico, the arbiter will not be able to consider Medicare or Medicaid payment rates, which are typically lower than commercial insurance rates, or providers' billed charges, which are typically higher than what insurers and patients ultimately pay.

    The parties will have to abide by the arbiter's decision and make any necessary payments within 90 days. In addition, the bill prohibits parties that initiated the IDR process from initiating another IDR process against the same part for the same services for 90 days following the initial IDR decision.

    The new requirements will go into effect in 2022 and, notably, they do not apply to ground ambulances.

    According to Modern Healthcare, the bill also includes language that bans so-called "gag clauses" between providers and health plans. Those clauses typically "prevent enrollees, plan sponsors, or referring providers from seeing cost and quality data on providers," Modern Healthcare reports.

    Calls for more relief

    Economists have said the relief measures included in the spending package are not enough to counter the economic effects America's coronavirus epidemic have had on the country—and some lawmakers already are calling for more aid.

    For instance, Senate Minority Leader Chuck Schumer (D-N.Y.) on Sunday called the latest measure a "down payment" on new aid, adding, "[o]nce this deal is signed into law, it cannot be the final word on congressional relief."

    The American Hospital Association in a statement largely praised the legislative package, praising Congress' decisions to eliminate Medicaid DSH cuts for three years, adopting an approach to surprise billing that does not "impose arbitrary rates on providers," and giving health systems greater flexibility in how they use Provider Relief Funding throughout their system. However, AHA said "more must be done to aid our response to the pandemic," including additional aide for "front-line health care workers, coverage for the uninsured, accelerated payment forgiveness, federal liability protections, and resetting the IMPACT Act, among other measures" (Emma/Levine, Politico, 12/21; Cochrane, New York Times, 12/21; Siegel Bernard/Lieber, New York Times, 12/21; Cohrs, Modern Healthcare, 12/20; Stein, Inside Health Policy, 12/21 [subscription required]; Mills-Gregg, Inside Health Policy, 12/21 [subscription required]; Luthi, Politico, 12/20; Kliff/Sanger-Katz, "The Upshot," New York Times, 12/20; Naylor, NPR, 12/21; Stein/DeBonis, Washington Post, 12/22).

     

    Advisory Board's Take

    What you need to know about the spending package

    Christopher KernsBy Christopher Kerns , Vice President, Executive Insights

    Although the Covid-19 relief bill recently passed by Congress may be just a first step in broader relief efforts for 2021, the law nonetheless carries significant implications for providers. In addition to the welcome increases in the Provider Relief Fund ($3 billion), delays to the Medicare sequester, greater flexibility for providers on their use of funds, and other changes to payments that providers and payers alike will applaud, the most interesting provisions, to our minds, are those around surprise billing.

    Efforts to rein in surprise billing practices nearly reached a vote last year, and had been expected to be a bipartisan issue for Congress this year until the pandemic struck. We had expected it to be a potential area of bipartisan compromise in the next Congress—regardless of which party ultimately controls the Senate.

    The included provisions ultimately reflected a number of compromises that had many aspects stripped out of final bill, pursuant to advocacy efforts from providers and health plans. The final bill includes protections for patients against surprise bills from out-of-network emergency care, certain ancillary services provided at in-network facilities by out-of-network physicians, and non-emergency care provided at in-network hospitals by out-of-network doctors—plus key transparency requirements.

    But crucially, the law does not establish fixed indexes for reimbursement against public payer rates, and instead requires arbitration for reimbursement disputes on certain out-of-network care. These protections are likely to complicate payer-provider negotiations going forward and alter health plans' network strategies, in addition to giving some greater leverage on those organizations—health plans, health systems, and large provider groups—that have the ability to handle the arbitration process.

    Ultimately, the surprise billing rules are a big step toward greater patient protections on a thorny issue that has long caused immense patient frustration. But the law only protects against surprises. The high out-of-pocket costs of health care will remain one of the biggest sources of patient (and voter) consternation, and both plans and providers will continue to have increasing incentives to provide a superior patient financial experience that delivers a relevant price patients can afford, manageable payment plans, and plenty of advanced notice on what the obligations are likely to be. 

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