Coronavirus Aid, Relief & Economic Security Act (the "CARES Act")
On March 27th, President Trump signed the “Coronavirus Aid, Relief, and Economic Security Act’’ (the “CARES Act”) into law. This $2 trillion stimulus package is the third in a series of supplemental spending packages passed by Congress to address the ongoing COVID-19 pandemic.
Please find a brief summary of some of the general provisions of potential interest and health-related provisions. Please note that the CARES Act is a massive piece of legislation with many different provisions addressing a wide-range of topics. These provisions will continue to be implemented over time through additional regulatory action. I also anticipate that there could be additional legislative action on these issues this year.
KEY GENERAL PROVISIONS
1. Unemployment Benefits: Increases unemployment benefits by $600 per week for up to four months.
2. Support for Individuals and Families: One-time payment of $1,200 per adult, $2,400 per married couple, and $500 per child. Benefit begins phasing out at household incomes of $75,000 per individual, $150,000 per married couple, and phases out completely at household incomes of $99,000 per individual (no children), $198,000 per married couple (no children). Penalty-free withdrawals from certain retirement accounts (e.g. IRAs and some employer plans) for individuals affected by the COVID-19 crisis.
3. $500B in Loans and Guarantees to Businesses, State and Local Governments: Includes direct grants for passenger and cargo airlines. Includes assistance specifically for state and local governments to make up for lost business tax revenue and significantly increased unemployment claims
4. Small Business Support: For 6 months, the Small Business Administration (SBA) will pay all principal, interest, and fees on all existing SBA loans. Creation of the Paycheck Protection Program: Small businesses can receive up to $10 million with payments deferred for up to a year to support payroll; portion of loan may be forgiven if businesses retain employees and salary levels
KEY HEALTH-RELATED PROVISIONS
1. National Academies Report on America’s Medical Product Supply Chain Security: Requires National Academies of Sciences, Engineering, and Medicine to study and publish a report on the security of the US medical product supply chain. The report is required to provide recommendations to address any supply vulnerabilities or potential disruptions that would significantly affect public health security or national security
2. Additional Manufacturer Reporting Requirements in Response to Drug Shortages: Requires drug manufacturers to notify HHS of and the reasons for permanent discontinuance or interruptions in the manufacture of an API that is likely to lead to a meaningful disruption in the supply of the API of certain crucial drugs. Requires manufacturers of certain drugs to develop, maintain, and implement a redundancy risk management plan that identifies risks to the supply of the drug for each establishment in which such drug or API of such drug is manufactured.
3. Prioritize Reviews of Drug Applications and Other Incentives: Requires HHS to take certain actions that could mitigate shortages of certain crucial drugs, such as prioritizing and expediting the review of certain FDA approval applications, and the inspection of manufacturing facilities
4. Rapid Coverage of Preventive Services and Vaccines for Coronavirus: Requires health insurers to rapidly cover, without cost-sharing, any qualifying coronavirus preventive service, so long as the preventive service has a rating of “A” or “B” in the current recommendations of the US Preventive Services Task Force (USPSTF), or is an immunization that has a recommendation from the Advisory Committee on Immunization Practices (ACIP)
5. Adjustment of Medicare Sequestration: Beginning May 1, 2020 and ending December 31, 2020, exempts the Medicare program from payment reductions under any sequestration order issued before, on, or after the date of enactment. This means that the Medicare Part B payment for drugs will increase from the current ASP+4.3% to the pre-sequestration statutory rate of ASP+6% for the temporary period
6. Coverage of the COVID-19 Vaccine Under Medicare Part B Without Cost-sharing: Adds COVID-19 vaccine and its administration to the list of vaccines required to be covered by Medicare Part B, with no beneficiary coinsurance. Requires that the Medicare Part B deductible not apply to a COVID-19 vaccine and its administration. Requires Medicare Advantage plans to cover COVID-19 vaccine and its administration with zero cost-sharing.
7. Requiring Part D Plans to Allow Flexibility During the COVID-19 Emergency Period to Facilitate Patient Access to Medicines: During the COVID-19 crisis, requires Part D plans to allow beneficiaries to obtain a single fill or refill up to a 90-day supply of covered Part D drugs prescribed to them, without utilization management or similar restrictions, so long as such refills aren’t inconsistent with applicable safety considerations
8. $100 Billion in Direct Funding for Health Care Providers: Allocates $100 billion to reimburse eligible health care providers for expenses or lost revenues attributable to COVID-19 and not reimbursable by other sources. This funding may be used for building or construction of temporary structures, leasing of properties, medical supplies and equipment (including personal protective equipment and testing supplies), increased workforce and trainings, emergency operation centers, retrofitting facilities, and surge capacity.
9. Medicare Hospital Inpatient Prospective Payment System (IPPS) Add-On Payment: Increases the weighting factor that would otherwise apply to the diagnosis-related group (DRG) by 20% for COVID-19 related treatment during the public health emergency. Directs the Secretary to identify relevant discharges via “diagnosis codes, condition codes, or other such means as may be necessary.”
10. Expansion of the Medicare Hospital Accelerated Payment Program: Expands an existing Medicare accelerated payment program for the duration of the COVID-19 emergency period. Qualified facilities may request up to a six-month advanced lump sum or periodic payment. Most hospital types could elect to receive up to 100% of the prior period payments. Qualifying hospitals are not required to start paying down the loan for 120 days (four months) and also have at least 12 months to complete repayment.
11. Health and Human Services Funding: Extends funding for certain time-limited, health care-related programs until November 30, 2020. These programs all relate to Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and private health insurance programs and activities, or health care-related provisions that were enacted in the Affordable Care Act. Examples include Disproportionate Share Hospital (DSH) funding, and Community Health Center funding. Previously, funding for these programs was set to expire on May 22, 2020. The extension of funding until November 30, 2020 means that this deadline is no longer relevant for potential near-term drug pricing or other health care-related legislation.
12. Department of Transportation Consideration of Drug Supply Chains: Requires the Department of Transportation to consider the need to maintain well-functioning pharmaceutical supply chains, when deciding whether to condition financial assistance to airlines on the continuation of service.