COVID relief and appropriations package includes surprise billing fix, $3 billion for provider relief

January 4, 2021

President Trump signed off on a $2.3 trillion spending package Dec. 27 that covers appropriation funding for the 2021 fiscal year and also includes an additional $900 billion for COVID-19-related relief efforts.

The package also moves to end the practice of surprise billing beginning in 2022 through the No Surprises Act, which would establish an arbitration process for providers and payers to settle payment disputes over out-of-network claims.

The deal includes an additional $3 billion for the HHS Provider Relief Fund, which offers grants to Medicare or Medicaid-enrolled hospital and health care providers to be reimbursed for health care related expenses or lost revenue directly attributable to the public health emergency resulting from coronavirus. For comparison, the CARES Act, which passed in March, included $175 billion for the fund.

While this agreement initially seemed like a done deal after months of compromising between Democrats and Republicans, passage of the package was thrown into question after being approved by both chambers when Trump released a video stating he was unhappy with several portions of the package. He primarily expressed displeasure over the $600 direct checks most Americans would receive, an amount Trump said was far too low. However, he eventually acquiesced and signed the deal to avoid a government funding shutdown.

A brief rundown of the No Surprises Act is available here.

Here’s how the remainder of the package will affect health care providers:

  • Three month delay of the 2% Medicare sequester cuts that were scheduled to resume January 1, 2021;
  • $3 billion to partially offset changes to the Medicare Physician Fee Schedule (MPFS)
    • To reduce previously announced cuts, all codes will receive a 3.75% increase for 2021 paid for by $3 billion from the Trust Fund.
    • To partially fund this increase, a complexity add-on G-code (Visit complexity inherent to certain office/outpatient E/M) is delayed for three years until 2024.
  • $3 billion in additional provider relief grants for Medicare or Medicaid-enrolled hospital and health care providers, including laboratories, to be reimbursed for health care related expenses or lost revenue directly attributable to the public health emergency resulting from coronavirus;
  • Exclusion of forgiven Paycheck Protection Program (PPP) loans from gross income;
  • Permits deduction of otherwise deductible expenses paid with the proceeds of a forgiven PPP loan;
  • Expands allowable expenses under the PPP to include certain operations expenditures, property damage costs, supplier costs, and worker protection;
  • Freezes the Advanced Alternative Payment Model thresholds at current levels for the 2021 and 2022 Quality Payment Program performance years. Currently, 50% of providers’ revenue must be received through an Advanced APM in order to qualify for the reporting track. Without this delay, the threshold would have jumped 75% in January.
  • Creates and appropriates $284.45 billion for a “PPP second draw loan” with a maximum amount of $2 million
    • To be eligible for a PPP second draw loan, eligible entities must
      • Employ 300 or fewer employees
      • Have used or will use the full amount of their first PPP loan
      • Demonstrate at least a 25% reduction in gross receipts in the first, second or third quarter of 2020 relative to the same 2019 quarter;
    • PPP second draw loans are eligible for forgiveness equal to the sum of payroll costs, as well as covered mortgage, rent, and utility payments, covered operations expenditures, covered property damage costs, covered supplier costs, and covered worker protection expenditures incurred during the covered period.

Overall, the package includes $8.75 billion to federal and local agencies to administer and track the coronavirus vaccine; $22.4 billion to support testing and tracing of COVID-19, and $3.25 billion for the Strategic National Stockpile.

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