COVID-19: Federal Update (6/2)
— MCCONNELL: SENATE TO TAKE UP HOUSE-PASSED PPP BILL. The upper chamber will “soon” take up a House-passed measure that seeks to reform the Paycheck Protection Program (PPP).
— HOUSE LAWMAKERS PUSH FOR BUDGET REFORMS IN ‘CARES 2.0.’ A bipartisan group of Members are calling for provisions that address the federal debt and trust funds for Medicare and Social Security to be included in the next round of COVID-19 relief legislation.
— STATES LOSE SOME CLEAN WATER ACT AUTHORITY UNDER NEW EPA RULE. States have less say in issuing Clean Water Act permits under an EPA rule finalized Monday as the Trump administration and conservative lawmakers seek to speed energy projects.
— LAWMAKERS BEGIN BIPARTISAN PUSH TO CUT OFF POLICE ACCESS TO MILITARY-STYLE GEAR. Republicans and Democrats in Congress have begun a new push to shut down a Pentagon program that transfers military weaponry to local law enforcement departments.
— OCC LETTER TO MAYORS: EXTENDED SHUTDOWNS WILL HURT LENDERS. OCC Acting Comptroller Brian Brooks penned a letter to the U.S. Conference of Mayors yesterday saying that extended COVID-19 shutdowns could hurt banks’ ability to lend.
— CMS ISSUES NEW GUIDANCE FOR STATES ON COVID-19. The guidance to states covers COVID-19 survey activities, CARES Act funding, enhanced enforcement for infection control deficiencies, and quality improvement activities in nursing homes.
Capitol Hill Update
— MCCONNELL: SENATE TO TAKE UP HOUSE-PASSED PPP BILL. Senate Majority Leader Mitch McConnell (R-KY) announced yesterday that the upper chamber will “soon” take up and clear the House-passed measure that seeks to provide Paycheck Protection Program (PPP) recipients with more time and flexibility in using these funds. While GOP senators were reportedly resistant to the lower chamber’s measure, Leader McConnell’s comments yesterday suggest that the Senate is satisfied with the underlying bill given the overwhelming bipartisan support it enjoyed in the House last week. Key provisions in the Paycheck Protection Program Flexibility Act include: (1) giving businesses 24 weeks to spend the funds instead of eight; (2) allowing businesses to repay any non-forgiven balance over five years; and (3) adjusting the Trump administration’s non-statutory requirement that 75 percent of PPP loan funds be used for payroll, bumping it down to 60 percent instead of striking it completely as the original version proposed.
— SENATE FLOOR ACTION FOCUSES ON NOMINATIONS. On the floor for today, Senators will resume clearing the queue of pending presidential nominations. This includes a vote on Brian Miller’s nomination to be Special Inspector General for Pandemic Recovery. The Senate will also vote on Victor Mercado’s nomination to be an Assistant Secretary of Defense.
Washington Insider: What We’re Reading
States have less say in issuing Clean Water Act permits under an EPA rule finalized Monday as the Trump administration and conservative lawmakers seek to speed energy projects. The rule limits the scope of environmental reviews that states conduct before issuing permits for projects such as pipelines and hydropower plants. It also directs states to narrow their reviews to water quality issues and creates a one-year deadline for states to make decisions.
Republicans and Democrats in Congress have begun a new push to shut down a Pentagon program that transfers military weaponry to local law enforcement departments, as bipartisan urgency builds to address the excessive use of force and the killings of unarmed black Americans by the police. With protests turning violent across the country, lawmakers are scrutinizing the Defense Department initiative — curtailed by former President Barack Obama but revived by President Trump — that furnishes police departments with equipment such as bayonets and grenade launchers.
A prominent GOP House lawmaker on Monday introduced legislation to create a “return to work bonus,” an idea gaining traction among Republicans concerned about the $600-per-week boost to unemployment benefits enacted in March amid the coronavirus pandemic. Under the bill from Rep. Kevin Brady (R-TX) the top Republican on the House Ways and Means Committee, people who had been receiving unemployment benefits and return to work would be able to receive up to two weekly payments of $600, or one lump-sum payment of $1,200. The benefit would be available through July 31, when the $600 increase to weekly unemployment benefits expires.
The Environmental Protection Agency (EPA) on Friday finalized a rule to control leaks of a type of pollution from industrial equipment, though critics argued the agency did not go far enough. The agency announced Monday that it had promulgated a rule to regulate emissions of ethylene oxide, which is used in the production of industrial chemicals. Chronic exposure to ethylene oxide has been associated with cancer and neurotoxicity and short-term exposure has been linked to lung injuries.
COVID-19: What We’re Hearing
— APPROPRIATIONS UPDATE. As the COVID-19 pandemic continues to upend the Congressional schedule, lawmakers are adjusting their expectations for consideration of fiscal year (FY) 2020 spending bills.
House. The lower chamber is expected to ramp up on the appropriations process in the coming weeks, with the goal of marking up all 12 measures by the end of July and completing full consideration by August. Previously, Leader Hoyer had indicated that the House could complete the markup process by June.
Senate. Senate Appropriations Chairman Richard C. Shelby (R-AL) indicated that his committee tentatively plans to mark up begin marking up spending bills during the third week of June.
— ‘CARES 2.0’ STATE OF PLAY. Senate Majority Leader Mitch McConnell (R-KY) stated yesterday that Congress will “probably” need to pass another round of COVID-19 relief legislation in the coming weeks — a pivot from his most recent stance that Congress must continue to analyze implementation of the CARES Act prior to moving additional stimulus relief. Key priorities that have emerged include:
Budget Reform. A bipartisan group of House lawmakers penned a letter to Speaker Nancy Pelosi (D-CA) and Minority Leader Kevin McCarthy (R-CA) calling for provisions that address the federal debt and trust funds for Medicare and Social Security to be included in the next round of COVID-19 relief legislation.
Surprise Billing. Reports out of the Trump administration suggest that the White House will push for action on surprise medical bills ahead of the next round of relief legislation.
During the CARES Act negotiations, Chairman Frank Pallone (D-NJ) and Senate Health, Education, Labor, and Pensions (HELP) Chairman Lamar Alexander (R-TN) were actively trying to tack their surprise billing legislation onto the package.
Liability. Leader McConnell and Sen. John Cornyn (R-TX) are working on legislation that would limit the liabilities of health care workers, business owners, and employees from lawsuits pertaining to the COVID-19 outbreak. Leader McConnell emphasized that any future COVID-19 relief efforts must include these protections in order for the Senate to consider additional relief legislation.
House Democratic leadership appears open to negotiating a deal on liability protections. Leader Hoyer emphasized that these protections must not undermine the health and rights of workers, but indicated that the issue is open for further discussion and negotiation.
Unemployment Reform. Senate Republicans are spearheading efforts on reforming the enhanced unemployment benefits so that generous payments approved in the CARES Act don’t become an obstacle to rehiring workers.
A key option on the table includes enhancing a tax credit that would give employers a tax break for keeping workers on the payroll.
State and Local Governments. Funding for state and local governments is a key pillar of the Democrats’ next stimulus bill. While there is bipartisan agreement that more needs to be done to help stymie economic hardships for these entities, allocating additional funding has become a divisive issue within the Republican conference.
It appears likely that some Senate Republicans — particularly those who are up for re-election — would coalesce behind a bipartisan proposal that would provide additional funding and flexibility to address needs at the state and local level.
COVID-19 Legislative & Regulatory Trackers
— OCC LETTER TO MAYORS: EXTENDED SHUTDOWNS WILL HURT LENDERS. The Office of the Comptroller of the Currency (OCC) Acting Comptroller Brian Brooks penned a letter to the U.S. Conference of Mayors yesterday saying that extended COVID-19 shutdowns could hurt banks’ ability to lend.
— CMS ISSUES GUIDANCE FOR STATES ON RANGE OF COVID-RELATED POLICIES AND ACTIVITIES. The Centers for Medicare and Medicaid Services (CMS) issued guidance to states on COVID-19 survey activities, CARES Act funding, enhanced enforcement for infection control deficiencies, and quality improvement activities in nursing homes.
— CMS UNVEILS NEW ENFORCEMENT ACTIONS FOR NURSING HOMES. CMS unveiled new enforcement actions for nursing homes based on early trends in the most recent data regarding incidence of COVID-19 in residential care facilities. The enhanced enforcement targets facilities with persistent infection control violations, and CMS will also enforce lower-level violations to ensure greater attention to infection control practices.
— TREASURY PUBLISHES UPDATED FAQS ON CORONAVIRUS RELIEF FUND. The Treasury Department updated its list of frequently asked questions that provide examples of eligible and ineligible expenditures of the state, local, and tribal Coronavirus Relief Fund. TRP’s analysis of these new FAQs can be read here.
— HHS, BARDA ANNOUNCE NEW CDMO MANUFACTURING CONTRACT. The Department of Health and Human Services (HHS) and the Biomedical Advanced Research and Development Authority (BARDA) announced a $628 million contract with Emergent BioSolutions to advance manufacturing capabilities and capacity COVID-19 vaccines and therapeutics.
— SBA AND TREASURY ANNOUNCE $10 BILLION IN PPP FUNDING FOR CDFIs. The Small Business Administration (SBA) and Treasury Department announced they will set aside $10 billion in PPP funding for Community Development Financial Institutions.
— HHS UPDATES PROVIDER RELIEF FUNDING WEBSITE. HHS has updated its webpage outlining details on provider relief and related health funding.
Click here for a list of extensive frequently asked questions on the fund.
Click here for a detailed overview on all of the COVID-related provider funding.
— CMS PUBLISHES FACT SHEET ON PROGRAMS AND PAYMENT IN HOSPITAL ALTERNATE CARE SITES. The Centers for Medicare and Medicaid Services (CMS) published a fact sheet for state and local governments that outlines how these entities can seek payment for care in alternate care sites through CMS programs.
— HHS ALLOCATES COVID-19 FUNDING FOR SNFs AND TRIBAL PROVIDERS. HHS announced on May 22 that it has begun distributing roughly $4.9 billion in COVID-19 provider funding to skilled nursing facilities. The same day, it also announced $500 million in funding for tribal hospitals, clinics, and urban health centers, a $100 million increase over the previously reported sum for those providers. TRP’s updated analysis of funding under the Provider Relief Fund is available here.
— HHS EXTENDS COMPLIANCE DEADLINE FOR PROVIDER RELIEF FUNDING. HHS announced on May 22 that it would allow providers eligible to receive provider relief funding from the CARES Act an additional 45 days to accept the Terms & Conditions for such payments. Providers will now have a total of 90 days from receipt of payment to make the attestation to HHS.
AS PREVIOUSLY REPORTED…
— HEROES ACT. The House passed the Democrats’ sweeping $3 trillion HEROES Act following weeks of intraparty negotiations and assessments of current COVID-19 response efforts. The bill is considered dead-on-arrival in the GOP-controlled Senate and White House. TRP’s comprehensive analysis of this legislation can be read here.
As written, the bill would represent the largest federal response to the COVID-19 pandemic to date, with provisions that would provide another round of direct payments to individuals and families, additional funding for health care providers and COVID-19 testing, as well as nearly $1 trillion in aid to state and local governments.
— LEGISLATIVE RESPONSE. TRP has published several in-depth policy memos that analyze actions that Congress and the federal government have taken to address the COVID-19 outbreak. Click here for the full list of memos.
Phase I. An $8.3 billion emergency supplemental appropriations bill cleared both chambers and was signed into law on Mar. 6. TRP’s analysis of the Phase I legislation can be read here.
Phase II. The Phase II legislative response bill was signed into law on Mar. 18. TRP’s full analysis of the Phase II bill can be read here.
Phase III. The CARES Act was signed into law on Mar. 27. TRP’s analysis of the Phase III legislation can be read here.
Phase 3.5. President Donald Trump signed the $483.4 billion “COVID-19 Phase 3.5” bill into law on Apr. 24. TRP’s comprehensive analysis of the Phase 3.5 legislation can be read here.
— SMALL BUSINESSES. TRP’s comprehensive analysis of the small business provisions contained in COVID-19 response bills can be read here.
PPP. SBA and Treasury Department have taken a piecemeal approach to implementing the PPP. While conducted with the aim of getting the emergency program up and running as quickly as possible, the government’s process of issuing FAQs and guidance as the program runs has created uncertainty in certain areas.
The loan application form can be accessed here.
The SBA and Treasury Department updated their running list of frequently asked questions on the PPP (May 27).
SBA issued guidance on how to calculate PPP loans by business type.
SBA published a list of all lenders participating in the PPP.
SBA issued an interim final rule clarifying the process of applying for PPP loans for individuals who report self-employed income on a 1040 Schedule C.
EIDL. Following overwhelming demand for Economic Injury Disaster Loans (EIDL) and accompanying $10,000 grants, SBA has limited eligibility for the program to agricultural businesses.
— FEDERAL RESERVE. Among other actions intended to mitigate an economic meltdown, the Fed has established 11 lending facilities intended to support the flow of credit to households, businesses, and municipalities. Many of these facilities are backed by Treasury funds provided under the CARES Act.
Open Market Operations. At the onset of the pandemic, the Federal Open Market Committee (FOMC) lowered interest rates to 0-.25 percent in an effort to spur economic activity. Fed Chairman Jerome Powell, however, has indicated that the Fed is unlikely to pursue negative interest rates. The Fed is continuing to purchase Treasuries and mortgage-backed securities (MBS) with the aim of reducing strain on the financial sector.
Main Street Lending Program. The Main Street Lending Program supports lending to small- and medium-sized businesses through the purchase of eligible commercial loans. More information on the program can be found here.
Term Asset-Backed Securities Loan Facility (TALF). First created to deal with the liquidity crisis in the Asset-backed Securities (ABS) market in 2008-09, the Fed recently recreated this program to respond to COVID-19. Similar to the first version, TALF will allow issuers of ABS to effectively sell into a Fed backed Special Purpose Vehicle. More information on the program can be found here.
Municipal Liquidity Facility (MLF). The Fed will purchase up to $500 billion in state and local debt with the intention of supporting cash-strapped municipal governments’ access to liquidity. More information on the program can be found here.
Primary and Secondary Market Corporate Credit Facilities. The Fed will make loans to and purchase the bonds of investment-grade larger companies through two corporate credit facilities. More information on the program can be found here.
Financial Markets. In addition to the above actions intended to support the flow of credit in the economy, the central bank has established several other facilities intended to facilitate the continued functioning of commercial paper markets, money markets, and primary dealer markets.
— TREASURY. The Treasury Department released a list of the payments that have been made to states and qualifying localities through the Coronavirus Relief Fund.
Employee Retention Credit. The Treasury Department has released a list of frequently asked questions pertaining to the Employee Retention Credit.
— OVERSIGHT. The Congressional Oversight Commission has issued its first report outlining how it will review the Treasury Department and Federal Reserve’s efforts to implement Subtitle A of the CARES Act. This will include an analysis of the lending programs and facilities designed for businesses and municipalities.
— EO ON DEREGULATION. The Trump administration issued an executive order calling on agencies to target regulations “that may inhibit economic recovery” during the COVID-19 pandemic. Click here to read TRP’s analysis of this new order.
— IRS. The Internal Revenue Service (IRS) published a list of frequently asked questions on COVID-related relief for retirement plans and IRAs (May 4).
— HHS. Among key initiatives led by the Department of Health and Human Services (HHS) at large:
Testing. The Trump administration published a report on its national COVID-19 testing strategy as mandated by the “Phase 3.5” measure.
HHS and the Health Resources and Services Administration (HRSA) allocated $225 million to Rural Health Clinics provided by the “Phase 3.5” legislation to bolster COVID-19 testing (May 20).
Drug Manufacturing. HHS and the Biomedical Advanced Research and Development Authority (BARDA) announced a four-year, $354 million agreement with Phlow Corporation aimed at expanding U.S.-based pharmaceutical manufacturing for COVID-19 response (May 20). TRP’s analysis of the agreement can be read here.
Drug Development. The Trump administration announced a framework and leadership for “Operation Warp Speed“— a national program aimed at accelerating the development, manufacturing, and distribution of COVID-19 diagnostics, treatments, and vaccines (May 15).
Workforce, Telehealth. HHS and HRSA awarded $15 million in grant funding to 159 organizations across five health workforce programs to bolster telehealth capabilities in response to the COVID-19 pandemic (May 13).
— MEDICARE AND MEDICAID. The Centers for Medicare and Medicaid Services (CMS) has offered a series of regulatory flexibilities and guidances:
1135 Waivers. A full list of the 1135 waiver approval letters can be accessed here (Updated May 15).
Medicaid Guidance. CMS released a new CMCS Informational Bulletin that provides states with guidance on how to temporarily modify certain provider payment methodologies and capitation rates under their Medicaid managed care contracts during the public health emergency (May 14).
MA Plan FAQs. CMS updated its list frequently asked questions related to the public health emergency for Medicare Advantages plans (May 13).
Interim Final Rule. CMS issued an interim final rule with comment period and blanket waivers under Section 1135 of the Social Security Act. These new flexibilities provide for Medicare coverage of serology tests, new coverage for services provided by pharmacists, and a waiver of the limitation on the types of practitioners that may furnish Medicare telehealth services (May 8).
Medicaid, CHIP FAQs. CMS published a tranche of frequently asked questions for state Medicaid and CHIP programs regarding COVID-19 response efforts (May 5).
— HEALTH CARE PROVIDER FUNDING. TRP’s comprehensive analysis of these distributions can be read here.
PHSSEF Distributions. To date, HHS is providing a $50 billion general allocation for Medicare hospitals and providers, $10 billion for hospitals in highly impacted areas, $10 billion for rural providers, $500 million for the Indian Health Service, and $4.9 billion for skilled nursing facilities. It also establishes a program to fund COVID-19 care for the uninsured. Additionally, HHS cited providers who will receive further, separate funding, including dentists and providers that solely take Medicaid.
— FDA. The Food and Drug Administration (FDA) has published several guidance documents related to drugs being developed for COVID-19, compounding, medical devices, and the supply chain.
Testing. FDA posted a list of antibody tests that are being removed from the “notification list” of tests being offered under the Policy for Coronavirus Disease-2019 Tests During the Public Health Emergency (May 22).
Compounding. FDA issued guidance to temporarily allow pharmacies to compound drugs for hospitalized COVID-19 patients that are essentially copies of commercially-available drugs or provide such drugs to a hospital without a patient-specific prescription when certain conditions are met (Updated May 21).
It also issued guidance to temporarily allow outsourcing facilities to compound a drug that is essentially a copy of an approved drug, use a bulk drug substance not on the 503B list, and not meet certain stability testing and expiration date requirements when certain conditions are met (Updated May 21).
Drug Development. FDA published guidance documents related to drugs being developed for COVID-19.
The first guidance document provides general recommendations to sponsors to help prepare them for pre-investigational new drug application (pre-IND) meeting requests for COVID-19 related drugs (May).
The second guidance document is intended to assist sponsors in the clinical development of drugs for treating or preventing COVID-19 (May).
Supply Chain Exemptions. FDA issued guidance outlining an exemption and exclusion from certain requirements of the Drug Supply Chain Security Act during the public health emergency (Updated May 11).
Antigen Test. FDA issued an emergency use authorization for the first COVID-19 antigen test (May 8).
Device Shortages. FDA published guidance on reporting requirements for medical device shortages (May).
Remdesivir. FDA issued an emergency use authorization for the antiviral Remdesivir (May 1).
— CDC. The Centers for Disease Control and Prevention (CDC) published detailed guidelines for reopening schools and businesses that have been shut down amid the COVID-19 outbreak.
CDC published guidance documents that offer decision-making tools for reopening schools, workplaces, child care programs, mass transit systems, bars and restaurants, as well as youth programs and camps.
The Substance Abuse and Mental Health Services Administration (SAMHSA) awarded grant funding to increase access and improve the quality of community mental and substance use disorder (SUD) treatment services through the expansion of Certified Community Behavioral Health Clinics (CCBHC) (Apr. 27).
SAMHSA released $15 million in supplemental grant awards for tribal COVID-19 behavioral health response (May 1)
— NIH. National Institutes of Health (NIH) launched a study to investigate whether the COVID-19 pandemic has resulted in pregnancy-related health issues. The agency plans to incorporate this data into broader registry on how COVID-19 impacts maternal health.
The National Institutes of Health issued its first guidance on COVID-19 treatment options that are currently under review (updated May 12).