Omnibus Appropriations Package – 15 Key Provisions for Healthcare Providers

January 13, 2021

Passed by Congress Dec. 21, 2020, and signed by President Donald Trump Dec. 27, 2020, the $1.4 trillion omnibus Consolidated Appropriations Act, 2021 (H.R. 133), includes numerous statutory provisions that directly affect healthcare providers.

The spending bill funds the federal government through the end of the fiscal year, Sept. 30, 2021, and provides a $300 per week federal unemployment supplement, $600 stimulus checks and $284 billion for a second round of Paycheck Protection Program loans discussed in a previous McGuireWoods alert, among other policies. To assist the healthcare industry in understanding the policies included in the massive spending bill, this alert summarizes 15 key healthcare provisions included in H.R. 133.

  1. Medicare physician fee schedule payment increase in 2021. To support physicians and other healthcare professionals, H.R. 133 increases by 3.75 percent the Medicare physician fee schedule for services furnished by physicians and other qualified professionals on or after Jan. 1, 2021, and before Jan. 1, 2022. To account for this increase, H.R. 133 appropriates $3 billion to the Federal Supplementary Medical Insurance Trust Fund, with further funding available from the Trust Fund through the end of 2021. This increase will not be taken into account for setting payment amounts beginning in 2022, as it is intended to address certain policies adopted by the Centers for Medicare & Medicaid Services (CMS) and COVID-19 challenges this year.
  1. Further suspension of the Medicare sequestration. The CARES Act suspended the Medicare 2 percent sequestration payment reductions from May 1, 2020, through Dec. 31, 2020, as discussed in a March 2020 alert on that legislation’s impact on hospitals. The new law extends the suspension of sequestration another three months. The sequester suspension provides additional relief for providers financially challenged due to increased COVID-19-related costs and declines in revenues. However, the CARES Act extends the sequestration reductions through 2030 in exchange for the prior temporary suspension, and there was no change to this extension in H.R. 133.
  1. New benefits and support for Medicare and Medicaid beneficiaries. As discussed in this earlier alert on changes for Medicare and Medicaid beneficiaries, H.R. 133 includes numerous provisions that directly impact Medicare and Medicaid beneficiaries. Key Medicare beneficiary changes include extending coverage eligibility for immunosuppressive drugs for kidney transplant patients, waiving Medicare co-insurance for colorectal cancer screening tests and continuing coverage of certain temporary transitional home infusion therapy services.

    In addition, H.R. 133 increases the use of real-time benefit tools to lower beneficiary drug costs and simplifies beneficiary enrollment for Medicare Part B coverage. For the Medicaid program, H.R. 133 extends both the Money Follows the Person Demonstration Program and spousal impoverishment protections through fiscal year 2023, after earlier COVID-19 extensions to these beneficiary policies, as discussed in April 29 and Sept. 30, 2020, alerts. Finally, it provides Medicaid coverage for citizens of certain Freely Associated States who are living and working in the United States.
  1. Additional medical residency positions. H.R. 133 expands the number of residency positions available in connection with Medicare’s payments for direct graduate medical education costs. For years, policymakers have been lobbied to expand the healthcare workforce, particularly around medical residency slots. Beginning in fiscal year 2023, 200 positions will be made available annually up to an aggregate 1,000 new residency positions.

    Further, the Secretary of U.S. Department of Health and Human Services (HHS) is mandated to provide not less than 10 percent of the aggregate positions to (a) hospitals in rural areas, (b) hospitals with a higher reference resident level than the otherwise applicable resident limit, (c) hospitals in states with new medical schools that have attained certain designation statuses, and (d) hospitals providing services to health professional shortage areas. Interested hospitals must actually offer the new residency positions, if awarded, and no hospital may receive more than 25 new full-time equivalent residency positions.
  1. Surprise billing prohibition. H.R. 133 prohibits “surprise” medical bills from out-of-network providers or facilities for care that patients had limited or no input in selecting, and for services by out-of-network providers at certain in-network facilities, including hospitals and surgery centers. The practice of billing patients for the difference between out-of-network rates and the amount paid by an insurer is commonly referred to as balance billing. However, beginning Jan. 1, 2022, if a patient requires out-of-network emergency care, or ancillary services from out-of-network providers at an in-network facility, or out-of-office care at an in-network facility, then such patient will be responsible only for the amount he or she would have paid in-network under the patient’s insurance plan unless the patient has provided advance informed consent to receive out-of-network treatment.

    To accomplish this surprise billing prohibition, lawmakers reached a bipartisan compromise that includes a complicated dispute resolution process for payment. Ambulance services were not addressed in H.R. 133, nor in previous efforts to address surprise billing. McGuireWoods anticipates providing subsequent guidance on these provisions.
  1. Removal of gag clauses regarding price and quality information. In an effort to increase transparency, H.R. 133 removes limitations on publicizing information on healthcare providers’ price and quality, often known as gag clauses. Specifically, a group health plan, health plan insurer and issuer of health insurance coverage cannot enter into agreements with healthcare providers that restrict such an insurer from being allowed to provide provider-specific cost or quality-of-care information, allowing beneficiaries to access de-identified claims and encounter information, or sharing such information with an insurer’s business associates. These gag clause prohibitions require an annual attestation of compliance submitted to the Secretary of HHS. This provision intends to increase transparency around cost and quality, and joins recent HHS efforts requiring hospitals to post their costs.
  1. Provider Relief Fund reporting changes and more funding. As discussed in this earlier alert on the Provider Relief Fund, H.R. 133 adds flexibility under the Provider Relief Fund for reporting “lost revenue” (which allows providers to keep more of their payments), allows providers to allocate payments among subsidiary entities and creates an additional funding phase. Previous legislation provided $175 billion to the Provider Relief Fund to reimburse healthcare providers for eligible expenses and lost revenues attributable to COVID-19 (as discussed in previous McGuireWoods legal alerts). HHS guidance on the Provider Relief Fund has evolved, leading to concerns that providers may return this emergency support, as discussed most recently in Oct. 2 and Nov. 3, 2020, McGuireWoods alerts. H.R. 133 will likely reduce the number of Provider Relief Fund recipients that will need to return payments, and it provides an additional $3 billion for emergency support.
  1. Additional funding for the Federal Communication Commission (FCC) COVID-19 telehealth program. The CARES Act provided the FCC with funding to create a COVID-19 Telehealth Program, as discussed in this April 2020 alert on telehealth during COVID-19, which was intended to reduce barriers for providers and patients to effective telehealth services. With the appropriated funds, on April 2, 2020, the FCC adopted a grant program to support specific providers (e.g., post-secondary educational institutions offering healthcare instruction, teaching hospitals, medical schools, community health centers or health centers providing healthcare to migrants, local health departments or agencies, community mental health centers, not-for-profit hospitals, rural health clinics, and skilled nursing facilities) so providers can purchase telecommunications and information services, broadband connectivity and devices necessary to create and implement a telehealth program.

    R. 133 appropriates an additional nearly $250 million for the COVID-19 Telehealth Program. The FCC is required to solicit public comment on the metrics the FCC should employ in reviewing applications, on how to handle applications filed during the last round and on allowing such applicants to update or amend their applications to the extent necessary.
  1. Mental telehealth expansion. In the first of what is expected to be significant expansion of telehealth services permitted by the CARES Act during COVID-19, as discussed in this April 2020 alert on telehealth, H.R. 133 expands Medicare telehealth services to allow beneficiaries to receive mental health services via telehealth if the beneficiary has been seen in person at least once by the qualifying practitioner during the six-month period prior to the first telehealth service. The bill also gives the Secretary of HHS the authority to provide for additional face-to-face requirements.
  1. Moratorium on add-on code for complex evaluation and management (E/M) visits. H.R. 133 prohibits HHS from making payments for G2211, the new complexity add-on code for E/M visits, before Jan. 1, 2024. CMS finalized code G2211 for use in 2021 for E/M visits that are part of a continuing relationship related to a patient’s single, serious or complex condition. Providers would have included this add-on code with their billed E/M codes 99202–99215 to receive an additional payment that the American Medical Association has stated would cost Medicare approximately $3 billion. By delaying implementation for three years, the budget neutrality conversion factor will be further adjusted, decreasing reductions otherwise to be paid under the Medicare physician fee schedule.
  1. Home health use of occupational therapists. H.R. 133 permits occupational therapists to conduct an individual’s initial assessment visit and complete the comprehensive assessment with respect to certain rehabilitation services for home health agencies under the Medicare program, if the physician referral includes occupational therapy, physical therapy or speech language pathology, and does not include skilled nursing care. These changes provide additional flexibility for home health providers to satisfy the conditions of coverage for home health services provided for in the CARES Act, as discussed in this March 2020 alert on home health services.
  1. New Medicare provider payment for rural emergency hospital services. R. 133 creates a new rural healthcare provider payment for rural emergency hospitals (REHs), which is intended to allow rural hospitals to continue emergency services even if the hospital can no longer maintain inpatient services. REH status will not allow inpatient services and patients cannot, on an annual average, stay for longer than 24 hours. H.R. 133 will require certain staffing requirements and will allow the REH to offer outpatient services.

    To become an REH, assuming state licensure allows its formation, the entity must be, as of the date of enactment of the law, either a critical access hospital or a “subsection (d) hospital” (defined at 42 U.S.C. § 1395ww(d)(1)(B) and which is essentially a general acute-care hospital), with not more than 50 beds and that is located in, or is treated as being located in, a rural area. Once enrolled, the REH will remain an REH until the facility desires to convert back to its prior status or it no longer meets the requirements of an REH.

    Beginning on or after Jan. 1, 2023, HHS will reimburse an REH for REH services in an amount equal to covered hospital outpatient services rates plus 5 percent (subject to the application of certain copayment obligations). There will also be an additional facility payment, calculated based on a Medicare subsidy amount for 2023, along with separate payments for ambulance services and post-hospital extended care services. HHS will then evaluate how REHs affect healthcare accessibility and outcomes in rural areas.
  1. Medicare reimbursement for rural providers. Medicare reimbursement for physicians and other providers includes three geographic adjustments, one based on the relative work geographic practice cost index of the region where the service is provided. Previously, the CARES Act extended through Dec. 1, 2020, an existing “floor” for such adjustment at 1.0 that had been slated to expire May 23, 2020, as discussed in this March 2020 alert on that legislation's impact on rural health. H.R. 133 extends this again to Jan. 1, 2024. This adjustment should help ensure rural providers do not see a decrease in their reimbursement during the COVID-19 pandemic and for some time beyond it.
  1. Additional rural health provisions. H.R. 133 addresses several other rural healthcare matters. It extends the Rural Community Hospital Demonstration Program by another five years for a total 15-year extension period. Further, payments for rural health clinic services provided beginning April 1, 2021, will increase to $100 per visit, with such amount increasing at pre-established annual rates through 2028. H.R. 133 also dictates rates for certain hospice services provided by attending physicians on behalf of rural health clinics, so long as such individuals are employed by the clinic or are otherwise contracting with the clinic. This will allow the hospice patients to maintain their existing rural health clinic physician through their hospice care.
  1. Significant aid to certain health agencies. H.R. 133 provides $6 billion to the Substance Abuse and Mental Health Services Administration (SAMHSA) and $7.5 billion to the Health Resources and Services Administration (HRSA) for substance abuse treatment, health centers, the Ryan White HIV/AIDS clinics and the Bureau of Health Professions. Similar funding was previously proposed in the House-passed HEROES Act. H.R. 133 also extends mandatory funding for community health centers, the National Health Service Corps and the Teaching Health Center Graduate Medical Education Program at current levels for fiscal years 2021 through 2023, which was also adjusted in the CARES Act as discussed in this March 2020 alert on that legislation's impact on the healthcare workforce.

McGuireWoods and McGuireWoods Consulting are continuously monitoring legislation and regulations related to healthcare policy. Please contact the authors or a member of the McGuireWoods healthcare team for additional information. McGuireWoods Consulting’s federal team assists clients in communicating with policymakers on complex legislative issues related to healthcare, and McGuireWoods attorneys address ongoing, day-to-day obstacles and create new models for delivering healthcare services across the country.


McGuireWoods has published additional thought leadership analyzing how companies across industries can address crucial business and legal issues related to COVID-19.

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