U.S. House Passes American Rescue Plan – 15 Provisions for Healthcare Providers

March 1, 2021

In the early morning of Feb. 27, 2021, the U.S. House of Representatives narrowly passed H.R. 1319, the American Rescue Plan Act of 2021, by a 219-212 vote. Two Democrats joined with a united Republican caucus to oppose the bill. House Democratic leadership introduced and passed the American Rescue Plan the same week the United States announced its 500,000th death from COVID-19.

President Joe Biden requested the American Rescue Plan’s $1.9 trillion in spending to develop a national vaccination program; increase COVID-19 testing, tracing and treatment; change employment regulations, including the federal minimum wage; and address the negative financial impacts of the COVID-19 pandemic. The bill includes financial relief to state, local and tribal governments, as well as extensions to enhanced unemployment benefits, certain debt collection relief and direct cash payments to households.

The House action followed a ruling by the Senate parliamentarian that could mean the Senate will not include some provisions of the House bill. In the Senate, using budget reconciliation to pass legislation subjects that legislation to the Byrd Rule. Named for the late Sen. Robert Byrd (D-W.V.), the rule allows provisions that do not have a direct budgetary impact to be struck from legislation. Reconciliation allows the Senate to pass legislation with a simple majority rather than the filibuster-proof threshold of 60 votes. This means, because of the 50-50 partisan split in the Senate, all Democratic senators must be united to pass the legislation, with Vice President Kamala Harris serving as the tie breaker.

On Feb. 25, the Senate parliamentarian ruled before the Senate considering the legislation that the House’s provision for a phased increase to the federal minimum wage to $15 per hour did not pass the Byrd Rule test. There may be other provisions that, if the Byrd Rule is raised during debate, may also be struck. Since the 1980s, reconciliation has largely been limited to mandatory programs and taxes. Under some interpretations of the Byrd Rule criteria, funding for education, vaccines, testing and public health activities as well as child care could fall under the Byrd Rule test. However, if no one raises the point of order during debate, no ruling occurs. Should provisions be struck from the House-passed legislation, the House would have to vote on what the Senate passes. The Democratic leadership’s target date for getting the legislation to President Biden’s desk is March 14.

Discussed below are 15 provisions included in the legislation, as it shifts to the Senate, that healthcare providers should understand:

1. Funds COVID-19 Vaccine Activities. The American Rescue Plan allocates significant additional funding for COVID-19 vaccine activities. First, it provides $7.5 billion to the Centers for Disease Control and Prevention (CDC) to plan, prepare for, promote, distribute, administer, monitor and track COVID-19 vaccines. Key aims for this funding include distributing vaccines, establishing community vaccination centers and mobile vaccine units, and communicating with the public about how to receive vaccines. In addition to the funding noted above, the legislation provides $1 billion to the U.S. Department of Health and Human Services (HHS) for vaccine confidence programs designed to increase national vaccination rates.

The legislation provides $6.05 billion for necessary expenses related to research, development, manufacturing, production and purchase of vaccines. Separately, the American Rescue Plan provides $10 billion under the Defense Production Act for medical supplies and equipment, including personal protective equipment (PPE), and for responding to future pathogens with the potential to create a public health emergency. Finally, the legislation allocates $500 million to the Food and Drug Administration for evaluation, oversight and facilitation of vaccine performance and manufacturing.

2. Funds COVID-19 Testing, Contact Tracing and Mitigation Activities. The American Rescue Plan also focuses significant funds on continued COVID-19 testing and mitigation efforts — specifically, $47.8 billion to detect, diagnose, trace and monitor COVID-19 infections and related strategies to mitigate the spread of COVID-19. HHS was directed to use the funds to take actions such as: implementing a national testing strategy, funding health departments’ efforts related to COVID-19 testing supplies, and enhancing data sharing related to COVID-19 testing.

The legislation also allocates $1.75 billion to expand activities and workforce related to genomic sequencing, analytics and disease surveillance. Next, the bill provides money to combat COVID-19 and other emerging infectious disease threats globally, including global health security, disease detection and response, protection immunization and coordination. There is some ambiguity on the final dollars approved here for global health due to the House process, but the draft legislation presented to the final committee before House passage included $750 million. Finally, the legislation provides $500 million to the CDC to support public health data surveillance and analytics infrastructure modernization initiatives and establish, expand and maintain efforts to modernize the U.S. disease warning system to forecast and track hot spots for COVID-19 and emerging biological threats. Similar provisions were included in the House-passed Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act).

3. Expands Health Insurance Access Through COBRA Continuation Coverage. The American Rescue Plan allows individuals eligible for COBRA coverage to maintain their employer-sponsored coverage after a layoff, reduction in hours or furlough, by paying only 15 percent of premiums through Sept. 30, 2021. The HEROES Act proposed to provide full coverage for such individuals throughout 2020, but that provision did not pass in the Senate. The legislation provides special extended election periods and special enrollment provisions allowing the opportunity for individuals previously declined COBRA continuation coverage or who had such coverage and discontinued the coverage prior to the enactment of the law. Group health plans are required to provide notices of these coverage opportunities.

Finally, the legislation provides a refundable tax credit for employers and group health plans to reimburse the full amount of COBRA coverage premiums. Other coverage-related expansions include spending on health insurance exchanges and spending on federal employees and maritime employees diagnosed with COVID-19 before Jan. 30, 2023, with such illness presumed to be a work-related illness for wage loss compensation, or longshore and harbor workers benefits.

4. Funds Public Health Workforce and Mental Health Training. The American Rescue Plan includes $7.66 billion to strengthen the nation’s workforce at public health departments at the state, local and territorial levels. A recipient public health department can use received funds for personnel costs, PPE, certain data-related and other types of technology, related administrative costs, reporting requirement costs and sub-awards to local health departments. In particular, the legislation defines eligible personnel costs broadly to include costs necessary to recruit, hire and train people to “serve as case investigators, contact tracers, social support specialists, community health workers, public health nurses, disease intervention specialists, epidemiologists, program managers, laboratory personnel, informaticians, communication and policy experts, and any other positions as may be required to prevent, prepare for, and respond to COVID-19” at public health departments and certain nonprofit organizations.

An additional $100 million is provided for the nation’s Medical Reserve Corps, which supplies volunteers in public health emergencies, plus $200 million for nursing loan repayment programs. An added $330 million is allocated for teaching health centers that operate graduate medical education programs. Finally, $80 million is provided for mental and behavioral health training and $100 million would fund a Behavioral Health Workforce Education and Training Program. All of this funding comes after the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provided significant funding for the healthcare workforce.

5. Increases Funding for Community Health Centers. The American Rescue Plan provides an additional $7.6 billion to health centers, federally qualified health centers and the Papa Ola Lokahi (which seeks to improve the health status and wellbeing of Native Hawaiians and their families) and to other entities named in the Native Hawaiian Health Care Improvement Act. The awards under this provision must be used for COVID-19-related purposes. These purposes include promoting, distributing and administering the COVID-19 vaccine, as well as detecting COVID-19 infection, tracing and mitigation efforts, and developing a workforce necessary to respond to COVID-19. The centers may use awards to acquire equipment and supplies for mobile testing or vaccinations. Finally, awards can be used to “modify, enhance, and expand health care services and infrastructure” and to work within communities for COVID-19 outreach and education. This funding comes after funding extensions for health centers in the year-end omnibus Consolidated Appropriations Act, 2021 (H.R. 133), and in the Continuing Appropriations Act, 2021 and Other Extensions Act, and funding increases in the CARES Act.

6. Provides Emergency Rural Development Grants for Rural Healthcare. The American Rescue Plan provides $500 million to the secretary of the Department of Agriculture until Sept. 30, 2023, for needs-based grants to facilities that primarily serve rural areas, and that target and bolster certain aspects of the COVID-19 response efforts. Specifically, funds from the grants may be used to increase vaccine distribution capacity, provide drugs or medical supplies to increase medical surge capacity, increase telehealth capabilities, construct temporary or permanent structures to provide healthcare services, and support staffing needs for vaccine administration and testing. Additionally, the funds may be used to reimburse expenses and lost revenue due to the COVID-19 pandemic incurred prior to the awarding of a grant, along with any other efforts determined to be critical to address the COVID-19 pandemic and approved by the secretary of the Department of Agriculture.

7. Funds Indian Health Services. The American Rescue Plan includes $5.4 billion to support the activities of Indian Health Services (IHS). These funds include $2 billion for lost reimbursements from third-party payors to IHS during the pandemic; $500 million for the Purchased/Referred Care program; $140 million for information technology, telehealth and electronic health records infrastructure; $84 million for the Urban Indian Health Programs; $600 million for tracking COVID-19 vaccines; $1.5 billion for tracing infections; $240 million for public health workforce supporting American Indian health; and $420 million for mental and behavioral health. An additional $600 million will be available for IHS health facility improvements to respond to COVID-19. These funding programs are in addition to $1 billion provided in the CARES Act and more than the $2.1 billion proposed in the House-passed HEROES Act.

8. Increases Spending on Mental Health Services. The American Rescue Plan provides an additional $3.5 billion for block grants to states, with half allocated for the Community Mental Health Services Block Grant program and the other half for the Substance Abuse Prevention Treatment Block Grant program. These block grant programs provide funding to all U.S. states and territories for programs targeting those with serious mental illnesses and to prevent and treat substance abuse. This spending is a substantial increase to these block grants, as the fiscal year 2020 amounts for these two programs were $722.5 million and $1.85 billion, respectively, and recipient states and territories have until Sept. 30, 2025, to spend the funds.

The legislation also provides funding for a variety of mental and behavioral health-related programs, including $20 million for an awareness campaign focused on healthcare professionals; $40 million for healthcare workforce mental and behavioral care; $30 million for community-based overdose prevention programs, syringe service programs and other harm reduction programs; and $50 million for community behavioral health needs worsened by the COVID-19 pandemic. These funding programs are in addition to $6 billion to the Substance Abuse and Mental Health Services Administration (SAMHSA) and $7.5 billion to the Health Resources and Services Administration for substance abuse treatment in H.R. 133 and proposed in the House-passed HEROES Act.

9. Enhances Medicaid Funding for Community-Based Mobile Crisis Intervention Services. The American Rescue Plan provides a Medicaid federal medical assistance percentage (FMAP) matching payment to state Medicaid programs equal to 85 percent of the cost for community-based mobile crisis intervention services furnished through bundled payments for a three-year period beginning one year from enactment. Such mobile crisis team services have been supported by SAMHSA grant programs and are intended to provide interventions to individuals with mental health and substance abuse needs where the individual is experiencing a crisis, outside a hospital or health facility. Such services are team-based, with at least one behavioral healthcare professional and members are trained in providing trauma-informed care. They are able to quickly screen, stabilize and coordinate healthcare services for the individual, and are encouraged to partner with emergency medical services and other healthcare facilities in a community. The American Rescue Plan also provides $15 million for planning grants to develop such offerings under the respective state Medicaid plan.

10. Mandates and Funds Medicaid and CHIP Coverage for COVID-19 Vaccines. The American Rescue Plan requires state Medicaid and CHIP plans to cover testing and treatment for COVID-19 for Medicaid and CHIP beneficiaries with an FMAP rate of 100 percent through one year after the end of the public health emergency, and adjustments for CHIP state allotments. In addition, the legislation allows state Medicaid plans to cover eligible uninsured groups, including specialized and preventative therapies for individuals diagnosed with or presumed to have COVID-19. Additionally, COVID-19 vaccines and treatments must be made available for certain conditions that might be complicated by COVID-19, such as cancer or pregnancy.

Coverage must begin on the enactment date of the American Rescue Plan and end on the last day of the first quarter that begins one year after the end of the emergency period. State Medicaid and CHIP plans will not be allowed to require beneficiary cost sharing for COVID-19 vaccines or treatment of a condition that may seriously complicate the treatment of COVID-19. The legislation also allows outpatient drugs used for COVID-19 prevention or treatment to be included in the Medicaid Drug Rebate Program.

11. Modifies Medicaid and CHIP Coverage for Pregnant and Postpartum Women. The American Rescue Plan allows state Medicaid and CHIP plans to provide pregnancy- and postpartum-related medical assistance coverage to eligible beneficiaries, including low-income children covered under CHIP, for seven years. Full benefits would be available to women during pregnancy and throughout the 12-month postpartum period, or up to a year after the last day of her pregnancy. If the state selects this option for its Medicaid program, it must provide it under its CHIP program.

12. Increases Medicaid Funding for Newly Expanded State Coverage and Other Support for State Medicaid Programs. The American Rescue Plan seeks to encourage states to expand their Medicaid programs to the uninsured by increasing the FMAP for such expansion by 5 percent for two years. Effectively, this would increase the FMAP for expansion to newly eligible beneficiaries in new expansion states after enactment to 95 percent, closer to the Affordable Care Act’s original 100 percent match. If expanded, state Medicaid plans must cover individuals whose income does not exceed 133 percent of the poverty line. The FMAP increase will not apply to disproportionate-share hospital payments.

Additionally, the American Rescue Plan extends the 100 percent FMAP rate for services provided at Urban Indian Health Organizations and Native Hawaiian Health Care Systems for two years. The legislation also increases the FMAP by 7.35 percent for state Medicaid programs from home and community-based services that are provided between April 1, 2021, and March 31, 2022 (not to exceed 95 percent). State eligibility for FMAP assistance requires states to implement certain activities, which include enhancing, expanding and strengthening home and community-based services under the state’s Medicaid program. These FMAP increases are in addition to amounts provided in the Families First Coronavirus Response Act to state Medicaid plans.

13. Increases Veterans Affairs Care Funding. The American Rescue Plan provides $13.48 billion for healthcare services and related support to eligible veterans under the Department of Veterans Affairs (VA) programs through Sept. 30, 2023. This funding helps to cover the loss of health insurance for many veterans and also to sustain CARES Act staffing and service-level expansions. The VA will have wide discretion on spending such funds, including for facility improvements, suicide prevention and other mental health services, telehealth and other healthcare-related uses. The VA will waive up to $2 billion in copayments from April 6, 2020, through Sept. 30, 2021, and must reimburse veterans who paid copayments or other cost sharing during this period. Finally, the legislation provides $750 million for state veterans’ homes for upgrades related to safety and one-time emergency payments to support operations for enhanced treatments, cleaning and supplies during the COVID-19 pandemic.

14. Supports Skilled Nursing Facilities Responding to COVID-19. The American Rescue Plan provides $200 million to HHS for infection control efforts through the development and dissemination of protocols related to COVID-19 prevention and mitigation in skilled nursing facilities (SNFs). Further, the legislation provides another $250 million for states to establish and implement strike teams to assist SNFs with clinical care, infection control or staffing during the COVID-19 emergency period. Each state’s strike team would be deployed to SNFs in the state with diagnosed or suspected COVID-19 cases among residents or staff, to respond to the situation. The strike teams are similar to a proposal in the House-passed HEROES Act that would have created federal strike teams.

15. Supports OIG Oversight of the Provider Relief Fund. While a smaller appropriation, the American Rescue Plan provides $5 million to the HHS Office of Inspector General (OIG) for oversight activities with respect to the public health and social services emergency fund (the Provider Relief Fund). The Provider Relief Fund was created through congressional appropriations now totaling $178 billion to reimburse healthcare providers’ eligible expenses and lost revenues attributable to COVID-19. HHS developed the Provider Relief Fund through multiple rounds of payment distributions, including both General Distributions and Targeted Distributions to specific provider categories. In late February 2021, the U.S. Department of Justice announced its first Provider Relief Fund-related criminal indictment. With the American Rescue Plan funding, OIG is likely to increase its planned efforts to audit and review Provider Relief Fund spending.

McGuireWoods and McGuireWoods Consulting will continue to monitor these legislative efforts and how the Byrd rule may impact these provisions as the Senate considers the American Rescue Plan. Healthcare providers should note that this legislation could affect the delivery of patient care and the operation of healthcare providers. 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.

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