On March 25, 2020, the United States Senate passed the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The Act makes available nearly unprecedented resources to U.S. businesses in an effort to stabilize payrolls and contain the economic cost of the pandemic. The CARES Act is the third wave of legislation to address the coronavirus pandemic following the enactment of the Families First Coronavirus Response Act and an $8.3 billion emergency funding bill.
Title III of the CARES Act is targeted at “Supporting America’s Health Care System.”[1] Title II is designed to help the health care system provide the care needed during the COVID-19 health emergency. This portion of the CARES Act is organized in six subtitles—(a) Health Provisions; (b) Education Provisions; (c) Labor Provisions; (d) Finance Committee; (e) Health and Human Services Extenders; and (f) Over-the-Counter Drugs.
Health Provisions
Subtitle A contains the health provisions of the CARES Act. There are four parts to this Subtitle A: (1) addressing supply shortages by permitting the Strategic National Stockpile to stockpile medical supplies and incentivizes the production of personal protective equipment (PPE) and ventilators by providing liability protection to manufacturers; (2) providing access to health care for COVID-19 patients; (3) providing support for research and development; and (4) reauthorizing health care workforce training programs.
Addressing Supply Shortages
The CARES Act requires the Strategic National Stockpile to include PPE, ancillary medical supplies, and other applicable supplies required for the administration of drugs, vaccines and other medical products and devices.[2] The Act incentivizes the production of PPE and ventilators by providing liability protection to manufacturers.[3] The Act also prioritizes the review of drug applications and requires drug manufacturers to report any disruptions of the sourcing of active pharmaceutical ingredients and implement risk management plans related to shortages.[4]
Access to Health Care for COVID-19 Patients
Under the Families First Act, all comprehensive private health insurance plans must cover FDA-approved testing to diagnose coronavirus. However, consumers could still potentially face cost-sharing for testing services under the Families First Act depending on the entity or lab that developed their test.
The CARES Act builds on the new coverage provisions of the Families First Act and broadens the testing that would be covered by private plans without cost-sharing to include (1) tests provided by labs on an emergency basis; (2) state-developed tests; and (3) any other tests determined appropriate by the Department of Health and Human Services.[5] If preventive measures (defined as an “item, service or immunization that is intended to prevent or mitigate coronavirus”) becomes available, group health plans and insurers must also cover such preventive measures with no cost-sharing obligation.[6]
The CARES Act also includes a provision intended to deal with surprise billing for coronavirus testing. Under the Act, all comprehensive private health insurance plans will reimburse a test provider based on the rate negotiated between the plan and the provider that was in place prior to the pandemic. If there is no negotiated rate, the plan is instead required to fully reimburse the provider based on the provider’s own “cash price”. However, the provider must publish this “cash price” on a public website while there is a declared public health emergency or risk facing a civil monetary penalty of up to $300/day.[7]
Innovation
The CARES Act provides for using competitive procedures to enter into transactions to carry out emergency public-health related projects, including the development of vaccine research and development. It expedites the development and approval of new animal drugs used to prevent or treat a zoonotic disease in animals that has the potential to cause serious adverse health consequences for humans.[8]
Health Care Workforce
The CARES Act approves appropriations for a variety of health professions-related programs, with particular focus on programs serving medically underserved populations.[9]
Education Provisions
Subtitle B provides relief for college students and student loan borrowers impacted by COVID-19.[10] For all federally-owned loans, all payments of principal and interest are deferred for six months.[11]
Labor Provisions
Subtitle C limits the Family Medical Leave Act’s paid leave amounts and emergency paid sick leave for employees impacted by COVID-19.[12] The CARES Act includes a new rule for rehired employees whereby an “eligible employee” (for purposes of the FMLA) includes someone who was laid off by the employer on or after March 1, 2020, had worked for the employer for at least 30 days in the last 60 calendar days prior to the lay-off and has been rehired by the employer.[13] The Cares Act also allows for advances on anticipated tax credits for employers’ paid family leave costs.[14]
The CARES Act also makes parallel changes to the paid sick leave provisions from the Families First Act, including provisions intended to improve the ability of taxpayers to monetize the benefit of the recently enacted sick and family leave credits.[15]
Finance Committee
Subtitle D expands access to telehealth services by 1) expanding the list of providers who can provide telehealth services; 2) relaxing place-of-service limitations; and 3) increasing reimbursement rates.[16] Subtitle D also increases Medicare coverage reimbursement for COVID-19 related treatment.[17] These changes allow an individual to have an insurance plan (for plan years beginning on or before December 31, 2021) that includes telehealth and other remote care without disqualifying the individual from owning a high deductible health plan.[18]
The Act also repeals a rule enacted in the Affordable Care Act that prohibited over-the-counter medicines (other than insulin) from being “qualified medical expenses” and limited the use of HSAs and FSAs to prescribed medicines or drugs.[19] As a result, users of HSAs and FSAs will be able to use funds from these accounts to cover over-the-counter medical products.[20]
Health and Human Services Extenders
Subtitle E addresses other aspects of the Medicare and Medicaid programs, generally extending time-limited funding increases and delaying certain planned reimbursement cuts.[21] The CARES Act increases funding for various agencies and programs and includes a number of “health care extenders” for community health center, Medicare, Medicaid and other public health programs.[22] Current funding for these programs was previously set to expire in late May 2020 and the CARES Act generally extends funding through the end of November 2020.
Over-the-Counter Drugs
Subtitle F amends Chapter V of the Federal Food, Drug, and Cosmetic Act to insert a new section regulating certain nonprescription drugs. This new section reforms the regulatory process for over-the-counter drug approvals and provides the FDA with more flexibility to make changes administratively.[23] This new section also incentivizes pharmaceutical companies to research and manufacture innovative drug products by providing an 18-month market-exclusivity period.[24]
To discuss this or other related issues, contact Robert Couch at (208) 528-5222 or send an email to rcouch@parsonsbehle.com, or Lee Radford at (208) 528-5252 or send an email to lradford@parsonsbehle.com
[1] CARES Act, §§ 3001-3862.
[2] Id., § 3102.
[3] Id., § 3103.
[4] Id., §§ 3111-12.
[5] Id., § 3201.
[6] Id., § 3203.
[7] Id., § 3202.
[8] Id., §§ 3301-02.
[9] Id., §§ 3401-04.
[10] Id., §§ 3501-19.
[11] Id., § 3513.
[12] Id., §§ 3601-11.
[13] Id., § 3605.
[14] Id., § 3606.
[15] Id., § 3606.
[16] Id., § 3701.
[17] Id., § 3701.
[18] Id., § 3701.
[19] Id., § 3702.
[20] Id., § 3702.
[21] Id., §§ 3801-03
[22] Id.
[23] Id., §§ 3851-3862.
[24] Id.
