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July 17, 2020

Health Law Weekly

COVID-19 Updates and Developments (Week of July 13)

  • July 17, 2020

As of July 15, hospitals should no longer report daily COVID-19 data to the Centers for Disease Control and Prevention (CDC) National Healthcare Safety Network, according to an updated guidance document posted last week by the Department of Health and Human Services (HHS).

Instead, the data reports, which include information on testing, capacity and utilization, and patient flow, should be submitted either to state health departments or the TeleTracking™ portal, which is operated by a federal contractor.

According to the guidance, the federal government will rely exclusively on the daily data reports to allocate and distribute Remdesivir, an anti-viral medication used to treat COVID-19, protective equipment, and other supplies.

CDC Director Robert R. Redfield said in July 15 remarks  that the move is aimed at streamlining reporting and allowing more flexibility in data gathering capabilities. Redfield also said shifting the hospital reporting system will allow the NHSN to focus on nursing home and long term care facility reporting needs.  

“No one is taking access or data away from CDC,” Redfield said. According to Redfield, the data will be aggregated on the HHS platform and available to the CDC and other federal, state, and local public health officials.

HHS has faced criticism for the change in hospital reporting. “In the midst of the worst public health crisis in a century, it is counter-productive to create a new mechanism which will be extremely complicated to build and implement." Another area of concern is that the planning for this new approach did not substantively involve officials at the local, state, tribal and/or territorial levels, according to a statement from the American Public Health Association.

Agency Action

Department of Health and Human Services

July 10—HHS is distributing $4 billion in additional provider relief funds under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to certain hospitals. HHS is providing an additional $3 billion in funding to safety net hospitals and roughly $1 billion to specialty rural hospitals, urban hospitals with certain rural Medicare designations, and hospitals in small metropolitan areas, the agency announced. Dentists also will now be able to apply for funding through the Provider Relief Payment Portal. The CARES Act and subsequent legislation allocated $175 billion to help ease the financial strain on health providers in the wake of the COVID-19 pandemic. HHS has been distributing the funds over the last several months, including in June an initial $10 billion to safety net hospitals, which serve a disproportionate number of uninsured and low-income patients. HHS said the latest distribution is intended to help acute care hospitals that didn’t qualify for the initial distribution to safety net providers. HHS is revising the profitability threshold so that more safety hospitals will qualify for payment. In May, HHS distributed $10 billion to almost 4,000 rural health care providers. HHS is expanding the existing payment formula to include certain special rural Medicare designation hospitals in urban areas as well as others that provide care in smaller non-rural communities, which will be eligible for part of the $1 billion in additional distributions. HHS said these providers could include some suburban hospitals.

Centers for Medicare & Medicaid Services (CMS)

July 10—CMS is deploying Quality Improvement Organizations (QIOs) to nursing homes in areas of the country that are “hotspots” for COVID-19. As CMS contractors, QIOs work with providers to improve health care quality for Medicare beneficiaries. 

Food and Drug Administration (FDA)

July 10—FDA is preparing to resume the week of July 20 certain priority domestic inspections of agency-regulated facilities. The agency paused onsite surveillance inspections in March due to the COVID-19 pandemic, although mission-critical inspections continued. The agency has developed a rating system to help determine when to conduct prioritized domestic inspections using real-time data to qualitatively assess the number of COVID-19 cases in a local area. FDA also is making this data available to state partners who conduct inspections on FDA’s behalf. The resumption of “prioritized domestic inspections will depend on the data about the virus’ trajectory in a given state and locality and the rules and guidelines that are put in place by state and local governments,” FDA said. Other factors, including trends in new cases and hospitalizations for COVID-19, and the availability of certain services like public transportation, also will be considered. For safety purposes, FDA plans to alert regulated businesses in advance of an inspection.

Internal Revenue Service (IRS)

July 14—The IRS is giving tax-exempt hospitals an additional six months to prepare community health needs assessments (CHNA). Last week, the American Hospital Association (AHA), the Association of American Medical Colleges, and the Catholic Health Association asked the Department of Treasury to further extend the deadline, which previously had been pushed to July 15, noting the COVID-19 pandemic limited hospitals’ ability to engage with their communities and devote resources to completing the CHNAs. In Notice 2020-56, IRS extended the deadline until December 31, 2020. Hospitals that fail to prepare the CHNA on time face a $50,000 penalty excise tax under Section 4959 of the Internal Revenue Code, which isn’t subject to abatement. Hospitals must conduct a CHNA at least once every three years to maintain their tax-exempt status under Section 501(c)(3).

July 6—For-profit hospitals must include payments from the Provider Relief Fund in gross income, according to IRS guidance posted on its website. At the end of June, nearly 20 groups representing health care providers urged Congress to pass legislation clarifying that relief funding under the Public Health and Social Services Emergency Fund is not taxable and that entities receiving the aid maintain their tax deductions attributable to these funds. “Without such a correction, tax-paying health care providers lose at least 21 percent of the benefit of these funds and are treated unequally as compared to non-tax-paying providers,” according to the letter the groups, including AHA and the American Medical Association, sent to congressional leaders. For-profit health care providers had sought to exclude the funds as a qualified disaster relief payment under Section 138 of the Internal Revenue Code. But the IRS rejected that approach. Tax-exempt health care providers generally are not subject to tax on the relief payments, unless the funds reimbursed the provider for expenses or lost revenue attributable to an unrelated trade or business, the IRS said.

Other Developments

July 16—House lawmakers introduced a bipartisan measure that would extend temporary changes that expanded the use of telehealth beyond the COVID-19 public health emergency (PHE). The Congressional Telehealth Caucus' Protecting Access to Post-Covid-19 Telehealth Act would eliminate most geographic and originating site restrictions on the use of telehealth so patients could continue to receive these services in their homes. The measure also would authorize CMS to continue telehealth reimbursement for 90 days beyond the end of the PHE, make permanent disaster waiver authority so HHS could expand telehealth in Medicare during future emergencies and disasters; and require a study on the use of telehealth during the COVID-19 pandemic.

July 14—The American Health Care Association (AHCA) and the National Center for Assisted Living (NCAL) are warning that “urgent attention” is needed to head off major outbreaks in long term care facilities as COVID-19 cases are spiking in many states across the country. In a letter to the National Governors Association, the groups called for federal and state support to protect workers and residents. “Nursing homes and assisted living communities cannot stop the virus by ourselves—not without testing, personal protective equipment (PPE), staff support and funding, and not without support from the public health sector,” the letter said. The groups asked the nation’s governors to direct state public health agencies to expedite lab processing time and a solution for onsite testing with reliable rapid results; provide additional support on PPE, particularly N95 masks; and work closely with long term care facilities on reopening to visitors.