House Appropriations Draft Bill Targets Private Equity-Backed Healthcare Entities, Focuses on Pandemic Preparedness

King & Spalding

On July 6, 2020, the House of Representatives Committee on Appropriations released its draft Fiscal Year (FY) 2021 funding bill for the Departments of Labor, Education, and HHS (the Bill), which includes several interesting updates for the healthcare industry. The Bill, which was approved by the Committee on July 13, 2020, provides a total of $196.5 billion in funding, an increase of $2.4 billion from 2020 levels. The Bill also includes $24.4 billion in emergency spending to combat future public health threats like COVID-19. The draft Bill is available here. The House committee’s report on the draft Bill is here.

Notable among the Bill’s provisions are new restrictions on certain healthcare companies’ access to funds in the Medicare Accelerated and Advanced Payments Program (APP). For future APP distributions, providers and suppliers must “attest to whether such provider or supplier is owned and controlled by a private-equity entity.” To obtain APP funds, a healthcare organization must include in the HHS quarterly report an attestation regarding whether it is private-equity backed, in addition to “an accounting of the number of private equity owned and controlled providers (by provider category) and the amount of funding such providers in each category received” by provider number. Moreover, the Bill suggests that HHS make it a “condition of funding” under the APP that private equity backed hospitals and health systems cannot furlough workers or cut pay or benefits.

Previously, the key eligibility criteria for APP participation were that the provider or supplier must not be in bankruptcy, must not be under active medical review or program integrity investigations, must not have outstanding delinquent Medicare overpayments and the provider must have billed Medicare for claims within 180 days immediately prior to the APP request.

Other major themes in the Bill include appropriations for ramping up emergency preparedness and preparing for or preventing future public health crises, including those related to the flu. Overall, the Bill provides a total of $96.4 billion for HHS (+$1.5 billion from FY 2020). The nearly $100 billion appropriation includes, among other items:

  • $47 billion to the National Institutes of Health (NIH) that is, in large part, intended for flu, HIV/AIDS, and Alzheimer’s disease research;
  • $17 billion to the CDC, including funds for emergency preparedness activities to counter future public health emergencies;
  • $7.2 billion for the Health Resources and Services Administration (HRSA), including funds for HIV/AIDS initiatives;
  • $4 billion to CMS for administrative expenses, with a $100 million fund to support the Affordable Care Act (ACA) Navigators program and open enrollment; and
  • $4.5 billion for Biomedical Advanced Research and Development Authority (BARDA) research and development of vaccines and therapeutics to advance public health emergency preparedness, including $705 million for the Strategic National Stockpile.

The Bill also sets up a $5 billion “permanent emergency fund” for HHS to “respond quickly and aggressively to a broad range of” future public health threats. This HHS emergency fund has been “largely unfunded” for decades, according to the Committee’s report.

The Bill includes healthcare industry-focused policies as well, such as recommendations for Medicaid-related non-emergent transportation and recommendations for compiling weekly inventory reports for the Strategic National Stockpile, after COVID-19 revealed the stockpile “was not prepared for a pandemic response and our nation has very limited domestic production.”

House press releases with additional details and commentary on the draft Bill are available here and here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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