American Rescue Plan Act of 2021: Healthcare Highlights

March 11, 2021
Firm Publication

Earlier today, President Biden signed into law the American Rescue Plan Act of 2021 (Act), which narrowly passed the U.S. Senate (50 – 49) and House of Representatives (220 – 211) earlier this week. The Act provides for $1.9 trillion in funding, billions of which are earmarked for healthcare-related activities.

Funding for COVID-19-Related Priorities Outlined in the Act

Specifically, the Act allocates funding for various COVID-19-related priorities, including:

COVID-19 Testing, Vaccine Administration and Mitigation Activities
  • $47.8 billion is allocated to the U.S. Department of Health and Human Services (HHS) for activities to detect, diagnose, trace and monitor COVID-19 infections and related strategies.
  • $7.5 billion is allocated to the Centers for Disease Control and Prevention (CDC) to, among other things, establish community vaccination centers and mobile vaccine units, and promote, distribute, and track COVID-19 vaccines.
  • $6.05 billion is allocated to HHS for COVID-19 vaccine research, development, manufacturing, production and purchase expenses.
  • $1 billion is allocated to the CDC to strengthen vaccine confidence and improve vaccination rates.
  • $500 million is allocated to the Food and Drug Administration for evaluation, oversight and facilitation of vaccine performance and manufacturing.
Support to Skilled Nursing Facilities (SNFs)

$200 million is allocated for HHS to provide SNFs with infection control and vaccination uptake support through contracts with quality improvement organizations. The Act also allocates $250 million for states to create strike teams that will be deployed to SNFs with diagnosed or suspected COVID-19 cases (among residents or staff) to assist with clinical care, infection control, and staffing.

Community Health Centers

$7.6 billion is allocated to HHS for awards to health centers for COVID-19-related purposes such as promoting, distributing and administering COVID-19 vaccines; detecting COVID-19 infections; obtaining equipment and supplies for mobile testing or vaccinations; and enhancing healthcare services and infrastructure.

Rural Healthcare

$8.5 billion is allocated to reimbursing rural hospitals and facilities for healthcare-related expenses and lost revenues attributable to COVID-19, with requirements – including an application process – similar to those that are currently applicable to the Provider Relief Fund. Also, $500 million is allocated for need-based grants to certain facilities that serve rural areas for COVID-19 response efforts, such as increasing vaccine distribution and telehealth capacity.

Increased Oversight

$5 million is allocated to the HHS Office of Inspector General for oversight of activities supported by HHS’s COVID-19 funding.

Policy Changes Addressed in the Act

In addition to the financial support described above, the Act includes several additional policy changes, which further seek to address the COVID-19 pandemic more generally. These include:

Temporary Expansion of Affordable Care Act (ACA) Subsidies and Cost-Sharing Support

The Act expands ACA health insurance coverage support for tax years 2021 and 2022, by increasing the value of premium tax credit subsidies for all eligible individuals and by extending eligibility to households earning over 400% of the federal poverty line. In addition, the Act establishes cost-sharing support for unemployed individuals enrolled in qualified health plans.

Medicaid and CHIP Coverage and Funding

The Act requires Medicaid and CHIP programs to cover, with no cost sharing, COVID-19 vaccines and administration, as well as COVID-19 testing and treatment, for program enrollees through one year after the end of the public health emergency. The Act also temporarily sets the Federal Medical Assistance Percentage (FMAP) for states at 100% with respect to amounts expended for vaccines and vaccine administration; incentivizes states to adopt Medicaid-expansion (if they have not already done so) by temporarily increasing their base program by five percentage points; and increases the FMAP for Medicaid programs by 10 percentage points (not to exceed 95%) for expenditures for home and community-based services provided from April 1, 2021, to March 31, 2022.

Medicare Area Wage Index for All-Urban States

Beginning October 1, 2021, the Act reestablishes a floor for the Medicare area wage index applicable to hospitals in all-urban states (i.e., states with no rural areas or no hospitals classified as rural). Because the wage index is used in determining Medicare reimbursement rates, this change is expected to increase certain Medicare payments made to urban hospitals in these states. While the list of all-urban states has changed over time, previously, all-urban states included Delaware, New Jersey, and Rhode Island.

Ambulance Service Requirements

The Act provides that, in cases where an individual should have been transported to a destination permitted under Medicare but transportation did not occur due to community-wide emergency medical service protocols that are in place because of the public health emergency, Medicare may nonetheless pay for ground ambulance services at the base rate that would have been paid if the individual had been transported, excluding any mileage payment.

Mental Health and Substance Use Disorders

The Act allocates to HHS additional funding aimed at providing community mental health services and substance abuse prevention and treatment such as block grants offered by the Substance Abuse and Mental Health Services Administration that address mental health and substance use disorders; incentives for states to develop mobile crisis service programs; and funding to HHS for mental and behavioral health-related education and training.

If you have any questions on these changes or how the Act could impact your business, please contact one of the authors.