Health Care Policies in the Consolidated Appropriations Act, 2021

  • 2/2/2021
Doctor and nurse talking in hospital

The latest government funding and COVID-19 relief law offers several benefits to the health care industry, but it also comes with policy changes that may affect your organization. Review details so you can plan accordingly.

Key insights

  • The Consolidated Appropriations Act, 2021 brings more than $50 billion in additional health care-specific COVID relief funding.
  • Provider Relief Fund changes include flexibility in calculating lost revenues, the ability to move targeted distributions, and an additional $3 billion.
  • The No Surprises Act is now law, which bans balance billing in various situations, including for emergency services.
  • The act includes various reimbursement and policy changes for hospitals, physicians, and post-acute providers.

Does your health care organization need help navigating these new laws?

Contact us

The Consolidated Appropriations Act, 2021, signed into law on December 27, 2020, brought multiple long-sought-after health care policies, along with COVID-19 relief funding. 


COVID-19 relief

The new act includes $900 billion in COVID-19 relief funding, including an additional $3 billion and required changes for the Provider Relief Fund (PRF). We detailed how these changes impact the calculation of lost revenues and the ability to move targeted distributions by a parent entity in our January 4 Healthcare Innovation and Insight blog post.

Watch our PRF webinar

On January 27, CLA hosted an PRF webinar: Provider Relief Funds: Key Updates and What You Need to Know to Successfully Report. Learn the latest updates along with details on reporting and use of PRF dollars.

Other health care-related COVID-19 relief funding includes:

  • $30 billion for the development of necessary countermeasures and vaccines; the purchase of vaccines, therapeutics, diagnostics, and necessary medical supplies as well as medical surge capacity and other preparedness and response activities, including specific amounts targeted at tribal, minority, and rural communities.
  • $22.4 billion for testing, contact tracing, surveillance, containment, and mitigation to monitor and suppress COVID–19. These funds are for states, localities, territories, tribes, tribal organizations, urban Indian health organizations, or health service providers to tribes.
  • $4.25 billion toward substance abuse and mental health assistance, including $1.65 billion for grants for the substance abuse prevention and treatment block grant program.
  • $1.25 billion to the National Institutes of Health for COVID-19 research and clinical trials.

Paycheck Protection Program (PPP), employer retention credits (ERC), and more

The Consolidated Appropriations Act, 2021 includes many provisions not covered in this article but that may be of interest to health care providers. CLA has released a series of articles on these other topics, including PPP and ERC changes — to name a few. Read COVID Relief Bill: Five Things to Consider Now.

Congress also provided funding to advance broadband and telehealth, including an additional $250 million for the Federal Communication Commission’s (FCC) COVID-19 Telehealth Program created under the Coronavirus, Aid, Relief, and Economic Security Act (CARES Act). This new FCC funding requires that grants be equitably distributed — to the extent feasible — to not less than one applicant in each state, unless no eligible applicant is available. The law also requires more communication with applicants throughout the process, including sharing the grounds for any application denials.

Ban on surprise billing

No Surprises Act now law

The new act puts into place long-debated prohibitions against surprise billing — also known as balance billing — for patients in covered out-of-network situations, such as when receiving emergency services. After the act’s provisions take effect on January 1, 2022, the patient is held harmless from the “surprise” bill, with payment dispute handled between insurers and providers.

The No Surprises Act was included in this new law after several years of debate in Congress. It generally prohibits surprise bills (or “balance billing”) for emergency services provided by out-of-network facilities and providers. The law also bans balance billing for out-of-network providers when the patient is being treated at an in-network facility (unless notice and consent is given). However, in these situations certain ancillary items and services are excluded from the consent option, thus protecting the patient from a surprise bill. The Department of Health & Human Services (HHS) needs to promulgate rules around this, but generally the consent option may not be used for the following:

  • Items and services related to emergency medicine, anesthesiology, pathology, radiology, and neonatology, whether or not provided by a physician or non-physician practitioner, and items and services provided by assistant surgeons, hospitalists, and intensivists.
  • Diagnostic services (including radiology and laboratory services).
  • Items and services provided by other specialty practitioners, as defined by HHS.
  • Items and services provided by a nonparticipating provider if there is no participating provider who can furnish such item or service at such facility.

Air ambulance services are also covered by the law. Both air ambulance providers and health insurers must report information related to air ambulances services, claims, and costs, among other data points.

In the above scenarios, the patient pays an in-network rate (unless covered by the notice and consent option for non-emergency services). If reimbursement disputes arise between provider and insurer, a 30-day negotiation period begins. If at the end of 30 days the bill is still unresolved, a newly created independent dispute resolution process may be used.

Parties in arbitration submit their final offer to an arbiter who may consider various factors, such as skill or training level, or the median in-network rate, but may not consider billed charges or Medicare or Medicaid rates. The losing party pays the cost of arbitration.

There are also a variety of consumer protections included, such as a required advance cost estimate. Health plans are required to provide a price transparency tool and maintain accurate, up-to-date directories.

States with existing surprise billing laws are not preempted by the new act. Enforcement is to be handled by the states (as well as the federal government where needed).

These provisions take effect for plan or policy years beginning January 1, 2022.

Medicare changes

The act changes various Medicare-related reimbursements or policies. Review some of these changes:

  • 2021 Physician Fee Schedule (PFS) changes — The 2021 final PFS made various changes to physician reimbursements. Because these changes need to be budget neutral, some physician types, such as primary care, would have seen reimbursement increases, while others would have seen reductions. The act mitigates the decreased reimbursement for 2021 only with $3 billion in additional funding. This increase in payments is not to be taken into account in determining the fee schedule rates for years after 2021.

    Under the final 2021 PFS, the Centers for Medicare & Medicaid Services (CMS) had finalized a conversion factor of $32.41. With the enactment of this law, CMS’s updated conversion factor is now $34.89.

    Finally, HHS is prohibited from reimbursing Healthcare Common Procedure Coding System code G2211 (or any successor or substantially similar code) prior to January 1, 2024.
  • Sequester suspension — Extends the current suspension of the sequester through March 31, 2021.
  • Work Geographic Practice Cost Index (GPCI) floor extended — The GPCI floor increases the work component for physicians that practice in locations where labor costs are lower than the national average. This is extended through 2023.
  • Community health centers — These are funded through fiscal year 2023.
  • Home health agencies — Allows occupational therapists to conduct the initial assessment visit and complete the comprehensive assessment for certain rehabilitation services if the home health plan of care for such individual: does not initially include skilled nursing care, includes occupational therapy, and includes physical therapy or speech language pathology.
  • Telehealth — Removes the distant and originating site requirements for mental health services provided via telehealth. However, the provider must first have seen the patient in-person within the prior six months.
  • REH designation created

    Beginning in 2023, small rural hospitals may convert to a new designation called the “Rural Emergency Hospital.” An REH would be required to provide emergency services at all times, would have outpatient services, but would not have inpatient beds. The REH is designed to stabilize rural hospitals that may otherwise be forced to close in order to maintain health care access in these communities.

  • Rural Emergency Hospital (REH) designation — Allows a rural critical access hospital or prospective payment system (PPS) hospital with 50 beds or fewer to convert to an REH if certain conditions are met. An REH must still maintain emergency services at all times. REHs are allowed to include a skilled nursing facility unit and would still qualify for an exception to the payment limit for rural health clinics. Reimbursement would be set at the outpatient PPS rate plus 5%, plus a fixed monthly rate. REHs qualify as an originating site for telehealth purposes. The designation begins January 1, 2023. 
  • Graduate Medical Education (GME) — In order to increase physician residency slots and training, The act:
    • Increases GME slots by 1,000 beginning in fiscal year 2023 with a cap of 200 distributed per year until all slots are used. The slots must be distributed in certain ways, including mandating 40% to be directed to certain categories of hospitals, including rural and health professional shortage areas. No hospital may receive more than 25 residency slots.
    • Provides more flexibility for teaching hospitals participating in GME rural training tracks.
    • Addresses GME “rotator” issue for a small subset of hospitals whose residency caps were inadvertently triggered by hosting rotators. For hospitals with fewer than 1.0 FTE and no more than 3.0 FTEs, these hospitals may establish their residency caps anew.
  • What about existing, uncapped 2020 RHCs?

    There is a small subset of uncapped, provider-based RHCs that became provider-based in 2020. Unless subsequent legislation is enacted, these and any future RHCs would be subject to the non-facility specific cost-per-visit cap, since they would not meet the December 31, 2019, cut-off date to be grandfathered with a historical facility-specific cost based per-visit cap.

  • Rural Health Clinics (RHC) — All RHCs will likely face some type of cost-per-visit cap going forward, which means there will no longer be an exception to have an uncapped RHC. Provider-based RHCs that are not subject to a cap now, were in existence prior to December 31, 2019, and are attached to a hospital with fewer than 50 beds now have a facility-specific per-visit cap based on their historical visit cost. This facility specific cap is based on 2020 costs, and then inflated annually by a growth factor.

    Freestanding and RHCs that were attached to a hospital after December 31, 2019, are subject to a non-facility-specific cost-per-visit cap. This cap begins at $100 on April 1, 2021. The cap increases by roughly $13 each subsequent year until reaching $190 in 2028. After that, inflationary adjustments are applied annually.
  • Physician assistants billing — Permits physician assistants to directly bill under Medicare.
  • Hospice changes — Federally Qualified Health Centers and RHCs may now bill for hospice attending physician services beginning January 1, 2022. Hospice providers may only be subject to surveys once every 36 months. The statute includes a variety of mandatory changes related to surveys and certification, including training for surveyors, consistency across surveys, and a special focus program. The statute also extends the update of the hospice aggregate cap by the hospice market basket index through September 2030.
  • Mandatory radiation oncology care model — Delays this start date by an additional six months, until January 1, 2022.

There are various Medicaid-related changes in the law as well. For Medicaid Disproportionate Share (DSH) payments, the law eliminates payment cuts through 2023, but then extends those cuts through 2027. Also, Congress and federal oversight agencies have been looking at Medicaid supplemental payments for many years. The law requires that before October 1, 2021, HHS must create a system by which all states submit specific supplemental payments data. States would do so through their state plan or state plan amendment. Data collected would include an explanation of the payments, methodology used, and related details. DSH payments are excluded from the mandatory reporting requirements.

Finally, there are many health insurer-related policies such as prohibiting “gag clauses” in contracts between plans and health care providers that restrict access to price and quality data. The law requires reporting on drug costs and related issues, and includes provisions related to “non-qualitative treatment limitations” for mental health or substance use disorders.

How CLA can help

The Consolidated Appropriations Act, 2021 includes many details and policies that may impact you and your organization. Our team of professionals have been intensely involved with assisting our clients across the health care continuum on PRFs and other COVID-19 assistance programs.

Additionally, we understand your reimbursement. Whether it’s gauging how the recent Evaluation & Management code changes impact physician payments, or modeling the rural health care clinic payment changes, our teams can help you with understanding the impact and positioning for the future. 

Contact Us

Experience the CLA Promise