Special Delivery for the Holidays: Congress Passes the Next Round of COVID-19 Relief Funding
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On perhaps the final legislative day of 2020, Congress compromised on a last-minute $892 billion COVID-19 relief package, tacked it onto the Fiscal Year 2021 omnibus spending package to fund the federal government through September 2021, and passed it into law by overwhelming bipartisan majorities in both chambers.
In the opening weeks of the COVID-19 pandemic, Congress raced to pass several relief bills, the largest of which was the CARES Act. After an initial burst of bipartisanship, the pace of additional COVID-19 relief measures ground to a halt early this summer. The House passed the HEROES Act in mid-May but the Senate was unable to pass its own relief package as the 2020 elections loomed over the process. The November election left control of the Senate in doubt until early January 2021, when Georgia holds runoffs for both its Senate seats, and post-election political conditions left Senate leaders in both parties initially unwilling to negotiate a compromise package in the lame duck session.
As a result, a bipartisan coalition formed in the Senate over the last month, making a last-ditch effort to find common ground for a relief package as the pandemic swept back across the country late this fall. The Senators involved faced the same challenges Congress has grappled with since HEROES passed and HEALS withered, but they largely worked through most of those issues before turning the process over to Congressional leadership to finalize a deal.
Congressional leadership and the White House spent more than a week negotiating the final details. The big breakthrough occurred when both political parties agreed to withdraw their top demands. For Republicans, this meant walking away from a complicated effort to provide a liability shield to protect business from lawsuits involving COVID transmission. For Democrats, this meant abandoning a demand of between $160 to $500 billion in relief for state and federal governments.
Until the final week, the bill was largely negotiated outside of the normal committee process and without the direct input of Congressional leaders. The last week then became a mad dash for Congressional offices to: (1) fix hundreds of legislative language issues that turned broad agreement on funding numbers into actual policy implementation; and (2) pile a number of other legislative issues—some critical and time sensitive, some decidedly not—onto the last legislative vehicle of the year. The result is a 5,500-page legislative colossus presented in final form to Senators and Representatives just a few hours before they voted to approve it. The process and the compressed timeline for this bill means that there will be several major drafting errors, implementation challenges, and unintended consequences that will come to light in the days and weeks ahead as the bill is signed into law and implemented.
Those problems, combined with those interest groups that did not receive, in their view, adequate support in this legislation, may create momentum for another relief package early in 2021. In addition, President-Elect Biden and Democratic leadership in Congress made it clear they consider this package relief for those struggling from the effects of the pandemic, and they hope to pass an economic stimulus package in the first 100 or so days of the Biden Administration. That is more likely to happen if Democrats win both Georgia Senate races on January 5 and gain control of the Senate. If Republicans win in Georgia and retain narrow control of the Senate, a 2021 relief package would be smaller in scope and may require more time to negotiate.
The relief package Congress passed on the night of December 21 is formally known as the Coronavirus Response and Relief Supplemental Appropriations Act of 2021. It includes the following major elements:
- New funding for testing, contact tracing, PPE, vaccine administration, and mental health programs;
- Direct financial support for healthcare providers;
- Checks for most American taxpayers of $600;
- Replenishment of the Paycheck Protection Program and an expansion to allow some small businesses to receive additional funding;
- Support for hard-hit modes of transportation, including the airline industry, its contractors, and the mass transit industry;
- Aid for childcare providers, K-12 schools, and higher education;
- Additional funding for critical food and nutrition programs;
- Support for minority financial institutions and minority communities;
- Expansion of rental assistance;
- Additional resources for broadband development to bridge the digital gap; and
- A set of healthcare and tax policy "extenders" to address expiring provisions of law.
Our Advisory below looks at all the major elements of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021. The underlying Fiscal Year 2021 Appropriations bill to which it is attached is not discussed in this Advisory.
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Healthcare & Appropriations
Division M—Coronavirus Response and Relief Supplemental Appropriations Act, 2021
Food and Drug Administration (FDA): The bill appropriates $55 million, to prevent, prepare for, and respond to COVID-19. The bill directs: (1) $9 million of this sum for the development of necessary medical countermeasures and vaccines; (2) $30.5 million for advanced manufacturing for medical products; (3) $1.5 million for monitoring of medical product supply chains; (4) $7.6 million for other public health research and response investments; (5) $1.4 million for data management operation tools; and (6) $5 million for after action review activities.
Centers for Disease Control and Prevention (CDC): The bill appropriates $8.75 billion to remain available until September 30, 2024 for CDC-Wide Activities and Program Support, to prevent, prepare for, and respond to COVID-19, domestically or internationally, including activities to plan, prepare for, promote, distribute, administer, monitor, and track COVID-19 vaccines to ensure broad-based distribution, access, and vaccine coverage. The bill allocates $4.5 billion of this sum for states, localities, and territories, which includes $210 million for the Indian Health Service. The bill requires that $1 billion of the sum be made available within 21 days of enactment. The bill requires that $300 million of the sum be designated for high-risk and underserved populations, including racial and ethnic minority populations and rural communities. The bill requires the Director of CDC to provide an updated comprehensive vaccine distribution strategy and spend plan, to be submitted to Congress within 30 days of enactment, to be updated every 90 days through the end of the fiscal year.
National Institutes of Health (NIH): The bill appropriates $1.25 billion to the Office of the Director of NIH to remain available through September 30, 2024 to prevent, prepare for, and respond to COVID-19, domestically or internationally. The bill allocates $1.15 billion of this sum for research and clinical trials related to long-term studies of COVID-19, including $100 million for the Rapid Acceleration of Diagnostics.
Substance Abuse and Mental Health Services Administration (SAMHSA): The bill appropriates $4.25 billion for Health Surveillance and Program Support to prevent, prepare for, and respond to COVID-19, domestically or internationally. Of this sum, the bill appropriates $1.65 billion for grants for the substance abuse prevention and treatment block grant program and $1.65 billion for grants for the community mental health services block grant program. Of the sum, the bill allocates the following: (1) $600 million for the Certified Community Behavioral Health Clinic Expansion Grant Program; (2) $50 million for suicide prevention programs; (3) $50 million for Project AWARE; (4) $240 million for emergency substance abuse or mental health services in local communities; (5) $10 million for the National Child Traumatic Stress Network; and (6) not less than $125 million for tribes.
Administration for Children and Families (ACF): The bill appropriates $10 billion for payments to states for Child Care and Development Block Grants, to prevent, prepare for, and respond to COVID-19, domestically or internationally, to supplement state and territory funds for child care assistance. The bill appropriates an additional $250 million for Children and Families Services Programs, to prevent, prepare for, and respond to COVID-19, domestically or internationally, for making payments under the Head Start Act.
Administration for Community Living: The bill appropriates $100 million for Aging and Disability Services Programs, to prevent, prepare for, and respond to COVID-19, domestically or internationally, including $50 million for grants to enhance the provision of adult protective services.
Vaccine, Therapeutic, and Diagnostic Development and Procurement: The bill appropriates $22.95 billion to remain available until September 30, 2024 for the Public Health and Social Services Emergency Fund (PHSSEF), to prevent, prepare for, and respond to COVID-19, domestically or internationally, including: (1) the development of necessary countermeasures and vaccines, prioritizing platform-based technologies with US-based manufacturing capabilities (including to demonstrate innovations for such platforms); (2) the purchase of vaccines, therapeutics, diagnostics, necessary medical supplies; (3) medical surge capacity; and (4) other preparedness and response activities. The bill directs the Secretary of HHS to use these funds to purchase COVID-19 vaccines in sufficient quantities to address the public health need, and to ensure that vaccines, therapeutics, and diagnostics developed from those funds are affordable in the commercial market without delaying the development of such products. The bill permits the Secretary of HHS to use up to $3.25 billion for purchase of products to be deposited in the Strategic National Stockpile (SNS). The bill allocates $19.67 billion of the funds for the Biomedical Advanced Research and Development Authority (BARDA) for manufacturing, production, and purchase of vaccines, therapeutics, and ancillary supplies necessary for the administration such vaccines and therapeutics. Of this sum, the bill permits funds to be used for construction or renovation of non-federally owned US-based next generation manufacturing facilitates, other than facilities owned by the US Government, for such purposes.
Testing and Contact Tracing: The bill appropriates an additional $22.4 billion to remain available until September 30, 2022 for the PHSSEF to prevent, prepare for, and respond to COVID-19, domestically or internationally, for testing, contract tracing, surveillance, and mitigation to monitor and suppress COVID-19, for states, localities, and territories for activities including the following: (1) tests for both active infection and prior exposure, including molecular, antigen, and serological tests; (2) the manufacturing, procurement and distribution of tests, testing equipment and testing supplies, including personal protective equipment needed for administering tests; (3) the development and validation of rapid, molecular point-of-care tests, and other tests; (4) support for workforce; (5) epidemiology; (6) to scale up academic, commercial, public health, and hospital laboratories; (7) to conduct surveillance and contact tracing; (8) support development of COVID–19 testing plans; and (9) and other related activities related to COVID-19 testing and mitigation. The bill requires that funds be made available within 21 days of enactment. The bill allocates $790 million of the sum for the Indian Health Service. The bill allocates $2.5 billion of the sum for strategies for improving testing capabilities in high-risk and underserved populations, including racial and ethnic minority populations and rural communities. The bill requires governors of states and territories to update testing and contact tracing plans (pursuant to PL 116-139) and submit updates to the Secretary of HHS within 60 days of receiving funds.
Provider Relief Fund: The bill appropriates an additional $3 billion for the PHSSEF to prevent, prepare for, and respond to COVID-19, domestically or internationally, to reimburse, through grants or other mechanisms, eligible healthcare providers for healthcare related expenses or lost revenues that are attributable to COVID-19. The bill requires recipients of funds to submit reports and maintain documentation to ensure compliance with the requirements of the Provider Relief Fund. The bill clarifies that funds distributed under the Provider Relief Fund may be made available for the costs of construction of temporary structures, leasing of property, medical supplies, equipment including personal protective equipment, testing supplies, workforce and training, emergency operation centers, retrofitting facilities, and surge capacity. The bill directs providers to use the Frequently Asked Questions guidance released by HHS in June 2020 for calculating lost revenues. The bill requires the Office of Inspector General of HHS report within three years to the respective House and Senate Appropriations Committees on audit findings of the Provider Relief Fund.
Division N—Additional Coronavirus Response and Relief
Supporting Physicians and Other Professionals in Adjusting to Medicare Payment Changes During 2021: The bill increases the physician fee schedule for services furnished on or after January 1, 2021, and before January 1, 2022, by 3.75 percent. The bill transfers $3 billion dollars to the Federal Supplementary Medical Insurance Trust fund to remain available until expended to pay for this fee schedule increase. The bill requires the Secretary of HHS to submit a report to Congress by April 1, 2022 regarding the 2021 physician fee schedule increase.
Extension of Temporary Suspension of Medicare Sequestration: The bill extends the temporary Medicare sequestration suspension established under the CARES Act until March 31, 2021.
Aging and Disability Services Programs: The bill appropriates an additional amount of $175 million dollars for nutrition services under the Older Americans Act.
Division BB—Private Health Insurance and Public Health Provisions
Title I—No Surprises Act
No Surprises Act: The bill incorporates the No Surprises Act, legislation that bans surprise medical bills in emergency and certain other cases with respect to group health plans and health insurance issuers offering group or individual health insurance coverage. The legislation limits patient cost-sharing to in-network rates in the following circumstances: (1) services in an out-of-network emergency department; (2) services in an in-network emergency department provided by an out-of-network provider; and (3) out-of-network care provided at in-network facilities without a patient's informed consent. In order for the patient to provide informed consent, the provider must give the patient notice of their network status and an estimate of charges 72 hours prior to receiving out-of-network services, and the patient provides consent to receive out-of-network care. The bill requires providers to give patients a list of services received within 15 days, and to submit bills to payors within 30 days. If a payment dispute arises between providers and payors not settled within a 30-day negotiation period, the legislation includes a "baseball-style" binding arbitration process, referred to as "independent dispute resolution" (IDR), without a minimum payment threshold for access to this arbitration process.
In determining the appropriate payment via the IDR process, the IDR entity (arbitrator) is prohibited from considering usual and customary charges, the charges billed by the provider, and public payor rates (i.e., Medicare, Medicaid, CHIP, TRICARE). Instead, the IDR entity is required to consider the median in-network rate in the same geographic region, as well as information submitted by either party, including: (1) the provider's training and experience; (2) the patient acuity and the complexity of furnishing the item or service; (3) demonstrations of good faith efforts (or lack of good faith efforts) to enter into a network agreement; and (4) prior contracted rates during the previous four plan years. The legislation prohibits the party who initiates IDR from taking the same party to arbitration for the same item or service for 90 days.
The legislation's ban on surprise medical billing and corresponding IDR process also applies to air ambulance services, and does not include a minimum payment threshold.
The bill requires the Secretary of HHS to establish and periodically update a standardized reporting format for group health plans to voluntary report certain medical claims data to State All Payer Claims Databases. The Secretary of HHS is required to convene an Advisory Committee to advise the Secretary of HHS on the standardized reporting format. The bill authorizes $5 million for fiscal year 2021 to carry out this section.
Increasing Transparency by Removing Gag Clauses on Price and Quality Information: The bill prohibits "gag clauses" between group health plans (or health insurance issuers offering group health insurance coverage) and health care providers, networks, or associations of providers. Specifically, the bill prohibits agreements that would directly or indirectly restrict group health plan or health insurance issuers from: (1) providing provider-specific cost or quality of care information or data through a consumer engagement tool; (2) electronically accessing de-identified claims and encounter information or data for each enrollee in the plan or coverage; or (3) sharing such information or data, or directing such data be shared, with a Health Insurance Portability and Accountability Act of 1996 (HIPAA) business associate.
Disclosure of Direct and Indirect Compensation for Brokers and Consultants to Employer-Sponsored Health Plans and Enrollees in Plans on the Individual Market: The bill requires health benefit brokers and consultants to disclose to group health plan sponsors any direct or indirect compensation the health benefit brokers and consultants may receive for referral services. The bill also requires health insurance issuers offering individual health insurance coverage or a short-term limited duration insurance to disclose to enrollees the amount of direct or indirect compensation provided to an agent or broker for services associated with plan selection and enrollment.
Strengthening Parity in Mental Health and Substance Use Disorder Benefits: The bill requires certain group health plans and health insurance issuers offering group or individual health insurance coverage to perform and document comparative analyses of nonquantitative treatment limitations (NQTL) on mental health or substance use disorder benefits. Plans that provide both medical and surgical benefits, as well as mental health or substance use disorder benefits, and that impose NQTLs on the mental health or substance use disorder benefits, would be required to perform such comparative analyses. These plans would be required to make the comparative analyses available to applicable State authorities and the Secretary of Labor, Secretary of the Treasury, or the Secretary of HHS, upon request. The Secretaries of Labor, Treasury, and HHS must request that at least 20 plans per year submit comparative analyses to review for potential noncompliance with mental health parity requirements. The Secretary of HHS must publish an annual report with a summary of the comparative analyses. The Secretaries would be required to issue a compliance program guidance document to help improve compliance with mental health parity requirements under this section.
Reporting on Pharmacy Benefits and Drug Costs: The bill requires group health plans and health insurance issuers offering group or individual health insurance coverage to annually report the following information to the Secretary of Labor, the Secretary of the Treasury, and the Secretary of HHS: (1) the beginning and end dates of the plan year; the number of enrollees; (2) each State in which the plan or coverage is offered; the 50 brand prescription drugs most frequently dispensed by pharmacies for claims paid by the plan or coverage, and the total number of paid claims for each such drug; (3) the 50 most costly prescription drugs with respect to the plan or coverage by total annual spending, and the annual amount spent by the plan or coverage for each such drug; (4) the 50 prescription drugs with the greatest increase in plan expenditures over the preceding plan year that is subject of the report, as well as for each drug, the change in amounts expended by the plan or coverage in each plan year; (5) total spending on health care services by group health insurance broken down by defined categories; (6) the average monthly premium paid by employers on behalf of enrollees and enrollees; (7) any impact on premiums by rebates, fees, and any other remuneration paid by drug manufacturers to the plan or coverage or its administrators or service providers; and (8) any reduction in premiums and out-of-pocket costs associated with rebates, fees, or other remuneration. Within 18 months after the first report is due, and then biannually, the Secretary of HHS shall publish on the HHS website a report on: (1) prescription drug reimbursements under group health plans and group and individual health insurance coverage; (2) prescription drug pricing trends; and (3) the role of prescription drug costs in contributing to premium increases or decreases under such plan.
Title III—Public Health Provisions
Subtitle A—Extenders Provisions
Extension for Community Health Centers, the National Health Service Corps, and Teaching Health Centers that Operate GME Programs: The bill extends mandatory funding, at current levels, for community health centers, the National Health Service Corps, and the Teaching Health Center Graduate Medical Education Program. To this end, the bill authorizes, for each of fiscal years 2021 through 2023: $4 billion for community health centers; $310 million for the National Health Service Corps; and $27 million for teaching health centers that operate graduate medical education programs.
Diabetes Programs: The bill extends mandatory funding, at current levels, for the Special Diabetes Program for Type I Diabetes and the Special Diabetes Program for Indians. To this end, the bill authorizes, for each of fiscal years 2021 through 2023, $150 million for the Special Diabetes Program for Type I Diabetes and $150 million for the Special Diabetes Program for Indians.
Subtitle B—Strengthening Public Health
Improving Awareness of Disease Prevention: The bill requires the Secretary of HHS, in coordination with the Director of the CDC, to award competitive grants to public or private entities to carry out a national, evidence-based campaign to increase awareness and knowledge of the safety and effectiveness of vaccines. The bill also requires the National Vaccine Advisory Committee to update, as appropriate, the report titled "Assessing the State of Vaccine Confidence in the United States."
The bill also authorizes grants for the purpose of planning, implementation, and evaluation of activities to address vaccine-preventable diseases. The bill also requires the Secretary, acting through the CDC Director, to conduct activities to collect, monitor, and analyze vaccination coverage data to assess levels of protection from vaccine-preventable diseases.
Guide on Evidence-Based Strategies for Public Health Department Obesity Prevention Programs: The bill permits the Secretary of HHS, in coordination with the Director of the CDC, to develop a guide on evidence-based strategies for health departments to use to build and maintain effective obesity prevention and reduction programs. The Secretary may disseminate the guide and related materials to state, territorial, and local health departments, as well as to Indian Tribes and Tribal organizations.
Expanding Capacity for Health Outcomes: The bill requires the Secretary to award grants to evaluate, develop, and expand the use of technology-enabled collaborative learning and capacity building models. The goal would be to improve retention of healthcare provider and to increase access to healthcare services in rural areas, frontier areas, health professional shortage areas, and medically underserved areas. The bill authorizes to be appropriated $10 million dollars for each fiscal years 2022 through 2026.
Public Health Data System Modernization: The bill incorporates the Public Health Infrastructure Modernization Act of 2019 (H.R. 5321). The bill requires the Secretary, acting through the CDC, to: (1) conduct activities to expand, modernize, improve, and sustain public health data systems used by CDC, including with respect to interoperability and improvement of such systems as it relates to preparedness for a public health emergency; and (2) award grants or cooperative agreements for the expansion and modernization of public health data systems. In carrying out this section, the Secretary shall, as appropriate and in consultation with the Office of the National Coordinator for Health Information Technology (ONC), designate data and technology standards for public health data systems. The Secretary may develop and utilize public-private partnerships for technical assistance, training, and related implementation support on the expansion and modernization of electronic case reporting and public health data systems. The bill authorizes to be appropriated $100 million each year, from FY 2021 through FY 2025.
Native American Suicide Prevention: The bill requires certain grantees of youth suicide early intervention and prevention strategy programs to consult with federally recognized Indian tribes, tribal organizations, an urban Indian organization, or Native Hawaiian Health Care Systems (as applicable) regarding development and implementation of a statewide early intervention strategy.
Reauthorization of the Young Women's Breast Health Education and Awareness Requires Learning Young Act of 2009: The bill reauthorizes CDC programs to promote young women's breast health awareness from FY 2022 through FY 2026. The bill authorizes to be appropriated $9 million for each fiscal year.
Reauthorization of School-Based Health Centers: The bill reauthorizes the School-Based Health Center program from FY 2022 through FY 2026.
Subtitle C—FDA Amendments
Rare Pediatric Disease Priority Review Voucher Extension: The bill extends the authorization for the FDA Rare Pediatric Disease Priority Review Voucher Program through FY 2024, permitting the Secretary of HHS to issue vouchers through September 30, 2024 for drugs and biologics receiving FDA approval before September 30, 2026.
Conditions of Use for Biosimilar Biological Products: The bill amends the Public Health Service Act such that applications for licensure of a biological production "may include information to show that the conditions of use prescribed, recommended, or suggested in the labeling proposed for the biological product have been previously approved for the reference product."
Orphan Drug Clarification: The bill includes a clarifying amendment stating that the clinical superiority requirement that was codified in the FDA Reauthorization Act of 2017 (i.e., in order to grant orphan exclusivity to a drug that is the same as a drug already approved for the same orphan indication, the sponsor must show that its new product is "clinically superior" to the existing product) extends to drugs designated as orphans pre-FDARA but approved for marketing post-FDARA.
Modernizing the Labeling of Certain Generic Drugs: The bill includes the Making Objective Drug Evidence Revisions for New Labeling Act of 2020 (MODERN) Labeling Act. The bill allows the Secretary of HHS, through the FDA, to require holders of approved applications for certain generic drugs to update the labeling of those drugs, for which: (1) there new scientific evidence is available pertaining to new or existing conditions of use; (2) the approved labeling does not reflect current legal and regulatory requirements; (3) there is relevant accepted use in clinical practice not reflected in the approved labeling; and (4) updating the approved labeling would benefit the public health. The bill requires the Secretary of HHS to report to Congress on the number of covered drugs, types of drugs, descriptions of labeling changes, and the rationale behind those changes regarding the actions of the Secretary of HHS under this section.
Biological Product Patent Transparency: The bill requires the Secretary of HHS to, within 180 days of enactment, publicly publish in a searchable, electronic format information contained in the FDA's "Purple Book," including: (1) a list of each biological product with a patent; (2) the date of licensure of the product and application number; and (3) the licensure status and marketing status of each product. The Secretary of HHS is required to update the Purple Book every 30 days, and to post the patents corresponding with products on the Purple Book.
Subtitle D—Technical Corrections
Technical Corrections: The bill includes purely technical corrections regarding geriatric workforce legislation included in the CARES Act. The technical corrections regarding the CARES Act provision to reauthorize Title VII programs that strengthen the health professions workforce to better meet the health care needs of certain populations, such as older individuals and those with chronic diseases, who could be at increased risk of contracting COVID-19.
Division CC—Health Extenders
Title I—Medicare Provisions
Subtitle A—Medicare Extenders
Extension of the Work Geographic Index Floor Under the Medicare Program: The bill extends the Medicare Work Geographic Index Floor through January 1, 2024.
Extension of Funding for Quality Measure Endorsement, Input, and Selection: The bill provides $66 million in funding to the Centers for Medicare & Medicaid Services (CMS) for quality measure endorsement. It also includes additional reporting requirements, facilitates consideration of removal of certain measures, and prioritizes maternal morbidity and mortality measure endorsement.
Extension of Funding Outreach and Assistance for Low-Income Programs: The bill extends funding for low-income Medicare beneficiary outreach, enrollment, and education activities provided through the Area Agencies on Aging, Aging and Disability Resource Centers, and the National Center for Benefits and Outreach and Enrollment through September 30, 2023. The bill provides $50 million in funding for fiscal years 2021, 2022, and 2023.
Extension of Medicare Patient IVIG Access Demonstration Project: The bill extends the Medicare Intravenous Immunoglobulin (IVIG) Access Demonstration Project through December 31, 2023, increasing potential enrollment from 4,000 to 6,500 Medicare patients who have been diagnosed with primary immunodeficiency disease. The bill also updates the evaluation and reporting requirements.
Extending the Independence at Home Medical Practice Demonstration Program Under the Medicare Program: The bill extends the Independence at Home demonstration through December 31, 2023 and increases the demonstration from 15,000 participants to 20,000.
Subtitle B—Other Medicare Provisions
Improving Measurements Under the Skilled Nursing Facility Value-Based Purchasing Program Under the Medicare Program: The bill allows the Secretary of HHS to apply up to ten additional quality measures of functional status, patient safety, care coordination, or patient experience, for the skilled nursing facility value-based purchasing program for facilities with more than the required minimum number of cases, as determined by the Secretary of HHS. The bill allows the Secretary of HHS to transfer $5 million to the CMS Program Management Account from the Federal Hospital Insurance Trust Fund for fiscal years 2023, 2024, and 2025 to carry out this provision. Additionally, the bill requires a Medicare Payment Advisory Commission (MedPAC) report to Congress on establishing a prototype value-based payment program under a unified prospective payment system for post-acute care services.
Providing the Medicare Payment Advisory Commission and Medicaid and CHIP Payment and Access Commission with Access to Certain Drug Payment Information, Including Certain Rebate Information: The bill provides the executive director of the Medicare Payment Advisory Commission (MedPAC) and the executive director of the Medicaid and CHIP Payment and Access Commission (MACPAC) access to certain drug pricing data for purposes of monitoring, making recommendations for, and analysis of the Medicare and Medicaid programs.
Moratorium on Payment Under the Medicare Physician Fee Schedule of the Add-On Code for Inherently Complex Evaluation and Management Visits: The bill prohibits the Secretary of HHS from making payments under the Physician Fee Schedule for complexity add-on services described by Healthcare Common Procedure Coding System (HCPCS) code G2211 (or any successor or substantially similar code) prior to January 21, 2024.
Temporary Freeze of APM Payment Incentive Thresholds: The bill temporarily freezes the current payment and patient count thresholds for physicians and other eligible clinicians participating in Alternate Payment Models (APMs) to receive a 5 percent incentive payment for payment years 2023 and 2024, which are based on performance years 2021 and 2022. The bill also freezes the Partial Qualifying APM participant payment threshold and patient count threshold at current levels for payment years 2022 and 2023, which are based on performance years 2021 and 2022.
Permitting Occupational Therapists to Conduct the Initial Assessment Visit and Complete the Comprehensive Assessment with Respect to Certain Rehabilitation Services for Home Health Agencies Under the Medicare Program: The bill requires the Secretary of HHS, no later than January 1, 2022, to allow occupational therapists to conduct initial assessment visits and to complete comprehensive assessments for certain home health services.
Centers for Medicare & Medicaid Services Provider Outreach and Reporting on Cognitive Assessment and Care Plan Services: The bill requires the Secretary of HHS to conduct outreach to physicians and appropriate non-physician practitioners under the Medicare program with respect to Medicare payment for cognitive assessment and care plan services furnished to individuals with cognitive impairment such as Alzheimer's diseases and related dementias.
Continued Coverage of Certain Transitional Home Infusion Therapy Services: The bill provides continued coverage of home infusion therapy services for beneficiaries taking self-administered drugs or biologicals on a self-administered drug exclusion list when the home infusion therapy benefit takes effect on or after January 1, 2021.
Transitional Coverage and Retroactive Medicare Part D Coverage for Certain Low-Income Beneficiaries: The bill permanently authorizes, beginning January 1, 2024, the demonstration program providing transitional coverage of covered Medicare Part D drugs for Limited Income Newly Eligible Transition (LI NET) eligible individuals while their eligibility is being processed.
Increasing the Use of Real-Time Benefit Tools to Lower Beneficiary Costs: The bill requires Medicare Part D plan sponsors to implement real-time benefit tools capable of integrating with electronic prescribing and electronic health record systems.
Beneficiary Enrollment Simplification: The bill requires Medicare Part B insurance coverage to begin the first of the month following an individual's enrollment and allows for a special enrollment period for Medicare Part A and Part B for exceptional circumstances, as determined by the Secretary of HHS, similar to processes available under the Medicare Advantage and Medicare Part D programs.
Waiving Budget Neutrality for Oxygen Under the Medicare Program: The bill waives budget neutrality requirements under Medicare for oxygen and oxygen equipment.
Waiving Medicare Coinsurance for Certain Colorectal Cancer Screening Tests: The bill eliminates cost-sharing for Medicare beneficiaries over time, between January 1, 2022 and January 1, 2030, for colorectal cancer screening tests where a polyp is detected or removed.
Expanding Access to Mental Health Services Furnished Through Telehealth: The bill extends coverage of services furnished through telehealth to include mental health services meeting certain requirements.
Public-Private Partnership for Health Care Waste, Fraud, and Abuse Detection: The bill codifies the public-private partnership that includes health plans, Federal and State agencies, law enforcement agencies, health care anti-fraud organizations, and allows inclusion of any other entity determined appropriate by the Secretary of HHS for purposes of detecting and preventing health care waste, fraud, and abuse. The bill directs the Secretary of HHS to award a contract for use of a trusted third party to carry out the duties of the partnership.
Medicare Payment for Rural Emergency Hospital Services: The bill prohibits a rural emergency hospital from operating unless a State that provides for the licensing of such hospitals under State or applicable local law and is licensed pursuant to such law or is approved by the agency of such State or locality responsible for licensing hospitals, as meeting the standards established for such licensing. Additionally, the bill grants discretionary authority for rural emergency hospitals to include a unit of the facility that is a distinct part licensed as a skilled nursing facility to furnish post-hospital extended care services and be considered a hospital with less than 50 beds for purposes of the exception to the payment limit for rural health clinics. The bill also requires the Secretary of HHS to establish quality measurement reporting requirements for rural emergency hospital, which may include the use of a small number of claims-based outcome measures or surveys of patients with respect to their experience in the rural emergency hospital.
Distribution of Additional Residence Positions: The bill provides for the distribution of additional Medicare-funded graduate medical education (GME) residency positions, to include rural hospitals, hospitals that already above their Medicare cap for residency positions, hospitals in states with new medical schools, and hospitals that serve Health Professional Shortage Areas.
Promoting Rural Hospital GME Funding Opportunity: The bill provides greater flexibility for rural and urban hospitals to partner and address the physician workforce needs of rural areas by modifying the Medicare graduate medical education (GME) Rural Training Tracks (RTT) program.
Five-Year Extension of the Rural Community Hospital Demonstration Program: The bill extends the Rural Community Hospital Demonstration Program from 10 years to 15 years.
Extension of Frontier Community Health Integration Project Demonstration: The bill extends the Frontier Community Health Integration Project Demonstration by five years. This demonstration evaluates new models of health care delivery for rural Critical Access Hospitals.
Improving Rural Health Clinic Payments: The bill incrementally increases the Rural Health Clinic statutory cap over an eight-year period and regulates the annual rate of growth for uncapped Rural Health Clinic payments above the upper limit.
Medicare GME Treatment of Hospitals Establishing New Medical Residency Training Programs After Hosting Medical Resident Rotators for Short Durations: The bill allows hospitals to train a limited number of residents for short-term rotations without being impacted by an established full-time equivalent resident cap or a per resident amount.
Medicare Payment for Certain Federally Qualified Health Center and Rural Health Clinic Services Furnished to Hospice Patients: The bill allows certain Federally Qualified Health Centers and Rural Health Clinics to furnish and receive payments for hospice attending physician services where patients are terminally ill and elect the hospice benefit on or after January 1, 2022.
Delay to the Implementation of the Radiation Oncology Model under the Medicare Program: The bill delays, for an additional six months beyond the current January 1, 2022 date, implementation of the Medicare radiation oncology model.
Improving Access to Skilled Nursing Facility Services for Hemophilia Patients: The bill adds blood clotting factors for the treatment of patients with hemophilia and other bleeding disorders to the categories of high-cost, low-probability services that excluded from the skilled nursing facility per diem prospective payment system.
Title II—Medicaid Extenders and Other Policies
Eliminating DSH Reductions for Fiscal Years 2021 Through 2023: The bill delays the Disproportionate Share Hospital (DSH) scheduled reductions for fiscal years 2021, 2022, and 2023.
Supplemental Payment Reporting Requirements: The bill requires the Secretary of HHS to establish a system for each State to submit reports, as determined appropriate by the Secretary of HHS, on supplemental payments data, as a requirement for a State plan or State plan amendment that would provide for a supplemental payment. Each report submitted by a State must include certain outlined requirements.
Medicaid Shortfall and Third Party Payments: The bill adjusts the payment calculation for Medicaid Shortfall Payments by prohibiting payment adjustments that exceed an amount equal to the costs incurred during the year of furnishing hospital services for individuals eligible for medical assistance under the State plan or under a waiver of such plan and for whom the State plan or waiver is the primary payer for such services minus the sum of payments for such services and payments by uninsured patients for such services.
Extension of Money Follows the Person Rebalancing Demonstration: The bill extends the Money Follows the Person Rebalancing Demonstration through September 30, 2023 and provides for $450 million for administration of the program for fiscal years 2021 through 2023. The bill also updates certain State application requirements.
Extension of Spousal Impoverishment Protections: The bill extends spousal impoverishment protections through September 30, 2023.
Extension of Community Mental Health Services Demonstration Program: The bill extends the Community Mental Health Services Demonstration Program through September 30, 2023.
Clarifying Authority of State Medicaid Fraud and Abuse Control Units to Investigate and Prosecute Cases of Medicaid Patient Abuse and Neglect in Any Setting: The bill clarifies the authority of State Medicaid Fraud and Abuse Control Units ability to investigate and prosecute cases of Medicaid patient abuse and neglect in any setting to include patients residing in board and care facilities.
Medicaid Coverage for Citizens of Freely Associated States: The bill restores Medicaid eligibility to citizens of Freely Associated States (the Federates States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau).
Medicaid Coverage of Certain Medical Transportation: The bill requires State Medicaid plans to ensure necessary nonemergency transportation for beneficiaries under the State plan to and from providers for necessary services. The bill also requires States to comply with certain program integrity measures.
Promoting Access to Life-Saving Therapies for Medicaid Enrollees by Ensuring Coverage of Routine Patient Costs for Items and Services Furnished in Connection with Participation in Qualifying Clinical Trials: The bill requires State Medicaid programs to cover any item or service provided in connection with a qualifying clinical trial regarding any serious or life-threatening disease or condition, to begin on January 1, 2022.
Title III—Human Services
Extension of TANF, Child Care Entitlement to States and Related Programs: The bill extends current funding levels of the Temporary Assistance for Needy Families (TANF), the Child Care Entitlement to States and related programs through the September 30, 2021.
Personal Responsibility Education Extension: The bill extends the Personal Responsibility Education Program (PREP) through September 30, 2023.
Sexual Risk Avoidance Education Extension: The bill extends the Sexual Risk Avoidance Education (SRAE) program through September 30, 2023.
Extension of the Support for Current Health Professions Opportunity Grants: The bill provides $3.6 million to carry out related costs of Health Profession Opportunity Grants and for costs related to evaluation and reporting through September 30, 2021 and September 30, 2022 respectively.
Extension of the MaryLee Allen Promoting Safe and Stable Families Program and State court support: The bill extends current funding levels for the MaryLee Allen Promoting Safe and Stable Families program, through September 30, 2022 and clarifies that the Court Improvement Program changes take effect on October 1, 2021.
Title IV—Health Offsets
Requiring Certain Manufacturers to Report Drug Pricing Information with Respect to Drugs Under the Medicare Program: The bill requires manufacturers of drugs or biologicals that are payable under Medicare Part B—but that do not have a Medicaid Drug Rebate Agreement—to report the average sales price (ASP) of such drug or biological in a time and manner specified by the Secretary of HHS. The bill clarifies that a "drug or biological" includes "items, services, supplies, and products that are payable under [Part B] as a drug or biological." This requirement would apply to calendar quarters beginning on January 1, 2022.
Extended Months of Coverage of Immunosuppressive Drugs for Kidney Transplant Patients and Other Renal Dialysis Provisions: The bill establishes eligibility for immunosuppressive drug coverage through Medicare for post-kidney transplant individuals whose entitlement to benefits under Part A ends on or after January 1, 2023 and who do not receive coverage of such immunosuppressive drugs through other insurance.
Permitting Direct Payment to Physician Assistants Under Medicare: The bill allows for direct payments to physician assistants for services furnished to Medicare beneficiaries on or after January 1, 2022.
Adjusting Calculation of Hospice Cap Amount Under Medicare: The bill extends the annual updates to the hospice aggregate cap from September 30, 2025 to September 30, 2030.
Special Rule for Determination of ASP in Cases of Certain Noncovered Self-Administered Drug Products: The bill requires the Inspector General of HHS to conduct periodic studies to identify National Drug Codes for drugs and biologics that are self-administered and not covered under Medicare Part B. If the Inspector General identifies a National Drug Code for a drug or biologic, the Inspector General must notify the Secretary of HHS, and the Secretary of HHS must apply as the amount of payment for the applicable billing and payment code, the lesser of the amount of payment that would be determined if the National Drug Code for such product were excluded from such determination or the amount of payment otherwise determined under this section for such billing and payment code without application of this section.
Medicaid Improvement Fund: The bill rescinds $3.464 million from the Medicaid Improvement Fund.
Establishing Hospice Program Survey and Enforcement Procedures Under the Medicare Program: The bill establishes Hospice Program survey and enforcement procedures. The bill requires the Secretary of HHS to transfer $10 million from the Federal Hospital Insurance Trust Fund to the CMS Program Management Account for each fiscal year, beginning with 2022.
Medicare Improvement Fund: The bill provides $165 million for the Medicare Improvement Fund.
Implementing Funding: The bill provides $37 million to the CMS Program Management Account for fiscal year 2021 for the purposes of carrying out the Medicare and Medicaid provisions of this bill.
The small business provisions have been the subject of much debate amongst lawmakers but there was consensus regarding providing more economic assistance to small businesses as they continue to feel the impact of the pandemic. The bill makes several modifications to the existing Paycheck Protection Program (PPP) that will simplify the administrative requirements on small businesses to apply for and receive loan forgiveness, as well as expand the forgivable expenses. The bill also creates PPP Second Draw Loans, which allow small businesses that have spent all, or nearly all, of their original PPP funds but continue to suffer economic distress to receive a second round of PPP loans. In addition, the bill establishes a grant program for shuttered venue operators. Lastly, the bill makes several amendments to existing SBA loan programs, such as the economic injury disaster loans (EIDLs) and 7(a) loans.
Paycheck Protection Program (PPP) Amendments
Extension of Program: The bill extends the deadline to apply for PPP loans from August 8, 2020 to March 31, 2021. In addition, the bill appropriates an additional $284.5 billion for PPP and PPP second draw loans. Of that amount, the bill provides set-asides for guarantees of loans made by community financial institutions, insured depository institutions with consolidated assets of less than $10 billion, credit unions with consolidated assets of less than $10 billion and institutions of the Farm Credit System with consolidated assets of less than $10 billion. In addition, the bill creates set-asides for businesses with not more than 10 employees and recipients in low-income or moderate-income neighborhoods. The bill also appropriates $20 billion for Targeted EIDL Advances and $15 billion for Shuttered Venue Operator Grants.
Expanded List of Forgivable Expenses: The bill expands the allowable, and forgivable, uses of PPP loans to include: (1) certain operations expenditures, defined as payments for business certain software or cloud computing services; (2) property damage or looting costs due to public disturbances during 2020 that were not covered by insurance; (3) certain supplier costs for goods that are essential to the operation of the borrower's business, made pursuant to a contract, order, or purchase order in effect before the covered period of the loan or, for perishable goods, in effect before or during the covered period; and (4) worker protection expenditures made to comply with COVID-19 health requirements or guidance. This expanded list will be effective as if included in the CARES Act and apply to any PPP loan made before, on or after the date the bill is enacted, except for loans with respect to which the borrower has already received loan forgiveness. The bill maintains the requirement that at least 60 percent of PPP loan proceeds be used on payroll costs in order to receive loan forgiveness; and up to 40 percent may continue to be used for mortgage interest payments, rent, and utility payments, in addition to these additional uses of PPP loans (i.e., operations expenditures, property damage costs, supplier costs, and worker protection expenditures).
Taxation of Business Expenses: In response to complaints regarding the IRS's treatment of allowable expenses paid for using forgiven PPP loan funds, the bill clarifies such expenses are tax deductible. Specifically, forgiven amounts of a PPP loan should not be included in the gross income of the eligible recipient. No deduction can be denied or reduced, no tax attribute can be reduced, and no basis increase can be denied by reason of the exclusion of forgiven amounts of PPP loans from gross income. This provision only applies to PPP loans forgiven after enactment of the bill. The bill provides additional taxation provisions for partnerships or S corporations that receive PPP loans.
Lender Safe Harbor Revised: The bill amends the lender "hold harmless" provision. Rather than only requiring that a lender receive documentation from the eligible loan recipient attesting to the accuracy of information provided by a loan recipient for the lender to be held harmless, the bill holds a lender harmless from a range of enforcement actions to the extent such lender "relies on the certifications and documentation" submitted by a loan recipient. For the provision to apply, the lender must act in good faith in originating or forgiving any PPP loan based on that reliance. In addition, all other relevant federal, state, local, and other statutory and regulatory requirements applicable to the lender must be satisfied with respect to the PPP loan. This provision will be effective as if included in the CARES Act.
Covered Period: For loans for which forgiveness is provided after the date the bill is enacted, the bill allows a loan recipient to choose the end date of its PPP loan covered period, as long as the date is between 8 and 24 weeks of the date of loan origination.
Simplified Forgiveness Application for Smaller Loans: For loans up to $150,000, the bill provides that the loan must be forgiven if the loan recipient signs and submits a one-page certification (established by the SBA Administrator not later than 24 hours after the date of enactment of the bill) to the lender that provides a description of the number of employees the recipient was able to retain because of the PPP loan, the estimate amount of the PPP loan spent on payroll costs, and the total loan value. The certification must also attest that the recipient has accurately provided the required certification and complied with the PPP statutory requirements. The recipient must also retain employment records relevant to the form for four years and other records for three years. These small loans may still be audited by the SBA Administrator. This forgiveness simplification provision would be effective as if included in the CARES Act.
Loan Audit: Not later than 45 days after the date of enactment of the bill, the SBA Administrator is required to submit to the Small Business committees of the House and Senate a plan detailing the SBA's policies, procedures, and metrics related to auditing PPP loans. The Administrator will be required to update the committees monthly on this plan.
Limitations on Eligibility: The bill makes businesses or organizations that were not in operation on February 15, 2020, ineligible for PPP loans. In addition, entities that receive a Shuttered Venue Operator Grant after enactment of the bill are ineligible for PPP loans going forward.
7(a) Loan Payment Deferral: The bill allows lenders to defer payments of principal and interest of 7(a) loans for a grace period of not more than one year, with the option for an additional deferment period if the borrower provides documentation justifying the deferment. Should investors in the secondary market decline to approve a deferral requested by a lender, the bill instructs the SBA Administrator to purchase the loan to allow the borrower to receive full payment deferment relief, provided there is no cost to purchasing the loan.
Seasonal Employer: The bill adds a definition of "seasonal employer." A seasonal employer would be an eligible PPP recipient that does not operate for more than 7 months in any calendar year or, during the preceding calendar year, had gross receipts for any 6 months of that year that were not more than one-third of the gross receipts for the other 6 months of that year. In addition, the bill would amend the calculation for the maximum PPP loan amount for seasonal employers. Rather than relying on the average total monthly payments for payroll in a 12-week period between February 15 (or March 1) and June 30, 2019, the bill requires a seasonal employer to use the average total monthly payments for any 12-week period between February 15, 2019 and February 15, 2020.
501(c)(6) Organizations: The bill expands nonprofit eligibility for PPP loans to include 501(c)(6) organizations with not more than 300 employees, excluding professional sports leagues and organizations with the purpose of promoting or participating in a political campaign or other activity. To be eligible, the 501(c)(6) organization has to receive no more than 15 percent of its receipts from lobbying activities, and lobbying activities can comprise no more than 15 percent of the organization's total activities. In addition, the cost of the lobbying activities cannot exceed $1 million during the most recent tax year of the organization that ended prior to February 15, 2020.
The bill also allows destination marketing organizations with not more than 300 employees to receive PPP loans, subject to certain requirements. The bill makes clear, however, none of the proceeds of a PPP loan can be used for lobbying activities and expenditures.
Bankruptcy: For an entity in bankruptcy proceedings, the bill permits a court to authorize a debtor in possession or a trustee to obtain a PPP or second draw loan. The loan would be treated as a debt to the extent the loan is not forgiven, and would be given priority over any or all administrative expenses of the kinds specified in 11 U.S.C. §§ 503(b) or 507(b). The bill establishes certain procedures for including these loans in reorganization plans.
Oversight: The bill requires the SBA Administrator, subject to few exceptions, to comply with any data or information requests or inquiries made by the Comptroller General within 15 days (or such later date as the Comptroller General specifies). In addition, the SBA Administrator and the Treasury Secretary are required to testify before the Small Business congressional committees not later than 120 days after the date of enactment of the bill regarding implementation of changes to PPP, and not less than twice each year thereafter for two years from the date of enactment.
Sole Proprietorship Documentation Requirement: The bill broadens the authority of the SBA Administrator to determine what documentation may be necessary to establish eligibility.
Seasonal Employers Election of 12-Week Period: The bill amends the timeframe seasonal employers may use to the maximum loan amount for such employers. Rather than calculating the average total monthly payments for payroll from February 15 to June 30, 2019, the bill permits using any 12-week period between February 15, 2019 and February 15, 2020. This amendment does not apply to loans already forgiven.
Nonrecourse Requirements: The bill expands the nonrecourse requirements to include refinanced loans. The current provision limits the SBA Administrator's recourse against individual shareholders, members, or partners of an eligible recipient of a PPP loan to instances where PPP loan proceeds are used for purposes not authorized by the PPP loan program. This provision extends that limitation to refinanced loans.
Prohibition on Receiving Duplicative Amounts for Payroll Costs: The bill clarifies borrowers may not receive duplicative loan amounts for payroll costs.
Publicly Traded Companies Prohibition: The bill clarifies that publicly traded companies are not eligible to receive PPP loans.
Interest Rate Clarification: The bill clarifies the interest rate for PPP loans, is calculated on a non-compounding, non-adjustable basis.
Reimbursement for Processing: The bill clarifies SBA reimbursement rates as discussed below. For covered loans made prior to enactment of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act SBA shall reimburse a lender at a rate based on the balance of the financing outstanding at the time of disbursement of the covered loan, of: (1) 5 percent for loans of not more than $350,000; (2) 3 percent for loans of more than $350,000 but less than $2,000,000; and (3) 1 percent for loans of not less than $2,000,000. For covered loans made after enactment of this bill, SBA small reimburse a lender: (1) for a covered loan of $50,000 or less, the lesser of (a) 50 percent of the balance of the financing outstanding at the time of disbursement or (b) $2,500; (2) 5 percent for loans of more than $50,000 but not more than $350,000; (3) 3 percent for loans of more than $350,000 but less than $2,000,000; and (4) 1 percent for covered loans of $2,000,000 or more. The bill clarifies a lender shall only be responsible for paying agent fees for which the lender directly contracts with the agent. The bill also clarifies agent fees are "paid by the eligible recipient and may not be paid out of the proceeds of a covered loan." In addition, the bill states reimbursement for processing will be made no later than 5 days after the reported disbursement of a covered loan. A lender may not be required to repay the processing fee unless the lender is found guilty of an act of fraud in connection with the covered loan.
Reapplication for and Modification to PPP: The bill directs the SBA Administrator to issue rules or guidance regarding borrowers who return amounts disbursed under a covered loan or does not accept the full amount of the approved covered loan. Specifically, eligible borrowers who returned all or part of a covered loan may reapply for a covered loan for an amount equal to the difference between the amount retained from the initial covered loan and the maximum amount for a covered loan applicable to such borrower. Eligible borrowers who did not accept the full amount of a covered loan may request a modification to increase the amount of the covered loan to the maximum amount for a covered loan applicable to such borrower.
Eligibility for Certain News Organizations: The bill expands eligibility for PPP loans to business concerns, including stations which broadcast pursuant to an FCC license, that: (1) employ not more than 500 employees (or the size standard established for the NAICS code applicable to the business concern), per physical location of such business concern; or (2) any nonprofit organization that is a public broadcasting entity. The business concern must be majority owned or controlled by a business concern covered by a NAICS code beginning with 511110 or 5151, and the business concern must make a good faith certification that proceeds of the loan will be used to support expenses at the component of the business concern that produces or distributes locally focused or emergency information.
PPP Second Draw Loans
As called for by many lawmakers and businesses, alike, the bill allows the SBA to make additional PPP loans of up to $2 million. The second draw loans are available only to entities that, by the time they receive a second draw loan, have used or will use the full amount of an original PPP loan. Entities may only receive one second draw loan. The additional PPP loans are available to business concerns, nonprofits, housing cooperatives, veterans organizations, tribal business concerns, eligible self-employed individuals, sole proprietors, independent contractors, or small agricultural cooperatives that: (1) employ not more than 300 employees, and (2) had gross receipts during the first, second, third, or (for applications submitted on or after January 1, 2021) fourth quarter in 2020 that were at least 25 percent less than gross receipts of the entity during the same quarter in 2019. For the gross receipts requirement, different calculations apply for entities that were not in business during certain quarters of 2019.
Similar limitations on eligibility for original PPP loans also apply to the second draw loans. In addition, entities that receive a Shuttered Venue Operator Grant are ineligible for second draw loans. If an entity has more than one physical location, then it may still be eligible for a second draw loan if there are not more than 300 employees per physical location (in addition to the other requirements). The bill applies the same waiver of affiliation rules to the second draw loans as apply to the original PPP loans, with the modification that a business concern (together with its affiliates) must have not more than 300 employees.
As with original PPP loans, an eligible entity's loan amount is calculated by multiplying its average monthly payroll costs by 2.5, subject to a maximum of $2 million. In the case of eligible entities that are assigned a NAICS code beginning with 72, the loan amount is calculated as the eligible entity's average monthly payroll costs multiplied by 3.5, subject to a maximum of $2 million.
For second draw loans of up to $150,000, an entity need only submit a certification attesting it meets the applicable revenue loss requirements for the loan. To obtain loan forgiveness, it need only produce "adequate documentation that the eligible entity met such revenue loss standard."
For loan forgiveness of second draw loans, an entity is eligible for forgiveness in an amount equal to the sum of the following costs during the covered period: payroll costs (with some limitations), mortgage interest payments, certain operations expenditures, certain property damage costs, rent payments, utility payments, certain supplier costs, and certain worker protection expenditures related to COVID-19. To obtain full forgiveness, payroll costs need to make up at least 60 percent of the forgiveness amount.
Set-Aside: Not less than $25 billion of the amount guaranteed for second draw loans must be made to eligible entities with not more than 10 employees or for loan amounts of $250,000 or less to eligible entities located in low- or moderate-income neighborhoods, as defined by the Community Reinvestment Act of 1977. In addition, not less than $15 billion of the total amount of second draw loans must be made by community financial institutions and insured depository institutions, credit unions, and institutions of the Farm Credit System with assets of less than $10 billion.
Grants for Shuttered Venue Operators
The bill provides $15 billion for "Grants for Shuttered Venue Operators" through the Small Business Administration. Eligible entities include: (1) live venue operators or promoters, theatrical producers, or live performing arts organizations; (2) museum operators; (3) motion picture theater operators; and (4) talent representatives; in each case, so long as they were fully operational on February 29, 2020 and experienced a 25 percent reduction in gross earned revenue.
Entities that otherwise meet the requirements described above, are ineligible if they issue securities listed on the national securities exchange or received more than 10 percent of their gross revenue in 2019 from Federal funding. An entity also would be ineligible for funding if it (or its parent company): (1) own or operate venues in more than one country; (2) own or operate venues in more than 10 states; and (3) employ more than 500 full-time employees as of February 29, 2020. Entities are prevented from receiving both a grant under this program and a PPP loan on or after the date of the bill's enactment.The Administrator is directed to make initial grants beginning with two 14-day priority periods. The first priority period would direct grants to entities that lost at least 90 percent of their revenue from April 1-December 31, 2020 compared to the same period in 2019 and the second priority period would direct grants to entities that lost at least 70 percent of their revenue from April 1-December 31, 2020 compared to the same period in 2019. Special consideration is made for seasonal employers when calculating lost revenue. No more than 80 percent of the program's funds may be distributed under the two priority periods.
Following the priority periods, the Administrator may award initial grants to eligible entities that failed to qualify under the priority periods. The program requires that $2 billion of initial grants awarded under the program be directed to entities with no more than 50 full-time employees. The Administrator also is permitted to make additional supplemental grants to entities that received an initial grant and lost at least 70 percent of their revenue.
For eligible entities that began operations on or before January 1, 2019, the initial grant amount would be the lesser of 45 percent of gross earned revenue for 2019 or $10 million. For eligible entities that began operations after January 1, 2019, the initial grant amount would be the lesser of a six-month average of gross earned revenue or $10 million. Supplemental grants would be 50 percent of the initial grant amount. No entity will receive more than $10 million from this program, including amounts from initial and supplemental grants.
Grants may be used for costs incurred between March 1, 2020, and December 31, 2021, with an extended period for supplemental grants. Allowable uses of funds include: (1) payroll costs; (2) rent payments; (3) utility payments; (4) scheduled mortgage principal and interest payments; (5) scheduled payments on debt incurred in the ordinary course of business prior to February 15, 2020; (6) worker protection expenditures; (7) payments made to independent contractors (subject to an annualized maximum of $100,000 for any individual employee of an independent contractor); and (8) other ordinary and necessary business expenses. These grants may not be used: (1) to purchase real estate; (2) for payments on loans originated after February 15, 2020; (3) to invest or re-lend funds; and (4) for political contributions.
The bill clarifies these grants should not be included in the gross income of the recipient. In addition, no deduction should be denied, no tax attribute reduced, and no basis increase denied by reason of the exclusion from gross income. Additional provisions apply to partnerships and S corporations.
Other Loan Products
Extension of the Debt Relief Program: The bill extends Section 1112 of the CARES Act, which provides payment of principal, interest, and associated fees on qualifying SBA 7(a), 504 and microloans. Specifically, the bill would direct the SBA Administrator to pay the principal, interest, and any associated fees that are owed on the aforementioned loans for an extended period of time, the length of which is determined by the origination date of the loan and the loan type. All borrowers with qualifying loans approved prior to the CARES Act will receive an additional three months of principal, interest and associated fees, starting with the first payment due on or after February 1, 2021. After the three month period, borrowers assigned certain enumerated NAICS codes (i.e., NAICS codes beginning with 61, 71, 72, 213, 315, 448, 451, 481, 485, 487, 511, 512, 515, 532 or 812) will receive an additional five months of payments. In addition, the SBA will make payments of principal and interest for the first six months of loans approved between February 1 and September 30, 2021.
The bill also clarifies any payment received under section 1112(c) of the CARES Act should not be included in the gross income of the person on whose behalf the payment is made. In addition, no deduction should be denied, no tax attribute reduced, and no basis increase denied by reason of the exclusion from gross income. Additional provisions apply to partnerships and S corporations.
Modifications of 7(a) Loans: The bill provides funding to increase guarantees on SBA 7(a) loans to 90 percent of the outstanding principal balance until October 1, 2021. The bill also increases the Express Loan guarantee rate based on the size of the loan, with a 75 percent guarantee rate for loans less than or equal to $350,000 and a 50 percent maximum guarantee rate for loans in excess of $350,000.
Temporary Fee Reductions: The bill temporarily allows the SBA Administrator to reduce or eliminate 7(a) and 504 fees, to the extent Congress allocates funding through appropriations to offset the cost. The extension will be in effect through September 30, 2021.
7(a) Small Business Loan Fees: The bill first prioritizes the elimination or reduction of guarantee fees paid by the borrower, followed by the yearly fee paid by the borrower.
504 Disaster Recovery Loan Fees: The bill eliminates the one-time participation fee of 50 basis points on the total participation in any project. In addition, the provision eliminates the up to 1.5 percent of the net debenture proceeds processing fee that community development corporations may charge a borrower. If funding is appropriated, the SBA Administrator will reimburse each development company that does not collect processing fees.
Microloan Program Recovery Assistance: The bill expands the ability of intermediaries to issue Microloans. Specifically, the provision increases the loan limit for intermediaries from $6 million to $10 million in the aggregate, limited to $4.5 million in any single year through October 1, 2021. Beginning October 1, 2021, the aggregate limit will be $7,000,000 and the single year limit $3,000,000. This provision also allows intermediaries to receive a grant equal to 5 percent of the total outstanding balance of loans made to the intermediary, provided the intermediary provides at least 25 percent of its loans to small businesses concerns in economically distressed areas. The 5 percent grant is also available to intermediaries with a portfolio of loans that average $10,000 or less or at least 25 percent of the portfolio is serving rural areas. The grant provisions are subject to congressional appropriations.
The provision also waives matching requirements and extends the duration of loans to up to 8 years for loans made through September 30, 2021. Starting on October 1, the maximum duration reverts to 7 years or such other amount set by the SBA Administrator. This provision authorizes up to $80,000,000 in technical assistance grants and $110,000,000 in direct loans. In addition, the provision reallocates $50,000,000 for technical assistance grants and $7,000,000 for direct loans from the FY 2020 appropriations.
Repeal of EIDL Advance Deduction: The bill repeals Section 1110(e)(6) of the CARES Act, which requires EIDL advances to be deducted from PPP loan forgiveness amounts for payroll costs. The repeal will be effective as if included in the CARES Act. The bill also clarifies an emergency EIDL advance should not be included in the gross income of the recipient, and no deduction should be denied, no tax attributed reduced, and no basis increase denied by reason of the exclusion from gross income. The bill establishes certain additional requirements for partnerships and S corporations that receive such an advance.
EIDL Duplication: The bill clarifies borrowers may receive EIDL loans for a purpose other than paying payroll costs and other obligations.
504 Loan Limits and Refinancing: The bill allows eligible small businesses to use 504 loan program funds to refinance existing debt equal to 100 percent of the cost to expand those businesses. The bill also supports as much as $7.5 billion each year in debt refinancing for 504 program projects that do not involve expanding a small business.
EIDL Targeted Advances for Small Businesses: The bill provides $20 billion for certain small businesses to receive the difference between $10,000, which is the maximum amount of the EIDL advance, and the advance the entity received under the CARES Act. Eligible entities include: (1) entities that applied for a PPP loan before the date of enactment of the bill; (2) are located in a low-income community; (3) have suffered an economic loss of greater than 30 percent; and (4) employ no more than 300 employees. This provision excludes agricultural enterprises.
Emergency EIDL Grants: Eligibility for CARES Act EIDL grants will be extended from December 31, 2020 to December 31, 2021. In addition, an applicant for an emergency EIDL grant should be approved based solely on their credit score or an alternative appropriate method to determine an applicant's ability to repay. The bill doubles the authorization for EIDL grants to $40 billion.
Extension of Unemployment Benefits and Assistance to Railroad Workers
$300 Federal Pandemic Unemployment Compensation benefits: The legislation provides an extension of the Federal Pandemic Unemployment Compensation program created under the CARES Act, reducing the benefit from $600 per week to $300 per week, until March 14, 2021. This benefit would apply to weeks of unemployment after December 26 and through March 14, 2021.
The legislation also extends other CARES Act unemployment benefits through March 14, 2021. This includes extending to 50, from 39, the number of weeks an eligible beneficiary may receive assistance under Pandemic Unemployment Assistance for individuals who do not qualify for regular benefits. Additional verification measures are also required under the legislation. In addition, those individuals who have exhausted regular benefits under the Pandemic Emergency Unemployment Compensation program could receive a total of 24 weeks of benefits, up from 13 weeks. The additional benefits could continue through April 5, 2021, for individuals who have not exhausted them.
Should an individual receive an overpayment of benefits, the legislation offers states authority to waive any collection of overpayments, if it was without fault by the individual or if such "repayment would be contrary to equity and good conscience."
Through March 14, 2021, the legislation would extend federal support to nonprofits and government agencies for half of their costs of providing unemployment benefits as well as interest-free federal loans for state unemployment trust funds. The legislation also provides full federal funding to qualifying states for the Extended Benefit and work-sharing programs.
Extension of Federal Railroad Unemployment benefits: The bill amends the Railroad Unemployment Insurance Act to extend the temporary changes made under the CARES Act but also to reduce benefits from $1,200 during each two week period between April 1, 2020, and July 31, 2020, to $600 per two week period beginning on December 26. Among other changes, the bill also extends the waiver of the 7-day waiting period for applying for or receiving Railroad Unemployment Insurance benefits to March 14, 2021.
Tax Measures Included in the Consolidated Appropriations Act, 2021 (H.R. 133)
The tax division, titled Division EE—Taxpayer Certainty And Disaster Tax Relief Act, of the Consolidated Appropriations Act, 2021 (H.R. 133), provides a wide variety of tax relief, making some expiring provisions permanent, offering long-term extensions of others, and extending or modifying a number of others. This section first discusses certain COVID-related tax relief measures, and then discusses tax measures made permanent, extensions, and miscellaneous provisions. Of note, extending a measure through 2025, as a number of provisions do below, would line its expiration date up with the expiration of number of high-profile tax measures from the 2017 Tax Cuts and Jobs Act, adding to what is already a highly significant date for tax policy. Given the brevity of this document in comparison to the underlying provisions, some provisions have been omitted and the explanations simplified.
COVID-related Tax Relief Measures
Additional 2020 recovery rebates: The legislation allows for an additional advanceable refundable tax credit of $600 per eligible family member ($1,200 for joint filers) and $600 per qualifying child. As under the CARES Act, the credit phases out at income amounts greater than $75,000 ($150,000 for joint filers).
Modifications to the Employee Retention Credit: The legislation significantly modifies the Employee Retention Tax Credit provided in the CARES Act:
- For the period between January 1, 2021, and June 30, 2021, the credit rate increases from 50 percent to 70 percent of qualified wages;
- Eligibility for the credit is expanded by reducing the necessary year-over-year gross receipts decline from 50 percent to 20 percent, provides a safe harbor for allowing use of the prior quarter's gross receipts, and allows certain public instrumentalities to claim the credit;
- For calendar quarters in 2021, the limit on per-employee creditable wages increases to $10,000 per quarter;
- Allows greater flexibility for businesses with fewer than 500 employees to advance the credit;
- Makes retroactive (to the original date of the CARES Act) a clarification of the measurement of gross receipts for tax exempt organizations; and, among other things,
- Makes retroactive a clarification that group health plan expenses are considered qualified wages.
Clarification of tax treatment of Paycheck Protection Program loan forgiveness and EIDL loan forgiveness: The legislation clarifies that gross income does not include any amount that would otherwise arise from the forgiveness of a PPP loan, EIDL grants, or grants for Shuttered Venue Operators. This provision also clarifies that deductions are allowed for otherwise deductible expenses paid with the proceeds of such forgiven obligations, and that the tax basis and other attributes of the borrower's assets will not be reduced as a result of the loan forgiveness. This provision is effective as of the date of enactment of the CARES Act.
The legislation also allows for the temporary reinstatement of full deductions for business meal and drink expenses, including carry-out or delivery meals, incurred in 2021 and 2022.
Retroactive guidance for educator tax deduction for PPE: The legislation requires the Secretary of the Treasury to issue guidance providing that personal protective equipment and other supplies are treated as eligible expenses for the educator expense deduction, and that such guidance be retroactive to March 12, 2020.
Clarification of emergency financial aid grants: The legislation provides that emergency financial aid grants made for the purpose of providing financial relief to students enrolled at institutions of higher education are excluded from the student's gross income, and holds those students harmless for purposes of qualifying for American Opportunity and Lifetime Learning credits.
Extension of credits for paid sick and family leave: The legislation extends the refundable payroll tax credits enacted in the Families First Coronavirus Response Act for paid sick and family leave through March 2021.
Measures Made Permanent
Reduction in the medical expense floor: This legislation makes permanent the ability for all taxpayers to claim an itemized deduction for medical expenses that exceed 7.5 percent of their adjusted gross income.
Energy-efficient commercial buildings: The legislation makes permanent a deduction for energy efficiency improvements to a commercial building's envelope, lighting, heating, cooling, ventilation, and hot water systems, tying the efficiency standard to the most recent ASHRAE standard, and indexing the amount of the deduction to inflation.
Exclusion for certain state or local tax benefits for qualified volunteer emergency workers: The legislation provides that $50 per month in qualified reimbursements may be excluded from income.
Transitioning from the qualified deduction for tuition to increased lifetime learning credits: After 2020, the legislation repeals the qualified tuition deduction and increases the phase-out limits on the lifetime learning credit. These limits would increase from $58,000 ($116,000 for joint filers) to $80,000 ($160,000 for joint filers).
Shortline railroad track maintenance: The legislation would make permanent the credit for shortline railroad track maintenance at a rate equal to 40 percent of expenditures (50 percent for expenditures prior to January 1, 2023) paid or incurred by an eligible taxpayer on maintenance of certain railroad track. The credit is capped at $3,500 multiplied by the number of miles of railroad track owned or leased by the taxpayer as of the close of the taxable year.
Alcoholic beverage excise tax and related measures: The legislation makes permanent the reduced rates on alcoholic beverages set to expire in 2021 and simplifies record-keeping requirements. The legislation also transfers authority to administer reduced rates on imports to the US Department of the Treasury, clarifies that reduced rates are not allowed for illegally produced or smuggled goods, sets minimum processing requirements, and clarifies the single taxpayer rule for beer, wine, and spirits.
Measures Extended Through 2025
Controlled Foreign Corporation look-thru rule: The legislation extends through 2025 certain look-thru rules treating dividends, interest, rents, and royalties paid between related controlled foreign corporations as comprised of the earnings of the payor controlled foreign corporation.
Extension of the New Markets Tax Credit: The legislation provides an annual allocation of $5 billion of New Markets Tax Credits for years 2021 through 2025 and extends the carryover period for unused credits through 2030.
Work Opportunity Tax Credit extension: The legislation extends the Work Opportunity Tax Credit, which supports the hiring of individuals from among ten targeted groups, through 2025.
Discharge of Principal Residence Indebtedness: The legislation extends through 2025 the exclusion from gross income for a discharge of qualified principal residence indebtedness, but reduces the maximum exclusion from $2 million to $750,000.
Extension of 7-year depreciation for motorsport racetracks: The legislation extends through 2025 the special 7-year cost recovery time period for motorsport entertainment complexes.
Extension of expensing rules for film, television, and theatrical productions: The legislation extends the deduction for certain costs in the year they are incurred, up to $15 million ($20 million in certain areas), through 2025.
Extension of Oil Spill Liability Trust Fund Excise tax: The legislation extends through 2025 the excise tax of $0.09 per barrel of crude oil received at a refinery or petroleum product entered into the United States and deposits those proceeds into the Oil Spill Liability Trust Fund.
Modifies and extends Empowerment Zone benefits: The legislation extends tax benefits available for businesses operating in Empowerment Zones through 2025, and modifies them by terminating the increased expensing on qualifying equipment and the deferral of capital gains on the sale of certain qualified assets.
Extension of the employer credit for paid family and medical leave: The legislation extends the general business credit available to employers on eligible wages paid with respect to family and medical leave through 2025.
Extension of the exclusion for employer-paid student loans: The legislation extends through 2025 the ability of an employer to provide a student loan repayment benefit of up to $5,250 annually to an employee. Under this measure, the benefit is excluded from the employee's gross income.
Extension of the carbon dioxide sequestration credit: The legislation extends the credit for facilities to capture and sequester carbon dioxide that start construction by the end of 2025.
Measures Provided Shorter Extensions
Extension of a variety of energy-related provisions: The legislation extends the production tax credit through 2021 (including with respect to wind facilities, at their current 40 percent credit value). The legislation also extends the investment tax credit for solar energy property and other technologies, at their relevant phased-down rates, to 2023, after which the credit is reduced to either 10 or zero percent. Additionally, the legislation extends the 10 percent credit for nonbusiness energy property used to improve the energy efficiency of a principal residence, the 26 percent credit for residential energy efficient property (with the rate reduced to 22 percent in 2023), and the $2,000 credit for the acquisition of new energy efficient homes. The legislation also makes waste energy recovery property eligible for the investment tax credit, and allows off-shore wind facilities to claim the investment tax credit at the full credit amount through 2025.
Extension of various fuel, fueling, and vehicle credits: The legislation also extends the $1.01 credit per gallon credit for advanced biofuel, the $0.50 per gallon credit for alternative fuels and alternative fuel mixtures, as well as the credit for the installation of refueling property that dispenses ethanol, biodiesel, natural gas, hydrogen, and electricity, capped at $30,000 for business locations, and $1,000 for principal residences through 2021. The legislation also extends through 2021 the credit for the purchase of fuel cell vehicles and the 10 percent credit for two-wheeled plug-in electric vehicles.
Extension of the Indian Reservation employment credit: The legislation extends through 2021 the credit on the first $20,000 of wages and health insurance costs for qualified employees on an Indian reservation.
Extension of Indian coal production credit: The legislation extends through 2021 the inflation adjusted credit for the per-ton production of coal on lands owned by an Indian tribe.
Extension of accelerated depreciation for business property on Indian reservations: The legislation extends through 2021, the rules allowing for accelerated depreciation of certain property used for business purposes within an Indian reservation.
Extension of the American Samoa development credit: The legislation extends a credit corresponding to certain wages, benefits, and depreciation costs for companies doing business in American Samoa through 2021.
Extension of mortgage interest premiums as interest: The legislation allows the characterization of mortgage interest premiums as interest for the mortgage interest deduction for certain taxpayers through 2021.
Extension of the mine rescue credit: The legislation allows a credit for the per-employee cost incurred with respect to qualifying mine rescue training programs, capped at $10,000, for 2021.
Extension of provisions classifying race horses as 3-year property: The legislation extends rules classifying certain race horses as three year property for purposes of depreciation placed in service through 2021.
Extension of the health coverage tax credit: The legislation extends through 2021 the refundable credit of 72.5 percent of the premiums paid by eligible individuals for qualified healthcare coverage.
Extension of the Black Lung Disability trust fund excise tax: The legislation extends through 2021 the excise tax of $1.10 per ton for coal from underground minds and $0.55 per ton from surface mines (both excise rates are capped at 4.4 percent of coal's sale price) to fund the Black Lung Disability Trust Fund.
The legislation also provides for a number of miscellaneous tax changes, including:
- Making permanent the 4 percent rate floor for calculating credit related to certain acquisitions and housing bond-financed developments for purposes of the Low Income Housing Tax Credit;
- Providing for a 30-year depreciation of certain residential rental property;
- Updating the interest rate requirements for life insurance contracts;
- Allowing taxpayers to reference their income from the preceding year to claim the Earned Income Tax Credit and the Additional Child Tax Credit for 2020; and
- Extending the increased charitable donation limits from the CARES Act for both itemizers and non-itemizers, with certain modifications.
The legislation provides for changes to minimum age distribution rules to allow certain workers in the building and construction industry to make distributions from tax exempt multiemployer pension plans, if they were participants in such plan on or before April 30, 2013.
The legislation would also prevent a partial plan termination as long as the active participant count as of March 31, 2021 is at least 80 percent of the number of active participants covered by the plan as of March 13, 2020.
The legislation also provides for temporary flexible spending arrangement rules, allowing, among other changes, the carryover of unused benefits of the full amount from 2020 to 2021 and from 2021 to 2022; a 12-month grace period for unused benefits in dependent care flexible spending arrangements during 2020 or 2021 and an increase in the maximum age to 13 for 2021; and allowing prospective changes in election amounts for plan years ending in 2021.
Unlike the CARES Act, where a major focus was utilizing Fed facilities, the Treasury Department, and financial institutions as a channel for providing assistance to struggling businesses, the current bill is as notable for what it rescinds as what it provides in the financial services sector. However, the bill does direct financial regulators to support community development financial institutions and minority depository institutions and provides for capital injections as described below.
Federal Reserve Authority: The final deal includes a provision intended to restrict the Federal Reserve's authority to make new loans under the credit facilities established pursuant to the CARES Act. The provision was initially offered by Sen. Patrick Toomey (R-PA) and became a key sticking point in negotiations, with Democrats expressing concern that his amendment would unnecessarily curtail the Fed's emergency powers. The compromise provision included in the final package prohibits the Fed from making new loans under CARES Act facilities, while confirming that such termination of authority does not otherwise alter the Federal Reserve's section 13(3) authority as existed prior to the enactment of the CARES Act.
Exchange Stabilization Fund Recissions: Consistent with Secretary Mnuchin's request of Fed Chairman Powell in November, the bill would rescind $429 billion in unobligated CARES Act funds currently supporting numerous pandemic-related Fed credit facilities. Secretary Mnuchin indicated last month that markets had responded positively to the creation of these backstop facilities and banks continued lending, keeping credit largely available. The recission is intended to free up this funding to be re-appropriated by Congress.
Community Development Financial Institutions: The bill provides $9 billion for an "Emergency Capital Investment Program" intended to support neighborhoods disproportionately impacted by the pandemic. The program will have Treasury make capital investments in eligible community development financial institutions (CDFIs), including minority depository institutions, in the form of preferred stock purchases or other instruments, to support such institutions' efforts to provide loans, grants, or forbearance for small and minority-owned businesses and consumers in communities particularly impacted by the pandemic's economic effects. The bill also provides an additional $3 billion for the CFDI Fund to make direct grants to CFDIs for emergency COVID relief and relief to minority communities and minority-owned lenders that have been disproportionately impacted by the pandemic.
The bill includes substantial assistance for the transportation sector, with additional assistance provided for the aviation, rail, and transit industries. The bill also corrects what many considered a serious oversight in the CARES Act by providing funding for the motor coach industry and other smaller transportation services providers.
Aviation: The bill appropriates an additional $2 billion to extend the Payroll Support Program (PSP) through March 31, 2021 to go directly to frontline aviation workers' wages, salaries, and benefits. The bill designates up to $10 million to the Small Community Air Service Development Program (SCASDP), and up to $23.3 million shall be available to the Essential Air Service and Rural Improvement Fund. The bill provides limitations on certain employee compensations and creates protections for employees engaging in collective bargaining agreements.
The bill also appropriates $15 billion to the Department of Treasury for air carrier financial aid, and $1 billion for air carrier contractors. In coordination with the Secretary of Transportation, the Secretary of the Treasury requires the Secretary of the Treasury to submit a report to Congress no later than March 1, 2021 on the financial assistance provided to air carriers. The bill requires the Secretary to update the Treasury's website weekly to reflect new or revised distributions of air carrier financial assistance. Recipients of these newly appropriated funds must reapply for aid, even if they received funds under the CARES Act.
Motorcoach/Bus/Passenger Ferries: The bill includes $2 billion in assistance (grant, loans, and loan guarantees) for smaller transportation services including the motorcoach and bus industry, passenger ferries, and school buses, which did not receive assistance under the CARES Act. This assistance was the subject of bipartisan legislation introduced in July entitled the Coronavirus Economic Relief for Transportation Services (CERTS) Act, which had garnered 60 Senate cosponsors and 270 House cosponsors. The $8 billion in assistance will be administered by the Treasury Secretary in consultation with the Transportation Secretary, and the bill requires at least half of the assistance to be provided in the form of grants. Recipients will have one year in which to expend funds, and will be required to prioritize funds for maintaining current workforce levels and recalling/rehiring furloughed or laid-off employees.
Rail: The bill includes $1 billion for Amtrak, specifically targeting $655 million for Northeast Corridor activities, with the remaining $345 million for the national rail network. These grants are intended to prevent further furloughs of rail employees, and to prevent further reductions in frequency of rail service.
Transit: The bill appropriates an additional $14 billion to transit infrastructure grants to prevent, prepare for, and respond to coronavirus. These grants are intended to prevent further furloughs of transit employees and maintain ongoing operations.
FMCSA/NHTSA: The bill expands time periods for states to expend grants through the Federal Motor Carrier Safety Administration and the National Highway Traffic Safety Administration due to COVID-19 hardships.
Postal Service Assistance: The bill essentially converts a $10 billion loan to the Postal Service under the CARES Act into a grant by specifying that the Treasury Secretary must provide such funding without requiring repayment. The bill allows the USPS Postmaster General, during the period beginning on January 21, 2021, through March 15, 2021, to accept certain low-risk postal shipments.
Education & Workforce Provisions
Child Care: The bill includes $10 billion in emergency funding for child care, including assistance to families and providers, using the Child Care and Development Block Grant (CCDBG) mechanism to distribute funding. The $10 billion in funding is in addition to the Fiscal Year (FY) 2021 appropriation of $5.9 billion (an $85 million increase over FY 2020 level) for payments to states for the CCDBG.
Use of Funds: Although the bill utilizes the same funding mechanism (CCDBG) as the CARES Act, it provides increased flexibility on how the funds may be used through the state lead agency. Under the funding provided through CCDBG, the measure allows states to cover costs for: (1) providing families relief from copayments and tuition payments; and (2) paying a portion of the child care provider's costs typically paid for through family copayments to help cover such payments when there is decreased enrollment or closures related to coronavirus, and to allow providers to remain open or reopen. While the bill permits states to use funds to help providers with increased operating expenses during the pandemic, it encourages states, territories, and tribes to place conditions on payments to child care providers to help ensure a portion of funding is used to continue paying employee salaries/wages.
States may use funding to provide technical assistance to child care providers on the implementation of applicable state and local health and safety requirements and CDC guidance. Additionally, funds may be used to restore amounts for obligations incurred to respond to the pandemic prior to enactment.
The bill authorizes states, territories, and tribes to use the funding to provide child care assistance to essential workers during the pandemic without regard to the income eligibility requirements in the CCDBG Act, and permits funding to eligible child care providers that were not receiving CCDBG assistance prior to the pandemic.
Application Process: States are required to publicly publish the availability of funding and provide technical assistance to child care providers. The lead agencies are encouraged to establish enrollment and eligibility policies, which support the fixed costs related to child care services through de-coupling provider reimbursement rates from a child's absence and a provider closure due to the pandemic.
The bill clarifies that states do not need to amend their CCDBG state plan before utilizing the flexibilities provided under the bill.
The Secretary of HHS may not use more than $15 million for administrative expenses from the funds provided, which will remain available until September 30, 2024. States are required to submit a report to the Secretary of HHS within 60 days after the enactment, which outlines how the funds will be spent, and a subsequent report will be provided by the Secretary of HHS to the relevant congressional committees, 90 days after enactment.
Issue Subject to Future Negotiations: In previous relief proposals, lawmakers proposed funding for the child care sector ranging from $15 billion to $57 billion (including appropriations for a stabilization grant program and a separate supplemental appropriation for CCDBG). While the bipartisan package released on December 14 authorized a new temporary grant mechanism for the sector, this new package reverts back to the CARES funding mechanism, using only CCDBG to distribute the funds, but with greater flexibility. This change was made to ensure proper distribution of funding could be obligated quickly through the presidential transition of power. Given the total funding level provided for the child care sector in this package, Democrats, in particular, are likely to push for additional funding in future relief discussions in the 117th Congress.
Education Stabilization Fund: The bill appropriates $81.8 billion to the Education Stabilization Fund (ESF) to assist school districts, institutions of higher education, and students with the return to school and for continued learning of all students. Specifically, the bill provides: (1) $820 million for the outlying areas and Bureau of Indian Education; (2) $4 billion for the Governor's Emergency Relief Fund (GEERF), including $2.75 billion for non-public schools; (3) $54.3 billion for the Elementary and Secondary School Emergency Relief Fund (ESSERF); and (4) $22.7 billion for the Higher Education Emergency Relief Fund (HEERF).
ESF funding will remain available through September 30, 2022. Similar to the CARES Act, the bill requires entities receiving funds from the ESF to continue to pay employees and contractors during closures or disruptions due to the pandemic. It also requires states to include assurances in their ESF application that they will maintain support for K-12 and higher education in FY 2022 equal to at least the proportional level of the state's spending on education relative to the state's overall spending (averaged over fiscal years 2017, 2018, and 2019), but it also includes a provision to allow the Secretary to waive this requirement if a state has experienced a precipitous decline in financial resources.
Governor's Emergency Education Relief Fund: Like provisions in the CARES Act, the GEERF provides grants to Governors of each state that submits an approved application, which includes applications already submitted for GEERF funding through the CARES Act. Governors can use the funds to provide emergency support grants to school districts, public and private universities, and other education-related entities, such as child care and early childhood education providers, most significantly impacted by COVID-19 or deemed essential for providing emergency services to students. The bill requires the Secretary to award funds to Governors with an approved application within 30 days of the bill's enactment using the same allocation requirements from the CARES Act: (1) 60 percent on the basis of the relative population of individuals aged 5-24; and (2) 40 percent on the basis of the relative number of children counted under Title I of the Elementary and Secondary Education Act (ESEA).
The bill also includes a new program within the GEERF, which would set aside $2.75 billion to provide emergency assistance to non-public schools. Following the controversy over the ESF requirements in the CARES Act to provide "equitable services" to non-public schools, this section seeks to clarify and address funding issues for private schools. The bill directs the Secretary to establish an application process for states to apply for funds, which will be allocated based on the share of children aged 5-17 who are at or below 185 percent of the poverty line and attend a private school compared to all students in the state who meet this criteria. States receiving funding are required to create an application process to distribute the funds to private schools and must prioritize services and assistance to private schools that enroll low-income students or those most significantly impacted by the pandemic. The bill prohibits private schools that previously received a Paycheck Protection Program loan from being eligible for this GEERF funding.
Elementary and Secondary School Emergency Relief Fund: The bill provides supplemental grants to states that received ESSERF funds under the CARES Act, which will be used to award subgrants to local school districts in response to the COVID-19 crisis. Like the requirements in the CARES Act, the Secretary of Education must allocate ESSERF funding based on the state's share of Title I, Part A funds under ESEA, and states will allocate at least 90 percent of funds as subgrants to Title I schools.
In general, the eligible uses of ESSERF funds are the same as those included in the CARES Act. The bill also adds several new eligible activities, including addressing learning loss among students, particularly for low-income students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and children in foster care. The bill includes the following activities as eligible uses of funding to address learning loss: (1) administering and using high-quality assessments to assist educators in meeting students' academic needs, including through differentiating instruction; (2) implementing evidence-based activities to meet the comprehensive needs of students; (3) providing information to parents and families about how to effectively support students, including in a distance learning environment; and (4) tracking student attendance and improving student engagement in distance education. The bill also adds school facility repairs to reduce the risk of virus transmission and upgrades to improve the indoor air quality in school facilities as eligible uses.
Higher Education Emergency Relief Fund: The HEERF provides grants directly to public and private institutions of higher education to cover the costs associated with closures or significant changes to the delivery of instruction due to the pandemic. The measure requires institutions to use at least 50 percent of the relief funds for financial aid grants to students, similar to the CARES Act, to help cover any component of a student's cost of attendance or for emergency costs due to the pandemic (i.e., food, housing, course materials, technology, health care, and child care). It encourages institutions to prioritize financial aid grants to students with exceptional need, including students who receive Pell Grants.
The bill broadens eligible uses of funds for institutions to include defrayed expenses associated with the pandemic, including lost revenue and reimbursement for expenses already incurred. It also provides flexibility for institutions that received HEERF funding under the CARES Act to use those funds according to the updated terms and conditions under this bill.
The bill prohibits institutions from using the funds for payments to contractors providing pre-enrollment recruitment activities, endowments, or capital outlays for facilities related to athletics, sectarian instruction, religious worship, or any benefits for senior administrators or executives. Additionally, institutions that paid endowment tax in 2019 would receive decreased allocations (by 50 percent), but the Secretary may waive this provision if the institution demonstrates a need for additional funding for financial aid grants to students, payroll expenses, or other expenditures.
Aid to Institutions of Higher Education: The bill allocates 89 percent (or $20.2 billion) of HEERF funding using the following apportionment: (1) 37.5 percent based on the relative share of full-time Pell Grant recipients not exclusively enrolled in distance education courses prior to the pandemic; (2) 37.5 percent based on the relative share of the total number of Pell Grant recipients not exclusively enrolled in distance education courses prior to the pandemic; (3) 11.5 percent based on the relevant share of full-time non-Pell students not exclusively enrolled in distance education courses prior to the pandemic; (4) 11.5 percent based on the relevant share of the total number of non-Pell students not exclusively enrolled in distance education courses prior to the pandemic; (5) 1 percent based on the relative share of full-time Pell students enrolled exclusively in distance education prior to the pandemic; and (6) 1 percent based on the total number of Pell students enrolled exclusively in distance education prior to the pandemic. If an institution receives funds because its Pell students were enrolled exclusively in distance education prior to the pandemic, then the institution can only use these funds for emergency financial aid grants to students. The Department of Education would distribute the funds to institutions using the same systems in place to distribute federal financial aid funds and must do so within 30 calendar days of enactment.
Aid to For-Profit Institutions: The bill sets aside 3 percent (or $681 million) for for-profit institutions of higher education, which would be distributed using the same formula as above.
Aid for Historically Black Colleges and Universities and Minority Serving Institutions: 7.5 percent (or $1.7 billion) is reserved for Historically Black Colleges and Universities (HBCUs), other Minority Serving Institutions (MSIs), and developing institutions funded through the Strengthening Institutions Program. The Secretary will allocate these funds to institutions based on their relative share of funding in the FY 2020 appropriations cycle. These awards are in addition to the emergency funds included in the allocation of $20.2 billion to institutions of higher education. The Department must allocate these funds within 60 calendar days of enactment of the bill. The bill also provides additional flexibility for HBCUs and MSIs to use prior awards under Titles III, V, or VII of the Higher Education Act (HEA) to respond to the pandemic.
Fund for the Improvement of Postsecondary Education: One-half percent (or $113.5 million) is reserved for the Fund for the Improvement of Postsecondary Education to provide funding for institutions of higher education that have the greatest unmet need, including institutions of higher education with large populations of graduate students or institutions that did not receive an allocation from HEERF. The Secretary has 60 days after the enactment of the bill to create an application process to determine those institutions and must allocate funds within 120 days.
Student Loan Payment Suspension: Despite being included in the bipartisan draft circulated last week, the payment and interest moratorium on federal student loans is not included in the new Coronavirus Response and Relief Supplemental Appropriations Act of 2021. Sources indicate this is due to the fact that President-elect Biden will take action to avoid such payments becoming due February 1 after he is inaugurated. That said, such a move could complicate communications from Federal Student Aid and loan servicers, which are required to provide notifications in advance of the extension expiration date. Given that President-elect Biden would not be able to act until January 20 at the earliest, it does not leave much time for communications to such borrowers. It is expected that the Biden transition team will indicate to FSA and loan servicers that another extension is coming and that such notifications are not necessary.
Subsidized Student Loans: The bill includes a repeal of the program and lifetime caps on subsidized loans for undergraduate students that were put in place in 2013, meaning qualifying students could again avoid interest accrual on their need-based loans for longer while pursuing their degree. The bill stipulates that the Secretary of Education must implement the provision by July 1, 2023, including designating which award years will be eligible for the repeal. A notice must be published in the Federal Register 60 days before implementation.
FAFSA Simplification: As a parting gift to retiring Senate HELP Committee Chairman Lamar Alexander (R-TN), the package includes a provision to simplify the FAFSA from 108 to no more than 36 questions, streamline data verification, and simplify Pell Grant eligibility. According to committee documents, these combined efforts should lead to an additional 555,000 students who qualify for Pell and an additional 1.7 million students who qualify for the maximum award each year.
The bill borrows large sections of legislative language from a proposal Sen. Alexander first introduced last year, the Student Aid Improvement Act (S. 2557). As such, it will make sweeping changes to the needs analysis sections of HEA, including renaming the expected family contribution (EFC) to student aid index (SAI) and changing how such an index is calculated. The SAI will be an index that reflects an evaluation of a student's approximate financial resources toward their postsecondary education per academic year, relative to other applicants. There are a number of changes to the computations the Department will take under consideration for various student populations, including dependent students, independent students without dependents, and independent students with dependents. Additionally, it identifies students who are eligible for a simplified needs test, and therefore are exempted from reporting assets on the FAFSA.
The bill updates the definition for "cost of attendance" and requires institutions to make each element publicly available on their websites. It also updates the discretion provided to student financial aid administrators under the Higher Education Act, including to make adjustments on a case-by-case basis for students with special circumstances, prohibit certain institutional actions and fees, and publicly disclose how students can pursue a professional judgment.
In addition to reducing the number of FAFSA questions, the bill also includes a number of other streamlining provisions to allow students to know more quickly the amount of federal aid for which they qualify, including a three-variable (income, family size, and family type) Pell determination and procedures for the Department of Education to share and receive applicant tax data with the Internal Revenue Service.
Pell for Incarcerated Students: The package removes the 26-year ban on Pell Grants for incarcerated individuals. It combines elements from the REAL Act (S. 1074/H.R. 2168), the PREP Act (S. 1337/H.R. 2635), and the Beyond the Box for Higher Education Act (S. 1338/H.R. 2563) to (1) expand student eligibility through creation of a prison education program; (2) provide technical assistance, evaluation, and reporting of the prison education program; and (3) remove financial aid eligibility questions related to conviction penalty and the Selective Service registration requirement.
Specifically, the bill includes confined or incarcerated individuals, defined as an "individual who is serving a criminal sentence in a Federal, State, or local penal institution, prison, jail, reformatory, work farm, or other similar correctional institution" but not an individual in a halfway house or home detention. It also defines a qualifying prison education program as:
- one offered by an eligible institution of higher education approved to operate in a correctional facility;
- one that is determined by the state department of correction or federal Bureau of Prisons to be operating in the best interest of students;
- one that offers credit transferability to at least one institution of higher education in the state;
- one that is offered by an institution in good standing for the past five years;
- one that satisfies professional licensure and certification requirements; and
- does not focus on education programs where the job, occupation, or professional certification typically includes a prohibition on formerly incarcerated individuals.
The bill requires the Secretary of Education to provide technical assistance to the Bureau of Prisons, state departments of corrections, and other entities charged with overseeing prison education programs. It requires an evaluation and report to Congress of the program within one year of enactment. The evaluation must assess incarcerated individuals' ability to access the FAFSA, in addition to outcomes (e.g., degree attainment, recidivism, employment and earnings, etc.) related to the provision of Pell Grants. The report must be submitted to authorizing committees and made publicly available on the Department of Education's website. Among other information, the report must include at a minimum the following: (1) names and types of participating institutions; (2) number and demographics of incarcerated individuals received Pell Grants, (3) Pell Grant expenditures for each program; (4) cost of attendance for students; (5) mode of instruction; (6) post-release outcomes; (7) rates of recidivism; and (8) most common program offerings.
According to congressional staff, it is unclear if all current Second Chance Pell Pilot sites or legacy prison education programs would fit under the new definition. To help sort this out, the Department of Education has until July 1, 2023, to implement the changes to the law. It can implement the program earlier but must publish a notice in the Federal Register with 60-day notice if so.
Pell Eligibility for Defrauded Students: The bill restores Pell Grant eligibility for students: (1) whose institution closed while pursuing a course of study; (2) whose loans were discharged based on a successful Borrower Defense to Repayment claim; or (3) who received a false certification discharge.
HBCU Financing Forgiveness: The bill appropriates such sums as necessary to forgive outstanding loans, including principal, interest, fees, and costs, provided to Historically Black Colleges and Universities that received loans under the federal HBCU Capital Financing Program. Committee documents estimate debt forgiveness in the provision to be valued at $1.5 billion. The provision is effective upon enactment, and the Secretary of Education must repay the loans within 90 days of enactment.
Institute of Education Sciences: The bill provides $28 million through September 30, 2022 for the Institute of Education Sciences to carry out the National Assessment of Educational Progress, which the bill reschedules from the 2020-21 school year to the 2021-22 school year.
Issues Subject to Future Negotiations: While the proposal would provide additional relief to students and institutions through the Education Stabilization Fund, many stakeholders consider this a down payment on a much larger sum needed to stabilize the education sector. Advocates have applauded the higher education package included as part of the deal, noting the simplified financial aid systems and reinstated financial aid eligibility to certain populations are long-overdue. However, the removal of the payment relief for federal student loan borrowers means the new administration will likely move quickly in January to again extend the payment pause and interest moratorium through executive action. The Biden Administration also is expected to work with the 117th Congress to consider additional relief for borrowers, including potentially some form of student loan debt forgiveness.
Food & Nutrition
Supplemental Nutrition Assistance Program (SNAP): The bill increases the value of SNAP benefits to 115 percent of their current value through June 30, 2021, a key priority for many anti-hunger advocates and congressional Democrats. For the purposes of calculating SNAP benefits, an individual's federal pandemic unemployment compensation payment will not count as income for the month the individual receives the benefits or any of the following nine months. The bill also directs the Secretary of Agriculture to make available $100 million for states to administer SNAP, of which 75 percent is allocated to states based on the share of households in the state that participate in SNAP, and 25 percent would be based on the increase in the number of SNAP households in the state in the last 12 months.
It also clarifies college students' eligibility for SNAP benefits if they are: (1) enrolled at least half-time in an institution of higher education; and (2) eligible to participate in a state or federal work study program during the regular school year or have an expected family contribution of $0. The bill directs USDA to work with institutions and the Department of Education to inform federal student aid applicants and current students about these benefits, which will be in effect until 30 days after the COVID-19 public health emergency is lifted.
Additionally, the bill allocates $5 million for USDA to explore how to better incorporate technological developments into the SNAP program. Using these funds, the Secretary will provide additional support for the Food and Nutrition Service to conduct end-to-end testing in the online production environment and provide technical assistance to retailers on the technical requirements for the online acceptance of SNAP benefits. The Secretary also will use these funds to enter into cooperative agreements with up to five entities to build out functionality for direct-marketing farmers and farmers' markets to accept SNAP benefits. The Secretary also will look into methods to modernize electronic benefits transfer technology for SNAP benefits, as well as look for ways to support mobile technologies demonstration projects.
Pandemic-Electronic Benefit Transfer (P-EBT): The bill would amend the P-EBT program in the Families First Coronavirus Response Act, which gave USDA and states additional flexibility to address the needs of school children who would otherwise receive free or reduced-price meals but for school closures related to coronavirus. Previously, only children in K-12 schools were eligible for P-EBT, but the bill will expand eligibility to include families with children under the age of six who are enrolled in a covered child care facility.
It also amends current law to remove provisions requiring USDA to provide waivers to allow states to implement P-EBT. Instead, it allows states to use state or local public health ordinances in response to COVID-19 and the best feasibly available data to determine the status of a school or covered child care facility and identify children eligible for assistance.
Reimbursement of Emergency Costs for Nutrition Programs: The bill would direct the Secretary of Agriculture to establish a program to reimburse states for emergency operational costs incurred as a result of the pandemic by school food authorities, organizations, and institutions participating in USDA's Child Nutrition Programs, including School Meal Programs and the Child and Adult Care Food Program. Funds would be available until September 30, 2021.
Task Force on Supplemental Foods Delivery for Women, Infants, and Children (WIC): The bill directs the Secretary to establish a task force on supplemental food delivery through the WIC program, which will look at ways to streamline the redemption of supplemental foods benefits that promote convenience, safety, and equitable access to supplemental foods, including infant formula. The task force will assess online ordering and purchasing of supplemental foods, curbside pickup, home delivery, self-checkout, and other measures to limit consumer presence in a physical store. The Secretary must establish the task force within 90 days of enactment of the bill, and the task force must produce its findings and recommendations no later than September 30, 2021.
Additional Funding and Flexibility for USDA Programs: The bill would provide additional funding for the following programs:
- $13 million for the Commodity Supplemental Food Program, which provides food boxes to low-income adults over 60 years old;
- $400 million for the Emergency Food Assistance Program, which allows USDA to purchase food and distribute it through local food banks experiencing increased demand; and
- $182 million for Aging and Disability Services Programs, including senior nutrition services such as Meals on Wheels.
It also would extend the CARES Act flexibility for senior nutrition services to: (1) allow the Secretary of Health and Human Services to transfer up 100 percent of the funds received by the State Agency on Aging normally attributable to nutrition requirements under the Older Americans Act meal programs to allow seniors to get meals in case certain food options are not available; and (2) waive the dietary guidelines requirements under the Older Americans Act.
Rental Assistance: The bill provides $25 billion in rental assistance for FY 2021. The Secretary of the Treasury will provide funding from the Coronavirus Relief Fund to states and local governments to assist families experiencing a loss of income or those at risk of homelessness. Grantees must use at least 90 percent of the funds for rent, utilities, and other related housing expenses. These funds should only be used to provide assistance for up to 12 months but can be extended by an additional 3 months if it is necessary to provide housing stability. The other 10 percent must be used to provide housing stability services, such as case management or other services. The bill also encourages states and local governments to prioritize funds for households with an income that is less than 50 percent of the area median income or households with one or more individuals unemployed for the 90-day period prior to the date of their application for assistance. It also clarifies rental assistance payments would not be treated as income for the purposes of determining eligibility for other federal benefits or assistance.
Eviction Moratorium: The bill would extend the current eviction moratorium through January 31, 2021.
Telecommunications, Broadband Internet Access, and Technology Provisions
Amendments to the Secure and Trusted Communications Networks Act Reimbursement Program
The bill appropriates $1.9 billion for the Federal Communications Commission (FCC) to implement the "rip and replace" reimbursement program authorized under the Secure and Trusted Communications Networks Act of 2019 (H.R. 4998), which became law on March 12, 2020. Congress passed H.R. 4998 to establish a procedure for identifying and preventing communications equipment that poses a national risk from entering US networks, and to reimburse communications providers serving two million or less subscribers for the cost of replacing untrustworthy network equipment or services.
This bill expands program eligibility so that eligible telecommunications carriers (ETCs) with less than 10 million subscribers can participate, though funding will be prioritized for ETC's with less than two million subscribers. Finally, the legislation authorizes non-commercial schools and libraries - followed then by "any remaining approved applicants determined to be eligible for reimbursement" - to participate in the program if funding remains available after applications from ETCs are satisfied.
Connecting Minority Communities Pilot Program
The bill also authorizes and appropriates $285 million to establish the Connecting Minority Communities Fund, which will support the National Telecommunications and Information Administration's (NTIA) creation and administration of the Connecting Minority Communities Pilot Program.
The Program will be used to provide grants to a historically black or tribal college or university, a minority-serving institution, or a consortium led by one of those entities that includes a minority business enterprise or nonprofit in anchor communities. Funds can be used to purchase broadband internet access service or eligible equipment (defined broadly as equipment used to provide broadband internet access service, including connected devices such as laptops and tablets, Wi-Fi hotspots, modems, and routers), or to hire and train information technology personnel.
NTIA must promulgate rules within 45 days after enactment of the legislation that: (1) establish a method for identifying which eligible recipients in anchor communities have the greatest unmet needs; (2) ensure Pilot Program grants are made to those with the greatest unmet needs in a manner that best achieves the Program's purpose; (3) require eligible recipients receiving grants, excluding consortiums, to provide broadband internet access services or eligible equipment to those who demonstrate necessary need due to their income level or have been receiving unemployment since March 1, 2020; (4) ensure that grant recipients, or any entity to which a grant recipient lends or provides eligible equipment, use eligible equipment in a manner in keeping with the promulgated rules and do not sell eligible equipment; (5) ensure no less than 40 percent of the Program's grants are made to historically black colleges or universities; and (6) no less than 20 percent of the grants are made to historically black or tribal colleges or universities and minority institutions to provide broadband internet access services or eligible equipment to students. The Program will be terminated after the Fund's exhaustion.
Office of Minority Broadband Initiatives
The bill directs NTIA to establish the Office of Minority Broadband Initiatives inside the organization within 180 days of the bill's enactment, and appoint a Director of the Office of Minority Broadband Initiatives to lead the new office. The Director will be responsible for collaborating with federal agencies, state, local and governments, HBCUs and other stakeholders in an effort to expand broadband access and digital opportunities to anchor communities. Within a year of the Office's establishment, NTIA must submit a publicly available report to Congress detailing how the Office is working to expand access to broadband internet access services and reduce barriers to providing such services.
COVID-19 Telehealth Program
The bill appropriates $250 million in additional funds for the FCC's COVID-19 Telehealth Program, originally established under the CARES Act with a $200 million authorization that was quickly depleted. Of the total funds, $50,000 must be transferred to the FCC Inspector General for oversight purposes.
When distributing funds, the FCC must: (1) ensure that funds are equitably distributed amongst recipients in each state whenever possible; (2) allow previous applicants to update or amend their applications as necessary; and (3) provide each applicant with information on the status of their application, a rationale for their final decision for funding requests, and the opportunity to provide supplementary information for consideration in the event their application is denied. The FCC will be responsible for submitting a report to appropriate congressional committees no later than 90 days after the bill's enactment providing details on applicants and awards.
FCC Regulations and Procedure: The FCC must issue a public notice no later than 10 days after the bill's enactment establishing a 10-day period comment period to evaluate the criteria for funding, and how the Commission should treat applications filed during the funding rounds for awards from the COVID-19 Telehealth Program using CARES Act funding. The FCC must notify Congress of the metrics it plans to use to evaluate applications for Program funds no later than 15 days before the FCC first commits funds. Finally, the FCC must submit a report to Congress detailing how the funds have been distributed no later than 90 days after the bill's enactment, and every 30 days after until the Program's funds have been expended.
Emergency Broadband Benefit Program
The bill directs the FCC to establish the Emergency Broadband Benefit Program within 60 days of enactment, funded by a $3.2 billion Emergency Broadband Connectivity Fund to reimburse broadband internet service providers for connecting needy households during the public health emergency.
Eligibility Requirements: Eligible households for the emergency broadband benefit include those where: (1) at least one household member qualifies for Lifeline subsidies; (2) receives benefits under the Richard B. Russell National School Lunch Act; (3) received a Pell Grant in the current award year; (3) meets the eligibility criteria for participating provider's existing low-income or COVID-19 program; or (4) experienced a substantial loss of income since February 29, 2020 and can provide proper documentation. Those households would be eligible for discounted internet services of up to $50 per month, or in the case of service on a tribal land, $75 per month. Participating providers are responsible for determining the eligibility of potential recipient households through the National Verifier on National Lifeline Accountability Database or other FCC approved mechanisms.
Reimbursement for Broadband and Connected Devices: The Emergency Broadband Connectivity Fund would be available to reimburse providers for making broadband services or connected devices available to eligible households. Connected devices are defined as a laptop or desktop computer or tablet. Reimbursement is available up to $100 for the cost of the device, with a limit of no more than one connected device per eligible household.
Enforceability: Participating providers will be audited to ensure there is no waste, fraud or abuse in the program. A violation of the Program will be treated as a violation of the Communications Act of 1934 or related regulations and will be enforced as such.
Regulations: The FCC must promulgate regulations within 60 days following enactment of the legislation, informed by a 20-day comment and reply comment period.
Tribal Broadband Connectivity Program
The bill creates and appropriates $1 billion to the Tribal Broadband Connectivity Program, through which NTIA will make grants to eligible entities (defined as tribal government or organization, college, or university, the Department of Hawaiian Home Lands, or a native corporation) to expand access to and adoption of broadband service on tribal land or remote learning, telework, or telehealth resources during the COVID-19 pandemic. Funds must be distributed equitably, with not less than 3 percent available to the benefit of Native Hawaiians.
Eligible Uses: Eligible entities may use grant funds for: (1) broadband infrastructure deployment (with preference given to unserved households); and (2) affordable broadband programs such as free or reduced-cost broadband service, distance learning, telehealth, digital inclusion efforts, broadband adoption services, and preventing disconnection of existing broadband service.
Spending Timeline: Eligible entities receiving funds must commit the funds in accordance with their approved application within 180 days of receiving the funding, otherwise the funds will be reverted to the Treasury. Funds must be fully expended within 1 year of receiving grant funding, with the exception of infrastructure projects approved by NTIA. If funds are not spent within a year, those funds will be made available to other eligible entities to carry out the Program's purposes.
Broadband Infrastructure Program
The bill appropriates $300 million for NTIA to provide grants on a competitive basis for covered partnerships to deployment of fixed broadband infrastructure in unserved communities through a newly established Broadband Infrastructure Program. Covered partnerships are defined between a state or one or more political subdivisions of a state and a provider of a fixed broadband service. Broadband projects must be competitively and technologically neutral projects for the deployment of fixed broadband services for eligible services areas, defined as a census block in which a broadband service is not available at 1 or more households or businesses.
Eligibility Requirements: In order to be eligible for a Program grant, a covered partnership must submit an application that includes a description of: (1) the covered partnership; (2) the covered broadband project to be funded; (3) the area to be served by the project; and (4) any support such as a grant, loan, or high-cost universal service support provided to the provider of broadband service that is part of the covered partnership.
Prohibited Uses: The provider of broadband service within the covered partnership cannot use grant amounts to repay debts or act as collateral. The provider also cannot use more than $50,000 of the grant amount to pay for grant preparation costs. Grant funds cannot be used to purchase or support any covered communications equipment, as defined by the Secure and Trusted Communications Networks Act. NTIA must recover awarded funds if it determines that an eligible entity or covered partnership wrongfully used grant funds.
Priority Eligibility: When awarding grants, NTIA must prioritize applicants seeking to complete broadband projects categorized in the following ways, listed in decreasing order of priority: (1) designed to provide service to the greatest number of households in an eligible service area; (2) designed to provide service to an eligible service area that is wholly within an area other than a county, city, or town with more than 50,000 inhabitants and any urbanized area contiguous and adjacent to such a county, city, or town; (3) designed to be the most cost-effective, prioritizing such projects in areas that are most rural; (4) designed to provide broadband services with a download speed of not less than 100 megabits per second and an upload speed of not less than 20 megabits per second; and (5) any other covered broadband project.
Spending Timeline: A covered partnership has 1 year upon receiving the grant funds to expend such funds. NTIA can grant an extension if necessary.
Relationship to Other Federal Broadband Programs: The use of the Program's grant funds will not impact an entity's ability to participate in any other federal broadband program.
Broadband Data Act Funding
The bill appropriates $65 million for the FCC to implement the Broadband Data Act (S. 1822), which required the FCC to collect granular data regarding broadband internet access and create maps depicting the availability and quality of US broadband internet access service. The Broadband Data Act became law on March 23, 2020 but Congress failed at the time to appropriate funds for the FCC to carry out authorized activities.
Don't Break Up the T-Band Act
The bill repeals the requirement in Section 6103 of the Middle Class Tax Relief and Job Creation Act of 2012 (the "Jobs Act") for the FCC to reallocate and auction the 470-512 MHz band - a frequency range currently utilized by public-safety entities in certain urban areas. The bill also directs the FCC to implement rules to clarify acceptable expenditures on which 9-1-1 fees can be spent, and creates a task force to consider how the federal government can end 9-1-1 fee diversion.
This provision responds to congressional and FCC calls to strike Section 6103 of the Jobs Act, which required the FCC to auction T-Band spectrum to offset revenue lost from that legislation's tax cut. However, a 2019 study from the US Government Accountability Office (GAO) found that major metropolitan areas, such as New York City, Boston and Los Angeles, did not have viable alternatives for the T-Band. The GAO also said more than 900 public safety entities held licenses in the T-Band in order to respond to major events, natural disasters and terrorist attacks, on top of the emergency responders who utilized the spectrum. That led to introduction of the Don't Break Up the T-Band Act of 2020 (H.R. 451/S. 2748), sponsored by Rep. Eliot Engel (D-NY) and Sen. Ed Markey (D-MA), and a December 2019, request from FCC Chairman Ajit Pai for Congress to strike the T-Band auction mandate.
Office of Internet Connectivity and Growth
The bill establishes the Office of Internet Connectivity and Growth (Office) inside the NTIA that will be responsible for a number of activities designed to promote broadband internet access, adoption, and deployment. The Office will conduct public outreach, track federal broadband support funds, streamline and standardize the process for applying for federal broadband support, and coordinate federal broadband support programs within the Executive Branch and with the FCC. In general, the Office has a broad mandate to ensure unserved Americans have access to connectivity and to prevent duplication of broadband deployment programs.
Under the bill, the office shall consult with any agency offering a federal broadband support program in order to streamline the application process for financial assistance or grants. The bill also requires the FCC and any agency that offers a federal broadband support program to coordinate with the Office to ensure that broadband support is being distributed in an efficient, technology-neutral, and financially sustainable manner.
This provision mirrors the Advancing Critical Connectivity Expands Service, Small Business Resources, Opportunities, Access, and Data Based on Assessed Need and Demand Act (ACCESS BROADBAND Act) (H.R. 1328/S. 1046), sponsored by Rep. Paul Tonko (D-NY) and Sen. Catherine Cortez Masto (D-NV), and passed by the House of Representatives on May 8, 2019.
Interagency Agreement for Broadband Funding Coordination
The bill requires the FCC, NTIA and the US Department of Agriculture to enter into an interagency agreement within 180 days after enactment of the legislation to coordinate distribution of federal funds for broadband programs, to prevent duplication of support, and ensure stewardship of taxpayer dollars. The agreement must cover, among other things, the exchange of information about project areas funded under the programs and the confidentiality of such information. Programs subject to the agreement include high-cost programs administered by the FCC, such as the Universal Service Fund, the Rural Digital Opportunity Fund, and the Mobility Fund and 5G Fund, and programs managed by the Rural Utility Service and the NTIA. The FCC must also collect public comments focused on efficacy and suggested modifications of the interagency agreement within one year after entering into the agreement.
Reallocation and Auction of 3450-3550 MHZ Spectrum Band
The bill directs the President, acting through the NTIA, to withdraw or modify federal spectrum assignments in the 3450 to 3550 megahertz band, and directs the FCC to begin a system of competitive bidding to permit non-federal, flexible-use services in such band no later than December 31, 2021. This is intended to unleash critical mid-band spectrum for commercial use to enhance US global leadership in 5G and next-generation technologies.
This provision mirrors the Beat China by Harnessing Important, National Airwaves for 5G Act of 2020 ("Beat CHINA for 5G Act of 2020") (S. 4803/H.R. 8545), sponsored by Sen. Roger Wicker (R-MS) and Rep. Greg Walden (R-OR).
The American COMPETE Act
The legislation includes language adopted from the American Competitiveness of a More Productive Emerging Tech Economy Act (American COMPETE Act) (H.R. 8132), sponsored by Rep. Cathy McMorris Rodgers (R-WA) and Rep. Bobby Rush (D-IL), and passed by the House of Representatives on September 29, 2020. The American COMPETE Act is a bipartisan package of nine bills introduced by members of the Energy and Commerce Committee, and intends to support federal policymaking to maintain the US competitive edge in emerging technologies. The legislation also intends to identify and eliminate regulatory barriers for deployment of emerging technology while improving consumer protection and civil liberties for vulnerable communities.
In general, the bill requires the Department of Commerce (DOC), Federal Trade Commission (FTC) and Consumer Protection Safety Commission (CPTC) to conduct studies and submit reports on the impact of artificial intelligence and other innovative technologies on US businesses conducting interstate commerce - and also authorizes the agencies to combine studies where necessary for efficiency.
The nine individual bills that comprise the American COMPETE Act include:
The Generating Artificial Intelligence Network Security (GAINS) Act (H.R. 6950): Sponsored by Rep. McMorris Rodgers (R-WA), this bill requires the DOC to study and report on the impact of artificial intelligence, including machine learning, on US businesses conducting interstate commerce. Such study shall involve, among other things: (1) listing industry sectors that develop and use artificial intelligence and public-private partnerships focused on promoting the adoption and use of such technology; (2) establishing a list of federal agencies asserting jurisdiction over such industry sectors and entities and determining how these agencies are reducing barriers to business adoption and use of artificial intelligence; and (3) assessing risks and trends in the marketplace and supply chain of artificial intelligence. Commerce must report to Congress the results of such study and any recommendations to promote the adoption of artificial intelligence.
The State of Modern Application, Research, and Trends (SMART) of IoT Act (H.R. 2644): Sponsored by Rep. Robert Latta (R-OH), this bill requires the DOC to study the state of the internet-connected devices industry (commonly known as the Internet of Things or IoT) by: (1) ascertaining which federal agencies have jurisdiction over entities in the industry; (2) describing such jurisdiction and agency expertise; and (3) surveying the entities to better understand their interaction with the relevant federal agencies.
The Advancing Unmanned Delivery Services Act (H.R. 6943): Sponsored by Rep. Latta, this bill requires the DOC to study and report on the impact of unmanned delivery services on US businesses conducting interstate commerce. Such study shall involve, among other things: (1) listing industry sectors that develop and use unmanned delivery services, including autonomous vehicles, drones, and robots; (2) establishing a list of federal agencies asserting jurisdiction over such industry sectors; and (3) assessing risks and trends in the marketplace and supply chain of unmanned delivery services. Commerce must report to Congress the results of such study and any recommendations to promote the adoption of unmanned delivery services.
The Advancing Quantum Computing Act (H.R. 6919): Sponsored by Rep. Morgan Griffith (R-VA), this bill requires the DOC to study and report on the impact of quantum computing on US businesses conducting interstate commerce. Such study shall involve, among other things: (1) listing industry sectors that develop and use quantum computing and public-private partnerships focused on promoting the adoption and use of quantum computing; (2) establishing a list of federal agencies asserting jurisdiction over such industry sectors and entities; and (3) assessing risks and trends in the marketplace and supply chain of quantum computing. Commerce must report to Congress the results of such study and any recommendations to promote the adoption of quantum computing.
The Advancing IoT Manufacturing Act (H.R. 6939): Sponsored by Rep. Richard Hudson (R-NC), this bill requires the DOC to study and report on the impact of manufacturing on US businesses conducting interstate commerce. Such study shall involve, among other things: (1) outreach to manufacturers to review internet-connected devices and solutions used in the manufacturing industry and their impact on the manufacturing process; (2) establishing a list of federal agencies asserting jurisdiction over industry sectors that rely on manufacturing and internet-connected devices and solutions used in manufacturing; and (3) surveying the marketplace and supply chain of internet-connected devices used in manufacturing to assess and identify risks and trends in such marketplace and supply chain. Commerce must report to Congress the results of such study and any recommendations to promote the use of internet-connected devices and solutions in manufacturing.
The Advancing 3D Printing Act (H.R. 6928): Sponsored by Rep. Michael Burgess (R-TX), this bill requires the CPSC to study and report on the commercial impact of three-dimensional printing. Such study must involve, among other things: (1) listing industry sectors that develop and use three-dimensional printing and public-private partnerships focused on promoting the adoption and use of such technology; (2) establishing a list of federal agencies asserting jurisdiction over such industry sectors and entities; and (3) assessing risks and trends in the marketplace and supply chain of three-dimensional printing.
The Advancing New and Advanced Materials Act (H.R. 6927): Sponsored by Rep. Larry Bucshon (R-IN), this bill requires the DOC to study and report on the impact of new and advanced materials, including synthetically derived or enhanced natural properties, on US businesses conducting interstate commerce. Such study shall involve, among other things: (1) listing industry sectors that develop, use, or rely on new and advanced materials and reviewing uses and potential applications of such materials; (2) establishing a list of federal agencies asserting jurisdiction over such industry sectors; and (3) assessing risks and trends in relevant marketplaces and supply chains that impact new and advanced materials. Commerce must report to Congress the results of such study and any recommendations to promote the adoption of new and advanced materials.
The Advancing Blockchain Act (H.R. 6938): Sponsored by Rep. Brett Guthrie (R-KY), this bill requires the DOC to study and report on the impact of blockchain technology on US businesses conducting interstate commerce. Such study shall involve, among other things: (1) listing industry sectors that develop and use blockchain technology and public-private partnerships focused on promoting the adoption and use of such technology; (2) establishing a list of federal agencies asserting jurisdiction over such industry sectors and entities; and (3) assessing risks and trends in the marketplace and supply chain of blockchain technology. Commerce must report to Congress the results of such study and any recommendations to promote the adoption of blockchain technology.
The Countering Online Harms Act (H.R. 6937): Sponsored by Rep. Guthrie (R-KY), this bill requires the FTC to study and report on how artificial intelligence may be used to identify, remove, and take action to address online harms, including: (1) scams directed at older adults; (2) intentionally misleading content; (3) disinformation campaigns to influence elections; and (3) content furthering other illegal activity such as the sale of opioids, child sexual exploitation, terrorism, and the sale of counterfeit products.
Agriculture & Fisheries
Direct Agricultural Support: The bill provides $11.2 billion to the Department of Agriculture to respond to the impact of COVID-19 by providing direct support to agricultural producers, growers, and processors, including farmers, growers, distributors, and more. Of the total amount, $1 billion will be used to make payments to contract growers of livestock and poultry to cover not more than 80 percent of revenue losses for January 1, 2020 through the date of enactment of the bill. In addition, $20 million will be used to improve and maintain animal disease prevention and response capacity. $200 million is to provide relief to timber harvesting and timber hauling businesses that have, as a result of the COVID-19 pandemic, experienced a loss of not less than 10 percent in gross revenue between January 1 and December 1, 2020 (as compared to the gross revenue in 2019).
Review of COVID-19 Impacts: The bill requires the Agriculture Secretary to review the actions necessary to improve COVID-19-related food purchasing and the distribution of purchased commodities.
Agricultural and Rural Development Programs: The bill appropriates an additional $100 million for Specialty Crop Block Grants, $100 million for the Local Agriculture Market Program, $75 million for the Gus Schumacher Nutrition Incentive Program, and $75 million for the Farming Opportunities Training and Outreach Program.
Research: The bill appropriates $20 million for FY 2021, and each fiscal year thereafter, for the Agricultural Research Service to address gaps in nutrition research at the critical intersections of responsive agriculture, quality food production, and human nutrition and health.
Dairy Relief: The bill requires the Agriculture Secretary to provide supplemental dairy margin coverage payments to certain dairy operations whenever the average dairy production margin for a month is less than the coverage level threshold for that dairy operation. In addition, the bill requires the Secretary to establish a dairy donation program to facilitate the timely donation of certain dairy products and prevent and minimize food waste. Partnerships, consisting of a dairy organization and an eligible distributor, will be able to receive reimbursement (at a set rate) for donation and distribution of dairy products. The bill appropriates $400 million for this program.
Trust for Benefit of Unpaid Cash Sellers of Livestock: The bill requires livestock dealers to hold livestock in trust for the benefit of unpaid sellers, such as farmers and ranchers, until payment has been made in full.
Grants for Improvements to Meat and Poultry Facilities: The bill directs the Agriculture Secretary to make grants up to $200,000 to meat and poultry slaughter and processing facilities to assist them with respect to costs incurred in making improvements and carrying out other planning activities necessary to obtain a federal grant of inspection or to operate as a state-inspected facility. The grant can be used for modernizing or expanding existing facilities, modernizing equipment, complying with packaging and labeling requirements and safety requirements, developing processes to ensure food safety, and other purposes deemed by the Secretary. The bill appropriates $60 million for FY 2021 to 2023 for this grant program.
Farm Stress Programs: The bill directs the Agriculture Secretary to make grants to state departments of agriculture to expand or sustain stress assistance programs for farmers, ranchers, or other agriculture-related occupations. The grants can be up to $500,000 for each state. The bill appropriates $28 million for this purpose.
Fisheries Disaster Assistance: The bill appropriates $300 million for Fisheries Disaster Assistance, which includes expenses to provide timely assistance to Tribal, subsistence, ceremonial, commercial, aquaculture, processor, and charter fishery participants affected by COVID-19. This assistance can be in the form of direct relief payments.
© Arnold & Porter Kaye Scholer LLP 2020 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.