Senate Passes Stimulus Package with Relief for Clinical Laboratories

On March 25, 2020, the Senate passed a third piece of legislation to respond to the toll COVID-19 has taken on the U.S. economy. The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides $2 trillion to stimulate the economy and respond to the COVID-19 pandemic. Expanded small business loans, assistance to hospitals, funding for public health agencies, and direct payments to lower and middle-income Americans are just some of the provisions included in this sweeping bill. The House is expected to consider the bill by unanimous consent on Friday morning, March 27, 2020.

Below is a summary of provisions that could affect NILA members, both as laboratories and as small to medium-sized business owners.

Laboratory and Provider Provisions

Removal of Medicare Sequester

Effective May 1, 2020, through December 31, 2020, the CARES act temporarily lifts the Medicare sequester, which reduces payments to clinical laboratories (and other providers) by 2%. The Medicare sequester would then be extended by one year beyond current law. Therefore, you should see a 2% increase in your “net” Medicare Clinical Laboratory Fee Schedule (CLFS) payments effective May 1 through December 31, 2020, even though the CLFS rates remain the same.

PAMA Provisions

The Medicare CLFS payment rates for 2021 are frozen. Therefore, the 15% cut to the CLFS set to go into effect on January 1, 2021, is reduced to 0%. Additionally, the CARES Act includes a one-year delay in reporting private payor rates for clinical diagnostic laboratory tests. Late last year, the Laboratory Access to Beneficiaries (LAB) Act implemented a one-year delay on private payor rate reporting through December 31, 2020. The CARES Act extends this reporting delay even further through December 31, 2021.

Mandatory Diagnostic Result Reporting

Until the end of the public health emergency, every laboratory that performs or analyzes a test that is intended to detect SARS-CoV-2, or to diagnose a possible case of COVID-19, must report the results to the Secretary of Health and Human Services. The format, timing, and frequency of reporting will be determined by the Secretary through regulations that are not subject to regular rulemaking procedures.

Payment for COVID-19 Tests

The Families First Coronavirus Response Act, a supplemental bill that passed on March 18, 2020, required coverage of testing for COVID-19. The bill required public and private insurers to provide coverage for tests and not to impose any cost sharing requirements to patients. This originally covered only in vitro diagnostic products approved or cleared by the FDA. As the pandemic has evolved, FDA released unprecedented guidance to authorize states to review and approve COVID-19 tests to expand the availability of tests. The CARES Act expands the insurance coverage provision to include in vitro diagnostic products approved by states.

Price Transparency for COVID-19 Tests

For the duration of the public health emergency, providers of diagnostic tests for COVID-19, including clinical laboratories, must publish the cash price on the public internet site of each provider. A civil monetary penalty, not to exceed $300 per day, will be imposed on providers that do not comply or have not completed corrective action. Lawmakers are concerned about the efforts to make COVID-19 testing free to Americans and the move to require providers to publish a cash price is meant to keep providers from raising prices once insurers cover them at no cost to the patient.

Requires the Strategic National Stockpile to Include Diagnostics

The legislation adds language to the Strategic National Stockpile authority to include medical devices and diagnostic tests (including supplies, such as specimen collection swabs) in the stockpile to help avoid future shortages.

Small Business Provisions

Small Business Loans and Forgiveness Grants

Businesses with up to 500 full or part-time employees are eligible to receive loans from the Small Business Administration (SBA) to cover payroll, employee salaries, and certain other costs incurred between February 15 and June 30, up to a maximum of $10 million. These loans are subject to forgiveness equal to the amount spent by the borrower during an 8-week period after the origination date of the loan, subject to a reduction based on the reduction in number of employees or reduction of wages paid, in excess of 25%. The SBA will also pay the principal, interest, and any associated fees on certain existing SBA loans for 6 months.

Other Business Provisions

Economic Injury Disaster Loans (EIDLs) for Small, Medium, and Large Businesses

The bill expands eligibility for access to Economic Injury Disaster Loans (EIDLs), which can supply up to $2 million in disaster assistance for small and medium to large businesses located in a disaster declared county. The bill also creates a grant program allowing eligible entities that apply for an EIDL loan due to COVID-19 to request an advance of up to $10,000, to be distributed within 3 days, that is not required to be repaid, even if the loan is subsequently denied. Advance EIDL payments can be used to maintain payroll, meet increased costs to obtain materials, pay rent or mortgage obligations, or repay other obligations that cannot be met due to revenue losses.

Employee Retention Credit

A refundable payroll tax credit is authorized for 50% of wages paid by employers during the crisis for employers whose operations were fully or partially suspended due to a COVID-19 related shutdown or whose gross receipts declined by more than 50% when compared to the same quarter in the prior year. The credit is based on qualified wages paid to the employee. For employers with greater than 100 full-time employees, qualified wages are wages paid to employees when they are not providing services due to the COVID-19-related circumstances described above. For eligible employers with 100 or fewer full-time employees, all employee wages qualify for the credit, whether the employer is open for business or subject to a shut-down order. The credit is provided for the first $10,000 of compensation, including health benefits, paid to an eligible employee.

Assistance for Mid to Large Sized Businesses

The Treasury Department will provide financing to banks and other lenders that make direct loans to businesses with between 500-10,000 employees with an annualized interest rate of no more than 2% and principal and interest obligations not due for at least six months. To be eligible, the business must:

  • Certify that the funds will be used to retain at least 90% of its workforce at full compensation and benefits until September 30, 2020;

  • Certify that the recipient intends to restore at least 90% of the recipient’s workforce that was in place on February 1, 2020;

  • Restore compensation and benefits to workers no later than 4 months after the termination of the public health emergency; and

  • Meet other requirements relating to stock buy backs, dividends, and job outsourcing.

Unemployment and Rebate Provisions

Pandemic Unemployment Assistance

Individuals otherwise not eligible for unemployment benefits (e.g., self-employed, independent contractors, and others) are eligible for benefits through December 31, 2020, if unable to work as a direct result of the coronavirus public health emergency. Eligible individuals will receive an additional $600/week payment for up to four months and up to an additional 13 weeks of unemployment through December 31, 2020, for those unemployed after state unemployment benefits run out.

2020 Recovery Rebates

All U.S. non-dependent residents with adjusted gross income up to $75,000 ($150,000 for joint filers) are eligible for $1,200 per individual and $500 per child, phasing out completely at adjusted gross income of $99,000 ($198,000 for joint filers).

View a copy of the complete Coronavirus Aid, Relief, and Economic Security (CARES) Act here.

NILA will update you as new developments occur.