New COVID-19 Stimulus Relief Package Signed into Law

By , Published On: January 5, 2021

On December 27, 2020, the Consolidated Appropriations Act, 2021, Pub. L. No. 116-260 (“the Act”), became law. The Act is a $2.3 trillion spending bill that combines $900 billion for stimulus relief in response to the COVID-19 pandemic with a $1.4 trillion omnibus spending bill for the upcoming 2021 federal fiscal year. The bill passed Congress on December 21, 2020; President Trump criticized it strongly and threatened to veto it, but ultimately signed it into law almost a week later.

Division M of the Act includes the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, which includes a variety of economic stimulus measures and support for the health care sector to assist in the fight against COVID-19. The Act also provides for a varied assortment of aid for community health centers and Head Start grantees.

Highlights from the Act’s key provisions of interest to our clients are provided below.

Funding Extension for Community Health Centers

Perhaps most critically for the community health center community, Congress appropriated continuation funding (temporarily fixing the “funding cliff”) for the community health center program in Division BB, Section 301 of the Act. The funding had previously expired on December 18, 2020. The law provided for $4 billion per year for each of the fiscal years (FY) 2019 through FY2023 (effectively, a continuation of the present funding level) for community health centers. See Division BB, Title III, §301(a).

The same provision similarly provided funding extensions for the National Health Services Corps ($310 million per year) and the Teaching Health Centers program ($126.5 million), through FY2023. These extensions also represent continuations of existing funding levels. See Division BB, Title III, §301(b).

Clarifications Regarding Provider Relief Fund

The Act, at Div. M, Title III, adds several important clarifications regarding the use of funding to health care providers under the U.S. Department of Health and Human Services (HHS)-administered Provider Relief Fund (PRF). The new provisions should be beneficial to health centers and other health care providers seeking to use PRF funds to cover lost revenues due to COVID-19, and they may also hasten HHS’ distribution of remaining PRF funds to providers.

The Coronavirus Aid, Relief and Economic Security (CARES) Act of 2020, Pub. L. No. 116-136, and the Paycheck Protection Program and Health Care Enhancement Act of 2020, Pub. L. No. 116-139, collectively authorized the appropriation of $175 billion in assistance for HHS to distribute to health care providers via the PRF “to prevent, prepare for, and respond to coronavirus.” Specifically, per terms and conditions stated in the CARES Act, health care providers were allowed to use the PRF funds to cover “health care related expenses or lost revenues that are attributable to coronavirus.”[1] Most federally qualified health centers (FQHCs) have received PRF funds under one or more of several “distributions” made by HHS between March 2020 and December 2020.

HHS issued copious, and sometimes conflicting, guidance over the course of 2020 concerning the use of PRF funds. One important focus of the guidance involved the calculation of “lost revenues.” In guidance issued in June 2020, HHS advised that providers may use “any reasonable method” for estimating lost revenues, including either a year-over-year comparison or a comparison of budgeted with actual revenues.[2] HHS subsequently, in the fall of 2020, issued narrower guidance, requiring a year-over-year comparison.[3] The Act requires HHS to revert to the more generous interpretation of “lost revenues,” specifying that health care providers, for purposes of PRF funds, may calculate lost revenues using the guidance that HHS issued in June 2020 – i.e., a comparison of budgeted to actual revenues is permissible. See Division M, Title III.

The Act also requires HHS to allocate at least 85% of any currently unobligated PRF funds, as well as any funds recovered from PRF recipients, to cover financial losses and changes in operating revenues occurring in the second half of calendar year 2020 or the first quarter of 2021. Id.

Finally, the Act appropriates an additional $3 billion to the PRF. Id.

Other Provisions Relevant to Community Health Centers

The Act includes various other provisions of interest to community health centers, including the following:

  1. FQHC Healthcare Workforce

The Act, at Div. H, Title II, appropriates $5 million under the Public Health Service Act for grants that establish or expand optional community-based nurse practitioner fellowship programs that are either accredited or in the accreditation process, with a specific preference for practicing postgraduate, nurse practitioners in FQHCs. See Division H, Title II.

  1. Medicare Reimbursement to FQHCs for Hospice Services

Division CC, Sec. 132 of the Act amends the section of the Social Security Act relating to the Medicare FQHC prospective payment system (Social Security Act § 1834(o)) to provide that where a physician employed by or under contract with an FQHC function as “attending physician” for a hospice patient, the FQHC may be paid under the Medicare FQHC PPS methodology for the services. See Division CC, Title I, §132(1).

Under prior law, services rendered by a hospice “attending physician” were considered to be excluded from the FQHC benefit and the associated cost-related Medicare FQHC PPS payment, such that when FQHC physicians served in this role, the services could only be billed separately, if at all, to Medicare Part B under the physician services benefit.

This provision will benefit FQHCs serving a significant Medicare population, enabling them to continue to provide care thereunder to established patients with terminal illnesses.

Head Start Funding

The Act appropriated almost $16 billion for carrying out the Child Care and Development Block Grant. See Division H, Title II; see also Division M, Title III. In addition, a general, snapshot of payments under the Head Start Act, including for Early Head Start-Child Care Partnerships is provided as follows: (1) $123 million for a cost of living adjustment, (2) $25 million for the Secretary to supplement activities under the Designation Renewal System (which is not included in the calculation of the “base grant” in subsequent fiscal years), (3) $10 million for migrant and seasonal Head Start programs, in addition to funds previously made available, for quality improvement purposes, (4) $4 million for the purpose of maintaining the Tribal Colleges and Universities Head Start Partnership Program, and (5) $21 million to supplement funding otherwise available for research, evaluation, and Federal administrative costs. See Division H, Title II, §(1-5). An additional amount of $250 million was also appropriated for Children and Families Services Programs in order to prevent, prepare for, and respond to COVID-19 for payments under the Head Start Act. See Division M, Title III.

Higher Education Funding

The Act appropriated approximately $22.7 billion to the Higher Education Emergency Relief Fund (“HEERF”). See Division M, Title III, §314(a)(1-4). The funds are designed to do the following: (1) defray expenses associated with COVID-19, (2) carry out student support activities authorized by the Higher Education Act that address needs related to COVID-19, or (3) provide financial aid grants to students (including students exclusively enrolled in distance education), which may be used for any component of the student’s cost of attendance or for emergency costs that arise due to COVID-19. See Division M, Title III, §314(c)(1-3).

Funding for COVID-19 Vaccines

The Act funded the distribution of the COVID-19 vaccine by providing $8.75 billion, which will remain available until September 30, 2024, to prevent, prepare for, and respond to COVID-19, both domestically and internationally. See Division M, Title III. The Act also appropriated $22.9 billion to the HHS Public Health and Social Services Emergency fund, specifically for COVID-19 vaccine related costs, including “the purchase of vaccines, therapeutics, diagnostics, necessary medical supplies, as well as medical surge capacity.” Id.

New PPP Authority

The Act appropriated an additional $284.50 billion for PPP and PPP second draw loans. See Division N, Title III, §323(d)(1)(A). There were several set-asides, including, at least $15 billion for guaranteeing loans made by community financial institutions, and a separate $15 billion for guaranteeing loans made by insured depository institutions, credit unions, or institutions of the Farm Credit System chartered under the Farm Credit Act of 1971 with consolidated assets of less than $10 billion. See Division N, Title III, §323(d)(1)(A)(i-v).

If you have questions about how the Act could impact your organization moving forward, please reach out to Ted Waters at etwaters@ftlf.com or Susannah Gopalan at sgopalan@ftlf.com for additional information.


[1] CARES Act, Div. B, Tit. VIII.

[2] HHS, CARES Act Provider Relief Fund Frequently Asked Questions, p. 10.

[3] HHS, Post-Payment Notice of Reporting Requirements (November 2020), p. 1.