What Does Federal Health Look Like in 2021?

Federal Health is a continually growing area in our industry and if you are not currently keeping tabs on it, you should be. In this blog post, we’re covering what’s to come in FY 2021, including appropriation funding packages, the FY 2021 National Defense Authorization Act, expanded COVID stimulus, and the topic that is on everyone’s mind – how Federal Health will be impacted by the upcoming election. Our in-house Federal Health expert, Tris Carpenter, provides analysis on the political and economic considerations impacting our health agencies  – VA, HHS, and DHA  – as we head into the next fiscal year.

Minibus/Appropriation Funding Packages

What does Federal Health funding look like in FY 2021? We know that the House has passed 10 out of 12 spending bills on the floor, to date. However, they are currently not considering the Homeland Security spending measure and bill that funds parts of the legislative branch. We also know that the House approved a $1.3 trillion spending package in late July, including $210 billion in emergency money to help federal agencies fight the COVID-19 health emergency. Earlier this year, the House approved a smaller four-bill, a $259.5 billion bundle in early July, to fund the departments of State, Interior, Agriculture, and Veterans Affairs.

Legislation would fund the vast majority of the Federal government in FY 2021, boosting Health IT budgets at DoD, Health and Human Services, and Veterans Affairs. The health bill includes spending increases on COVID-19-related issues, including $5 billion in emergency NIH spending and $9 billion in emergency CDC funding. The package also includes significant spending for state and local public health departments, public health prevention, medical research, and infrastructure. There is a focus on modernizing public health data surveillance and analytics, as well as increases for telehealth and rural hospitals.

Here’s a breakdown of the funds allocated under the new funding packages:

• $694.6 billion in new discretionary spending authority for DoD, an increase of $1.3 billion above the FY 2020 enacted level
• $241 billion in funds for VA, including $105 billion in discretionary spending in FY 2021 (13% over current levels)
• $96.4 billion in discretionary funds for HHS, a $1.5 billion increase above the FY 2020 enacted level
• $1 billion for the Technology Modernization Fund (TMF) to help Federal agencies improve and modernize their Information Technology systems

Overall, this funding only represents an opening offer from the House in negotiations to avoid a government shutdown at the end of FY 2020. However, the appropriations process is stalled in the Senate, primarily due to an impasse over how to deliver another tranche of pandemic relief.

FY 2021 National Defense Authorization Act

Previous National Defense Authorization Acts (NDAA) have implemented major reform of the Military Health System (MHS) to increase bandwidth and focus on readiness to support the National Defense Strategy. The Defense Health Agency (DHA) now manages all military Medical Treatment Facilities (MTFs) in the continental United States and the purchased care system.

In FY 2021, the proposed NDAA provides for a total of $740.5 billion for national defense programs, including $636.4 billion for DoD, $25.9 billion for national security programs within the Department of Energy, and $69 billion for Overseas Contingency Operations. The FY 2021 NDAA also prioritizes that DoD will concentrate on improving medical and medical force readiness, aligned to National Defense Strategy (NDS) priorities.

The proposed NDAA will focus on three key areas that are at the forefront of the Federal Health landscape right now. Here’s what we found:

1. Viral Threats: Address emerging viral threats and the need for real-time forecasting and modeling techniques in response to emerging public health and national security threats. It also encourages DoD to leverage emerging infectious disease forecasting and modeling methods, and data developed by university and private partners.
2. Telehealth: Encourages MHS to implement telehealth and virtual health technologies using a flexible acquisition process. Importantly, this process emphasizes competition, enabling improvements to provider workflows, improving access and care for beneficiaries, and lowering overall costs.
3. Mental Health: Addresses mental health and suicide prevention, including authorizing a GAO study on delivery of federal, state, and private mental health services to reserve service members.

The proposed NDAA also extends the enhanced appointment and compensation authority for civilian personnel for the care and treatment of wounded members of the Armed Forces through 2025. It is important to note that the Senate voted in late July to pass their $740.5 billion defense policy bill for FY 2021. However, the House also approved its own version of the NDAA. Both chambers are now reconciling their bills to try and craft a final deal!

Expanded COVID Stimulus

There are three major economic stimulus bills that have been introduced in 2020: the enacted Coronavirus Aid, Relief, and Economic Security (CARES) Act, the proposed Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES) Act, and the proposed Health, Economic Assistance, Liability Protections and Schools Act (HEALS) Act. Here’s a look at the funding and provisions of these three COVID-19 stimulus packages.

CARES Act

In early 2020, Congress appropriated funds through the CARES Act and other supplemental legislation. To date, there are more than 51,000 COVID-19 related contracts. Here’s what we found in terms of funding:

• The total obligated amount of COVID-19 related contracts is $22.7 billion
• Top organizations utilizing this funding include HHS ($10.2 billion); DHS ($2.4 billion); and VA ($2.2 billion)
• Small business account for 25% of total obligations

HEROES Act

The House introduced the $3.5 trillion HEROES Act in May 2020. While there is not a specific expansion of telehealth services or Medicare telehealth policies, here’s what we found in terms of funding:

• Includes $130 million for CDC-wide activities and program support, including public health data surveillance and analytics infrastructure modernization
• Prohibits health insurance providers from imposing cost-sharing measures for necessary medical treatments related to COVID-19, including telehealth services
• Allocates $500 million to the Indian Health Services for direct health and telehealth services
• Provides $4.6 billion to the Public Health and Social Services Emergency Fund, including platform-based technologies with U.S.-based manufacturing capabilities, workforce modernization, telehealth access, and infrastructure

The HEROES Act also would authorize the Department of Veterans Affairs to make telehealth capabilities available to homeless veterans.

HEALS Act

In July 2020, the Senate introduced the $1 trillion HEALS Act. Here’s a closer look at the provisions of this proposed stimulus package:

• Allows HHS to continue the expansion of telehealth services through the end of 2021
• Provides Federally qualified health centers and rural health clinics with limited continuation of their CARES Act-authorized telehealth services for five years after the public health emergency ends
• Calls for a Medicare Payment Advisory Commission (MedPAC) report on the use of telehealth during the pandemic. This is required by July 2021 to inform new policies before the bill expires in 2021
• Allows employers to offer telehealth as an excepted benefit to employees who are neither full-time nor eligible for the employer’s coverage
• Protects human genetic information collected during COVID-19 testing by prohibiting patient information from being used for anything other than diagnostic and testing purposes, unless the patient consents

Both the proposed HEROES Act and HEALS Act are widely divergent and discussions to reconcile these two bills in Congress have not led to substantial progress to date!

Election/Transition Impacts

Everyone is wondering how Federal Health will be affected by the upcoming election. Given partisan divides in an election year, its anticipated lawmakers are likely on track to pass a short-term spending fix to keep the government open past Election Day. It’s expected that the outcome of the election may influence whether spending bills progress or pause until next year, once control of the House, Senate, and White House are decided. Regardless, the 2020 presidential election will influence the future of healthcare and health IT, no matter which of the two candidates claims victory. We can be certain that healthcare, dominated by the COVID-19 pandemic response, is poised once again to be the key issue in the upcoming elections.

It’s also safe to assume that there is likely a minimal chance that Congress will enact any major healthcare legislation before the November election or during a potential administration transition.

Depending on the outcome of the election, direct healthcare impacts may range from payments to policies, to prescriptions, and the ongoing rising cost of care. Potential scenarios range from expanding the Affordable Care Act (ACA) exchanges and enacting a public option to outright repeal and replace of the ACA. It’s possible that there will be focus on the implementation of a nationwide COVID-19 testing campaign or continued focus on rapid development and approval of a vaccine.

Final Thoughts

Regardless of the election in November, it’s likely safe to assume that health IT and modernization initiatives will continue forward with increased funding, regardless of who controls the House, Senate, and White House. Technology innovation initiatives started under the previous administration have continued and, for the most part, expanded under the current administration. Strong bipartisan support exists for emerging technologies, virtualization, process automation, artificial intelligence, and legacy system modernization initiatives.