On March 27, 2020, President Trump signed Public Law 116-136, the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), the federal government's latest and most ambitious response to the COVID-19 crisis. As yet, the CARES Act has chiefly drawn attention because it allots the largest economic aid package in United States history, as described in this Client Alert. Congress includes within the Act reforms of several U.S. Food and Drug Administration (FDA) and other Department of Health and Human Services (HHS) oversight authorities, payment processes, and other requirements relating to medical products and healthcare services. Below we describe several key changes related to drug and device manufacture, a support program for national emergencies that advances Medicare payments to cash-strained providers, and new delivery and payment arrangements for telehealth services.

1. Shift in Drug Review Priorities

The CARES Act amends Federal Food, Drug, and Cosmetic Act (FDCA) Section 506C(g), so as to more firmly mandate that the FDA deem high-priority, and expedite, application reviews and inspections for drugs that are life-supporting, life-sustaining, intended for emergency use or surgeries, and critical for public health emergency response. Congress thereby seeks to avert discontinuances and manufacturing interruptions that could disrupt the supply of needed drugs in future crises.

2. New Reporting and Planning Duties for Drug and Device Manufacturers

The CARES Act amends FDCA Sections 506C and 506J, so that manufacturers of drugs and devices have new reporting obligations relating to events that may disrupt supplies of drugs, active pharmaceutical ingredients, and medical devices that are deemed critical during a public health emergency.

Most notably, the Act establishes a new framework for medical device manufacturer reporting for medical devices that are critical to public health during a public health emergency and for other medical devices about which HHS determines that such reporting is needed. The Act permits the FDA to expedite inspections and the review of device applications that may mitigate or prevent the potential device shortages. Drug and device manufacturers will also be required develop risk management plans to address supply chain risks.

The Act also:

• Requires manufacturers of drugs registered under FDCA Section 510(j) to file annual reports to the FDA the amount of product manufactured for commercial distribution. This provision affords the Secretary of HHS the opportunity to exempt from the reporting requirement categories of biological products regulated under Section 351 of the Public Health Service Act.
• Authorizes HHS to mandate that manufacturers submit to the FDA information about a device or device component shortage, if HHS determines this information is needed during, or in advance of, a public health emergency.

3. Overhaul of Over-The-Counter (OTC) Drug Review

Drawing on earlier proposals before Congress, the CARES Act amends FDCA Section 505 in order to streamline OTC monograph review for drugs that do not require a new drug application. With regard to such drugs, the Act substitutes an "administrative order" process in place of the notice-and-comment rulemaking process for OTC drugs that has been followed for decades. Stakeholders and legislators have criticized the notice-and-comment rulemaking process for being too burdensome and drawn-out for use in OTC reviews.

The Act also:

• Grants an 18-month period of marketing exclusivity for OTC drug products with new active ingredients or when administrative orders provide for changes in conditions of use based on new clinical studies. The new exclusivity period is meant to afford pharmaceutical manufacturers greater incentive for research and development of novel OTC drugs.
• Establishes an OTC drug user fee program similar to those already in place for prescription drugs and medical devices. The proceeds from the fee program will fund the FDA's OTC monograph oversight and approval activities.
• Plainly establishes for the first time that failure to comply with an applicable monograph renders an OTC drug "misbranded" and therefore not legal for sale in the United States.

4. Expanded Accelerated and Advanced Payments Program

The Accelerated and Advance Payments Program (AAPP) directs advance payments as a kind of bridge funding for Medicare providers cash-strained in the context of national emergencies, like COVID-19. The AAPP CARES Act expands AAPP payments to a broader group of Medicare providers. Non-hospital providers, including physician practices and ASCs, will be able request from AAPP up to a 100 percent advance on their Medicare billings based on their Medicare payments over a three-month lookback period.

Providers submit a basic form to their Medicare Administrative Contractor, which states the reason why the provider seeks an advance (e.g., "to avoid risks relating to COVID-19, this facility currently offers only very limited services…"). The Centers for Medicare & Medicaid Services (CMS) has posted a fact sheet about newly expanded AAPP, which includes a step-by-step guide to filing an AAPP request. The fact sheet is available online at: https://www.cms.gov/files/document/Accelerated-and-Advanced-Payments-Fact-Sheet.pdf.

CMS anticipates MACs issuing payment to qualified providers within seven calendar days. AAPP payments are subject to repayment beginning 120 days after the payment is received. CMS states that Medicare Part B providers will have up to 210 days from the date of the AAPP payment was made for the reconciliation process to begin. New claims submitted by the providers will then automatically be offset to cover the AAPP payment.

5. Telehealth Reforms for Public Emergencies

Many provisions of the CARES Act affect rework federal requirements related to healthcare delivery and payment through the COVID-19 crisis and beyond. Telehealth services furnished in the context of public health emergencies—as defined under Social Security Act Section 1135(g)(1)—for example, will be greatly affected by the following reforms.

The Cares Act removes a payment requirement that was part of the telehealth waiver established by the Coronavirus Preparedness and Response Supplement Appropriations Act of 2020, which the President signed into law on March 6, 2020. Medicare, Medicaid, and the Children's Health Insurance Program will no longer require that beneficiary have a prior relationship with a provider sometime during the previous three years as prerequisite to telehealth reimbursement in the context of public health emergencies.

The Cares Act also amends the following key provisions of the Social Security Act:

• Section 1834(m) is amended so that, in the context of public health emergencies, Medicare may pay for telehealth services furnished to an off-site beneficiary by a Federally Qualified Health Center or a Rural Health Clinic. HHS is charged with developing and implementing a composite rate payment method that would be similar to that used in payment for comparable services under the Medicare Physician Fee Schedule.
• Section 1395rr(b)(3)(B) is amended so that, in the context of public health emergencies, the Secretary of HHS may waive the requirement that end-stage renal disease (ESRD) patients can receive monthly clinical assessments via telehealth under their ESRD benefit only after they received an in-person face-to-face clinical assessment.
• Section 1395f(a)(7)(D)(i) is amended so that, in the context of public health emergencies, hospice physicians or nurse practitioners may conduct a face-to-face encounter via telehealth for purposes of determining an individual's continued eligibility for the hospice program.

Finally, the Cares Act mandates that the Secretary assess ways to encourage the effective use in home healthcare of telecommunications systems, such as remote patient monitoring and other communications or monitoring systems consistent with the plan of care for the individual, in the context of public health emergencies. This provision and the intense pressures bearing down on Congress and HHS for better care delivery and payment options during the current crisis, promise more growth and change for telehealth practice.