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Senate Infrastructure Bill Has Both Direct, Indirect Impact on U.S. Health Care System, Leavitt Partners Analysis Shows

President Biden and Senator Majority Leader Schumer have been pursuing a two-track strategy to advance major policy objectives in 2021. The first track, the bipartisan “Infrastructure Investment and Jobs Act,” passed the Senate 69-30. Attention now turns to the House, where Speaker Pelosi has indicated she will not consider the bill until the Senate passes a Democratic-only reconciliation bill – which is the second track in Democrats’ policy strategy. While the Senate vote reflects a major bipartisan milestone, the bill still faces a trip through the House of Representatives before it gets to President Biden’s desk.

Although the bill focuses on traditional or “hard” infrastructure, there are both direct and indirect impacts on U.S. health care. The bill includes money for broadband improvements that will directly improve the infrastructure needed for telehealth and digital health initiatives. It also levies a new “refund” on certain Medicare Part B drugs and changes some COVID-19 related tax programs.

Key Health Care Measures in Proposed Bill (updated bill text here)

  • Contains tens of billions of dollars for broadband infrastructure improvements (Division F). These funds would expand access to affordable and reliable broadband service, which is expected to help improve the reach of telehealth services.
  • Includes “Buy America” directives to ensure that public infrastructure projects and projects using federal funds use American-made products and materials. This preference extends to the purchase and use of American-made products and materials generally, including government contracts for the purchase of personal protective equipment (PPE) (Division G, Title IX).
  • Hits pause on implementing the “HHS Rebate Rule” – the 2020 final rule to eliminate an anti-kickback statute safe harbor protection for prescription drug rebates (Division I).
  • Creates a new manufacturer “refund” for certain Medicare Part B drugs, starting in 2023, for single-use or single-dose products that were discarded (Division I).
  • Extends or ends various COVID-19-related programs intended to help families and businesses. Under this bill, the employee retention tax credit (which is currently set to expire on December 31, 2021) would end on September 30, 2021. The bill rescinds $13.5 billion in unobligated funds made available for the Small Business Administration (SBA) Disaster Loan Program Account, as well as $17.5 billion made available for targeted Economic Injury Disaster Loan (EIDL) advances through the SBA (Division H).
  • Makes investments in drinking water and wastewater infrastructure (Division E).

As the bill would deliver billions of dollars to states, the initiative also has an indirect effect on state budgets as they make Medicaid and CHIP funding decisions relative to other important priorities. It is too early to articulate how this will affect state revenues, but this will be important to track closely. Note that some of the early COVID-19 relief funds disbursed to states in 2020 had a significant impact on overall revenue calculations, so it should be expected that this too could change the budget calculus.

As for the second track, the debate on the Fiscal Year 2022 Budget Resolution to advance a $3.5 trillion reconciliation bill is officially under way. Details of the reconciliation bill will be the subject of intense negotiations among President Biden and Congressional Democrats, but the bill could include policy related to making the ACA premium credits permanent; adding a dental, vision, and hearing benefit to Medicare; expanding access to home- and community-based services; introducing new rules on drug pricing; and expanding Medicaid coverage or Medicaid-like coverage in non-expansion states, among other policies.

Look for the legislative process surrounding Tracks 1 and 2 to continue into the fall and possibly winter. Our colleagues at Leavitt Partners, who recently joined the HMA enterprise, are following these and other health care priorities through D.C. Direct, a subscription federal policy intelligence service with weekly webinars and analyses that help you focus your attention on the federal health policy issues that matter most. More information on D.C. Direct can be found here.