COVID-19 Policy Update (March 24, 2020) - Government Measures

Senate Closes in on Bipartisan Phase 3 Deal

Congressional negotiations to pass Phase 3 of the emergency economic relief package continued throughout the day on Tuesday, following Monday's failed procedural measure to set up a vote on the package. While the Senate failed to meet the self-imposed deadline for passage outlined by Treasury Secretary Mnuchin and Senate Majority Leader McConnell (R-KY), a number of Senate leaders have since indicated that there has been bipartisan progress, despite members' frustration with their colleagues across the aisle.

While a Phase 3 agreement has yet to materialize, a bipartisan deal is imminent. As federal, state and local governments continue to escalate their responses to the pandemic, the latest actions and developments may be found below. Akin Gump will continue to provide regular policy developments related to COVID-19.

Summary of Key Provisions in the Revised Senate Proposal

As noted in the last night's summary, key provisions of the Phase 3 Senate proposal thus far are outlined below. Please note that these provisions are subject to change as part of the ongoing negotiations.

Health Provisions

The revised Senate Republican bill retains key provisions sought by health care providers and other stakeholders, including:

Relaxation of regulatory requirements for post-acute care providers, including inpatient rehabilitation hospitals, long-term care hospitals and home health agencies.
Increased payment for durable medical equipment for the remainder of 2020.
Telehealth flexibility for kidney dialysis providers.

These provisions were not included in the latest House Democratic bill.

The revised Senate Republican bill also includes a new subtitle to establish a review program at the Food and Drug Administration (FDA) for over-the-counter medications. However, it no longer includes proposals to establish new coding and coverage processes for novel treatments.

Stakeholders continue to seek Senate inclusion of favored provisions from the House Democratic bill in a compromise agreement, including:

Subsidies for employer-sponsored COBRA coverage.
A risk corridor programs for Medicare Advantage plan.
Increased flexibility to states in extending current Medicaid waivers and increasing federal matching rates.
A prohibition on the Administration finalizing the Medicaid Fiscal Accountability Regulation (MFAR) proposed rule.
Most notably, up to $100 billion in grant payments to health care providers and suppliers to respond to the COVID-19 outbreak and to reimburse for lost revenues attributable to the outbreak.

Tax Provisions

Would grant a one-time tax rebate check of $1,200 per individual and $500 per child, with the amounts beginning to reduce at annual incomes of $75,000 for individuals, $112,500 for head of households and $150,000 for married couples. Eligibility for checks will be based on 2018 and 2019 returns.
Would waive the 10 percent early withdrawal penalty for distributions up to $100,000 from qualified retirement accounts for Coronavirus-related purposes. Income attributable to such distributions would be subject to tax over three years. There is also additional flexibility for loans from certain retirement plans for Coronavirus-related relief.
Would waive the required minimum distribution rules for certain defined contribution plans and IRAs for calendar year 2020.
Would allow filers to deduct up to $300 of cash contributions to charitable organizations in 2020, whether filers itemize deductions or not.
For individuals, the 50 percent of adjusted gross income limitation is suspended for 2020. For corporations, the 10 percent limitation is increased to 25 percent of taxable income. The provision also increases the limitation on deductions for contributions of food inventory from 15 percent to 25 percent.
Would allow employers and self-employed individuals to defer payment of the employer share of the Social Security tax over the following two years, with half of the amount required to be paid by December 31, 2021 and the other half by December 31, 2022.
Would provide that a loss from 2018, 2019 or 2020 can be carried back five years and also temporarily removes the taxable income limitation to allow net operating losses to fully offset income.
Would modify the loss limitation applicable to pass-through businesses and sole proprietors.
Would accelerate the ability of companies to recover corporate alternative minimum tax credits, and allow them to claim a refund and obtain additional cash flow.
Would temporarily increase the amount of interest expense businesses are allowed to deduct by increasing the 30 percent limitation to 50 percent of the taxable income (with adjustments) for 2019 and 2020.
Would allow businesses to immediately write off costs associated with improving facilities instead of having to depreciate those improvements over the 39-year life of a building.

Small Business Provisions

Would create a $349 billion "paycheck protection program" to provide small employers impacted by disasters who maintain their payroll with eight weeks of cash flow assistance in the form of federally guaranteed loans. Loans used for payroll costs, mortgage obligations interest, rent and utilities would be forgiven. The program would be retroactive through February 15, 2020. Business concerns with more than 500 employees per physical location or $500 million in gross annual receipts would not be eligible for the paycheck protection program. The bill prohibits prepayment penalties for any payment made on a covered loan. The measure also grants the Treasury Department the authority to allow financial institutions that do not participate in Small Business Administration (SBA) loan program to participate in the paycheck protection program until the COVID-19 national emergency declaration expires. It authorizes the Treasury Department to issue regulations and guidance to allow additional lenders to originate loans.
Would provide $240 million in grants to small business development centers and women's business centers to provide education, training and advice to impacted small businesses regarding business practices and resources necessary to mitigate against COVID-19.
Would also provide $25 million in grants to minority business centers to provide education, training and advice to minority businesses and minority chambers of commerce, additionally waiving existing matching fund requirements for the Women's Business Center Program.
Directs federal agencies to extend small business contract performance periods and quickly pay small business contractors impacted by the virus. Federal agencies would be prohibited from cancelling a contract with a small business in Fiscal Years 2021 and 2022 that defaulted on the terms of the contract due to COVID-19.
Would provide $10 billion in emergency Economic Injury Disaster Loans (EIDL) from January 31 through December 31, 2020. Eligible recipients must be considered small for their industry and must be individuals operating under a sole proprietorships or as an independent contractor on January 31, 2020; cooperatives in operation on January 31, 2020; or an Employee Stock Ownership Plan (ESOP) in operation on January 31, 2020. These entities may request an advance of up to $10,000, which the SBA must distribute within three days.
Provides $17 billion for SBA to pay principal, interest and fees for SBA 7(a), Community Advantage, 504 and Microloan for six months.
Would cap guarantees of trust certificates at a principal amount of $100 billion until September 30, 2021.

Administration Updates

White House Coronavirus Taskforce Virtual Town Hall Highlights

On Tuesday, March 24, the White House Coronavirus Task Force conducted a virtual town hall on Fox News in lieu of a traditional press briefing. Please find several highlights of the event below.

Vice President Mike Pence commended industry stakeholders for playing an integral role in the country's COVID-19 response efforts and highlighted their assistance with producing and manufacturing N95 masks and other vital medical equipment.
The White House Coronavirus Taskforce has not considered any measures to issue a national lockdown. The taskforce strongly recommends that Americans follow the President's 15-day guidelines to slow the spread of the virus.
Under the Defense Production Act, President Trump issued an executive order yesterday to "prohibit the hoarding of vital medical equipment and supplies, such as hand sanitizers, face masks, and personal protective equipment."
Vice President Pence noted that the federal government will provide payroll support to businesses with 500 employees or less to ease the economic burdens resulting from COVID-19.
Vice President Pence noted that testing capacity is rapidly expanding every day, adding that the FDA recently approved a swab test that can be self-administered.
Vice President Pence indicated that the Senate's Phase 3 COVID-19 stimulus bill would give hospitals approximately $100 billion in relief. President Trump stated that the Senate's bill is aimed at helping small businesses and workers.
The President continued to emphasize the importance of "opening America for business again," arguing that the country is not "built" to be closed. He also expressed his desire to reopen the United States for business by April 12 and reiterated his priority to get the United States "back to work" to prevent further economic fallout.
President Trump noted that U.S. testing capacity was outdated and unprepared to face the magnitude of the COVID-19 outbreak. He also stated that the Administration has transformed the country's testing systems and processes to adequately meet demand.
When asked about the ability for the virus to mutate, Dr. Deborah Birx, the White House COVID-19 response coordinator, noted that the virus has mutated several times, but that the exterior structure of the virus has remained constant. She explained that it is easier to develop treatments that attack the virus when its exterior proteins are the same.
Dr. Birx stated that, by the end of today or tomorrow, the United States will have conducted more tests than South Korea did in eight weeks. She mentioned that testing will be widely available to all Americans in the coming weeks, adding that they are prioritizing vulnerable populations and individuals exhibiting symptoms.

Coronavirus Task Force Briefing Highlights

President Trump expressed confidence that Republicans and Democrats in Congress would reach an agreement on the $2 trillion relief bill to support American families, small businesses and health care workers. Due to optimism about the stimulus bill, he highlighted that the Dow Jones surged over 2100 points (+11%) today, which is the largest gain in history.
President Trump noted that he has issued orders to deploy the United States Naval Ship (USNS) Comfort to New York and USNS Mercy to Los Angeles to assist in COVID-19 response efforts. He noted that each naval ship would provide an additional 1,000 patient beds and up to 1,200 medical staff.
President Trump argued that the U.S. should never rely on another country for supplies. He emphasized the importance of American independence to manufacture medical supplies and equipment, also commending the private sector for its generous support to help manufacture and donate critical medical supplies and protective equipment.
Dr. Birx indicated that cases will continue to surge in the U.S. due to the backlog in testing capacity, which is expected to continue increasing daily. She mentioned that they are seeing encouraging results coming out of Italy, including decreases in mortality.
Dr. Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases, stated that there are several potential treatment drugs in the pipeline, including remdesivir, ready for clinical trial.
Larry Kudlow, Director of the National Economic Council, stated that the Phase 3 stimulus bill would be the largest Main Street financial assistance package in the history of the U.S. He expressed confidence that the economic downturn would only last a few weeks, or a couple months.
The President is focused on expanding testing capacity and increasing medical supplies, commending the work of public-private partnerships
Vice President Mike Pence noted that 60 percent of newly identified cases are in the New York metro area, which is currently the top U.S. "hotspot". As a result, the Administration is prioritizing New York in its response efforts to confront the spread of COVID-19. Dr. Birx mentioned that they have identified an uptick in cases in Long Island, suggesting that community spread is occurring in New York. They urged anyone leaving the New York metro area to self-quarantine for 14 days.
President Trump indicated that "reopening America for business" by April 12 is a realistic goal for a significant portion of the U.S. Dr. Fauci added that such date may not be attainable for "hotspots" such as New York.

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