Congress’ COVID-19 aid, spending bill: Contact Lens Rule implications, key tax and Medicare pay fixes among AOA wins

December 21, 2020
The more than $2 trillion aid package and omnibus bill include a laundry list of AOA advocacy priorities, including a delay to FTC Contact Lens Rule changes, a new PPP “second draw” and deductibility fix, and reversal of steep Medicare pay cuts.
COVID-19 relief package

Congress’ long-anticipated, $2 trillion-plus COVID-19 aid and government funding package provides optometric practices, doctors and students with renewed relief options and other key AOA advocacy wins as the public health emergency continues into 2021.

Concluding months of hard-fought negotiations Monday evening, both the U.S. House and Senate passed the second-largest stimulus bill in U.S. history at $900 billion, breathing new life into federal relief measures that helped many doctors of optometry and students handle COVID-19-related hardships in 2020, alongside a $1.4 trillion omnibus spending bill. The former includes necessary revamps of crucial federal initiatives that AOA successfully advocated for optometry’s full recognition in this past year, helping the profession access over $1.69 billion in aid. The latter contains a laundry list of AOA advocacy priorities, including recognition of language that not only directs the Federal Trade Commission (FTC) to delay enforcement of recent changes to the Contact Lens Rule but also directs the Department of Health and Human Services (HHS) to write new rules fully implementing the AOA’s 2010 provider non-discrimination law (Harkin Law).

The 5,593-page legislation, reportedly the longest bill ever recorded, now goes before President Donald Trump nearly nine months after the landmark, $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act became law. At this time, it remains unclear if President Trump will sign the legislation into law. Throughout, the AOA has actively advocated for the profession with this latest bill containing new and significant provisions.

“This COVID relief bill and the provisions set forth are the culmination of months of AOA advocacy and a testament to our clear priority in 2020: ensuring doctors of optometry are recognized as frontline, essential health care providers and able to continue providing much-needed patient care in their communities,” says AOA President William T. Reynolds, O.D. “We have fought harder than ever to protect doctors and patients alike through this pandemic and as we enter 2021, I am hopeful and excited for the opportunities ahead.”

In addition to providing a new round of relief checks for many Americans and a temporary increase in unemployment benefits through March, the new relief bill will allocate an additional $300 billion for small business loan programs, such as the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL), and $3 billion for another round of HHS provider relief grants.

Specifically, the relief bill contains several AOA-backed provisions that will immediately benefit optometric practices, doctors and students, including: 

  • Delayed compliance with Contact Lens Rule changes.
    Significantly, Congress recognized language scolding the FTC over its decision to enact burdensome Contact Lens Rule changes on prescribers in the middle of the public health emergency and directed the agency to cease enforcement of these changes until April 1, 2021. The AOA has long argued that such changes were not only costly and unwieldy for doctors operating small businesses but also completely inappropriate to enact amid the COVID-19 pandemic. Despite language concerning the recent rule changes, prescribers must still abide by the rule’s requirement to provide patients a copy of their contact lens prescription as before.
  • Implementing the Harkin Law.
    Congress directed the HHS to begin rulemaking to fully implement PHSA 2706, the AOA-backed provider non-discrimination law (also known as the Harkin Law). The bill language also directs the agency to begin rulemaking no later than Jan. 1, 2022, and to issue a final rule implementing §2706 no later than six months after issuing the proposed rule.
  • PPP loan changes, “second draw” allowance.”
    The new relief bill will permit small businesses to apply for a “second draw” of PPP loans, assuming businesses can show a 25% reduction in gross receipts the in first, second or third quarter of 2020 relative to the same 2019 quarter. Also, initial and second-draw PPP loans may now be used for additional expenses, such as HR and accounting; supplier costs in effect before origination of loan; and PPE and adaptive investments to the business; while group health insurance, dental and vision may now count toward payroll costs.
  • PPP deductibility fix.
    Congress resolved the PPP tax-deductibility issue that arose when the IRS posted guidance that forgivable PPP loans effectively created unexpected taxable income for small businesses. The new relief bill clarifies that PPP loans are not taxable income and that deductions are allowed for expenses paid with proceeds of a forgiven PPP loan, retroactive to the CARES Act and applicable to subsequent PPP loans. This same treatment will apply to EIDL grants and certain loans or loan repayment assistance.
  • Funding for EIDL grants, deductibility changes.
    The new relief bill provides an additional $20 billion for a new round of EIDL grants and extends the covered period for EIDL through Dec. 31, 2021. Also, Congress repealed the requirement that PPP borrowers deduct amount of EIDL advance from PPP forgiveness.
  • New HHS provider relief grants.
    The new relief bill provides $3 billion for an additional round of HHS physician relief grants, available to doctors of optometry and others participating in Medicare and Medicaid. The bill directs 85% of funds for future distributions based on applications that consider financial losses and changes in operating expenses occurring in the third or fourth quarter of 2020, or first quarter of 2021.
  • Changes to Medicare E/M pay cuts, Medicare sequester.
    The new relief bill includes provisions aimed at blunting the impact of scheduled Medicare pay cuts because of E/M code pay changes. Congress blocked implementation of code G2211 for three years and provided $3 billion to increase payments under the Medicare physician fee schedule, boosting payments to physicians and others by 2% throughout 2021. Also, the bill delays the 2% Medicare sequester cut scheduled to take effect Jan. 1, 2021, by three months.
  • Modifications to employee retention tax credit (ERTC).
    The new relief bill modifies the ERTC for 2020 by allowing businesses that drew PPP loans to qualify, while also expanding (50% to 70%) and extending the ERTC through June 30, 2021.
  • Ends surprise medical bills.
    The new relief bill includes provisions that limit patient exposure to charges for emergency and other follow-up care delivered by non-participating providers in hospitals, emergency care centers and ambulatory surgical centers. Congress created exemptions for those obtaining patient consent in advance of scheduled care at these facilities and included an independent dispute resolution process for payers and providers to reach an agreement on payment.
  • Modifies FSA rollover.
    The new relief bill permits the rollover of unused balances for health and dependent care flexible spending arrangements, i.e., rolling over from 2020 to 2021 and 2021 to 2022.

Notably, the new relief bill will not extend a freeze on payments and interest for student loan borrowers as was expected when negotiations began. The plan to extend the pause through April fell through in the current legislation; however, U.S. Department of Education Secretary Betsy DeVos had extended the student loan forbearance period until Jan. 31, 2021.

The AOA and AOSA have urged Congress in recent weeks to consider extending debt relief and loan forgiveness provisions for optometry students in any new COVID-19 relief package. The AOA and AOSA will continue to fight for these changes in the new year.

AOA’s COVID-19 resources, updates

In addition to the AOA’s ongoing advocacy ensuring optometry’s eligibility in federal relief measures and vaccination availability, the AOA’s COVID-19 Crisis Response page offers relevant guidance and resources for doctors of optometry navigating COVID-19 challenges. Find the latest information from AOA’s Health Policy Institute or access the #AskAOA COVID-19 webinar series, and be sure to monitor AOA communication channels as new webinars or resources are made available.

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