Senate Passes Paycheck Protection Program and Health Care Enhancement Act

On April 21, 2020, the Senate passed in a pro forma session an “interim” coronavirus relief bill, titled the “Paycheck Protection Program and Health Care Enhancement Act” (the Senate Bill). The Senate Bill would amend the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), enacted March 27, 2020, to (i) increase the amounts authorized for the Paycheck Protection Program (PPP) in accordance with Section 7(a) of the Small Business Act, the economic injury disaster loans, and emergency grants under the CARES Act, and (ii) authorize additional funding for hospital and provider recovery and coronavirus testing. Notwithstanding complaints that have been lodged by various constituencies about the structure, administration, and fairness of the PPP that was implemented by the CARES Act, the new legislation would not modify the PPP’s lending program, choosing instead to appropriate additional funding so that more small businesses are covered. The following is a summary of the key provisions of the Senate Bill.

Increased Funding for SBA PPP and Emergency Loans

The Senate Bill authorizes the following additional funding:

• $310 billion for the PPP ($349 billion was authorized initially under the CARES Act)

• $10 billion for Emergency Economic Injury Disaster Loans (EIDL) Grants ($10 billion was authorized initially under the CARES Act)

• $50 billion for the Disaster Loan Program

Sixty billion dollars of the additional funding appropriated for the PPP is set aside for loans made by smaller insured depository institutions and credit unions.

Increased Emergency Funding for Hospitals and Other Providers

The Senate Bill appropriates an additional $75 billion ($100 billion was appropriated initially in the CARES Act) for the Public Health and Social Services Emergency Fund of the Department of Health and Human Services (the Relief Fund) for reimbursement to eligible health care providers for health care-related expenses or lost revenues that are attributable to the coronavirus. The Senate Bill does not change or further define the terms of the appropriation as provided initially in the CARES Act — specifically:

• The definition of “eligible health care providers” is the same as in the CARES Act: public entities, Medicare- or Medicaid-enrolled suppliers and providers, and other for-profit and nonprofit entities that provide diagnoses, testing, or care for individuals with possible or actual cases of COVID-19.

• These funds cannot be used to reimburse expenses or losses that have been or will be reimbursed from other sources.

• The Act gives the Secretary of the Department of Health and Human Services broad discretion in reviewing applications from providers (on a rolling basis) to determine which providers will receive payments from the Relief Fund. In that regard, although much preliminary congressional discussion suggested that the Act would specifically focus on providing additional funding to hospitals, the language of the Act, like the original CARES Act language, does not establish priorities among different categories of eligible health care providers with respect to this portion of the Relief Fund appropriation.

Increased Funding for Coronavirus Testing

The Senate Bill also appropriates $25 billion to the Relief Fund for necessary expenses to research, develop, validate, manufacture, purchase, administer, and expand capacity for COVID-19 tests.

• The funding can be used for tests for both active infections and prior exposure, as well as for the manufacturing, procurement, and distribution of tests, testing equipment, and testing supplies (including personal protective equipment needed for administering tests).

• Unlike the $75 billion funding described above, this funding includes specific allocations to states and various governmental agencies (such as the Centers for Disease Control and Prevention, the National Institutes of Health, and the Food and Drug Administration, as well as tribal health organizations) to support activities necessary to accelerate the research, development, manufacturing, and production of COVID-19 tests.

A link to what we understand to be the final text of the Senate Bill is below. This text may change once the House takes the Senate Bill up later this week.

The House is expected to vote on the Senate Bill on Thursday. We anticipate that if it is approved by the House, it will be approved by the White House on an expedited basis.