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Homeland Security


VI. Lowering Financial and Regulatory Barriers to Effective Response


Legal, social or financial obstacles may prevent institutions and individuals from taking useful actions to confront an epidemic.

In this chapter, the Working Group describes several such barriers to effective actions and proposes ways to overcome them in times of public health emergencies by providing funds, suspending certain medical regulations, reducing financial impacts on hospitals, using special authorities, and encouraging action in the private sector.

We also recommend that the National Security Council, led by the Homeland Security Advisor, undertake a systematic review of potential legal, social, and financial barriers to action, to determine which might reasonably be ameliorated during the time of the anticipated epidemic and to set plans in motion to reduce or remove such barriers in accord with the observed severity of the epidemic.


As discussed in previous chapters, influenza epidemics can be mitigated through medical and non­medical interventions. To achieve their full benefit, such actions require the compliance of individuals and organizations in many sectors, as well as adequate funding. The purpose of this chapter is to identify the potential social, financial, and regulatory barriers to compliance and to recommend ways to lower those barriers. Because the list of barriers and solutions below is likely to be incomplete, it would be valuable for the Administration to undertake a systematic analysis of these issues.


The effectiveness of mitigation efforts can be improved by (a) identifying potential legal, social, and financial barriers to action in the face of an influenza pandemic; (b) developing specific solutions and identifying triggers for implementing these solutions when feasible; and (c) ensuring that relevant actors know about the intentions to deploy the solutions. We describe several potential barriers, propose some solutions, and suggest that barrier-reducing activities be led by the National Security Council and the Homeland Security Advisor.

Emergency Funding for Federal, State and Local Actions

Responding to any widespread health emergency, such as an influenza epidemic, requires substantial resources from public and private sources, and the current economic recession is a potentially limiting factor in the provision of such funds.

The President and Congress have already taken commendable action through the Supplemental Appropriations Act, 2009 (P.L. 111-32), to provide financial support for efforts to control the current 2009-H1N1 pandemic by securing emergency response funds and allocating a substantial portion to support mitigation methods, as described in Chapter 1. We presume that the Office of Management and Budget will continue to closely monitor Federal expenses for influenza mitigation, so that additional emergency appropriations can be sought if necessary.

Using these funds, the Federal Government also has taken an important step to help already overbur­ dened state and local public health organizations respond to the pandemic by providing $350 million from the emergency appropriation, through DHHS, to state and local governments and hospitals.

It is likely that additional funds will be required for various activities. In Chapter 4 we discuss the impor­tance of enhancing surveillance systems—for example, to enlarge the capacity to diagnose 2009-H1N1 infection. In many states, public health laboratories are the only facilities offering this testing. If such laboratories are overwhelmed, key decisions about prophylaxis, treatment, and school closure may be delayed by diagnostic uncertainty. More funds would likely be required for such laboratory expansions.


We recommend that DHHS monitor the financial situation of state and local governments to determine whether they have sufficient financial resources and personnel to carry out necessary surveillance (including monitoring trends in respiratory virus activity and at least a minimal level of viral surveillance) and to respond to the public health situation, which may vary from one juris­ diction to another.

Lowering Barriers to Hospital Care

Hospitals may face regulatory and economic disincentives to care for patients acutely ill with influenza. In large outbreaks, hospitals—and in particular their pediatric wards, emergency departments, and ICUs—may quickly become overwhelmed. This may lead to the need for alternative care sites such as schools, hotels, stadiums, recreation centers, and churches. In addition, as we have already seen in other developed countries coping with influenza outbreaks this year, hospitals may need to reduce the number of beds available for elective surgeries and other activities that provide a major source of revenue. Further, overcrowded ICUs may require hospitals to transport some patients outside of the immediate area. Because rates of hospitalization for 2009-H1N1 are highest in children, hospitals can also anticipate needing more pediatric equipment than is typically available.

To respond appropriately to these pressures, hospitals may require relief from certain regulatory provi­ sions that normally limit the number of severely sick patients who can be seen; require that all patients be subjected to routine tests or procedures that may be irrelevant during a pandemic; or prevent the rapid triaging of patients who are only mildly ill.

Two actions typically are necessary for these usual assurances to be waived. First, the DHHS Secretary must declare a Public Health Emergency. When this action is taken, the Secretary can gain access to a special fund called the Public Health Emergency Fund. (We note, however, that this access is currently since Congress has not appropriated any public monies to the Fund.) Second, the President must make a declaration under the Stafford Act or National Emergencies Act. When both of these actions have been taken, DHHS can waive or modify a number of administrative requirements of the Emergency Medical Treatment and Active Labor Act (EMTALA), Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP). For example, the Secretary can waive conditions of participation or certification require­ments, allowing health providers to offer care even if not licensed by their state to do so. In addition, an “1135 waiver” of EMATLA could enhance the ability of hospitals to respond to a pandemic by allowing

  • Diversion of less ill patients from emergency departments to alternative care sites for triage and treatment without being subject to penalties and fines;
  • Provision of emergency care for patients regardless of their ability to pay; and
  • Earlier care of patients in emergency departments, by eliminating the requirement for a medical screening exam before evaluation by a health provider.

During the spring 2009-H1N1 outbreak, a Public Health Emergency was declared nationwide but the Stafford Act was not invoked. Because both actions are required for DHHS to issue an 1135 waiver, hos­pitals were not authorized to divert individuals to off-site alternate care sites, even if their emergency departments were overwhelmed. In addition, the Public Health Emergency Fund, though authorized, is currently unfunded.


We recommend that if the Secretary of DHHS declares a Public Health Emergency, the President consider issuing a Stafford Act declaration so that hospitals can more effectively triage and treat patients.

Alternatively, the Administration could ask Congress to amend the Social Security Act preemptively so that the ability to issue 1135 waivers is linked automatically to the declaration of a Public Health Emergency.

In addition, we recommend that Congress provide funding for the Public Health Emergency Fund.

In addition to regulatory barriers, hospitals face significant financial disincentives for vigorous planning and implementation of appropriate disaster operations. For example, a resurgence of 2009-H1N1 may fill large numbers of hospital beds with individuals who are in need of expensive care but are either uninsured or have insurance that will reimburse the hospital at unfavorable rates. Moreover, a 2009- H1N1 resurgence could preoccupy hospital personnel; trigger expensive contagion control procedures; and force the postponement of more profitable cases or their diversion to other providers. All of these factors can have a detrimental effect on hospital finances. Hospitals also may need to rely upon alterna­ tive care sites and standards, which may not be subject to the usual reimbursement rules, raising the potential for non-reimbursed care.


We recommend that DHHS’s Centers for Medicaid and Medicare Services ( CMS ), which reimburse hospitals for care provided through Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP), examine the financial implications for hospitals of actions they might take in responding to the pandemic. Such an analysis should examine the economic implications of hospital reimbursement for the care of 2009-H1N1 patients in conventional and alternative care sites, while also considering the financial losses that hospitals might incur by deferring elective procedures.

Non-medical Mitigation Activities

A key element in mitigating the spread of an epidemic is compliance with social distancing measures— for example, staying home from work or school or avoiding public gatherings such as concerts or sporting events when ill. However, compliance is unlikely when economic or other disincentives punish individuals for these behaviors. It is critical that appropriate Federal officials take the lead in identifying these disincentives and removing or minimizing them. Since immunizing large segments of the popula­ tion likely cannot be completed before late November or early December, the use of social mitigation measures may represent the most effective means for reducing transmission of virus in the fall when it is spreading most efficiently.

Because crowding in schools is extreme and prolonged and because the risks of infection with 2009- H1N1 to the relevant age groups are high, special consideration should be given to ways to encourage potentially infectious students to remain at home rather than attend school.


We recommend that the Department of Education, working with the Department of Health and Human Services and the Department of Labor, meet with representatives from state and local school districts in August 2009 to identify the financial needs and regulatory barriers that would discourage decisions to close schools when public health conditions warrant such closures and to consider actions that Federal, state, and local authorities could take to reduce those disincentives. Examples of possible actions include waivers on the minimum required number of school days, meals for children who are in school meal programs, access to online or “drop off” educational activities and programs, and childcare options for parents who work. Because actions might need to be taken rapidly, it is important that these plans be well publicized to institutional actors, includ­ing school principals.

We also recommend that the Department of Education develop clear and effective 2009-H1N1 contingency plans by October 1, 2009, and designate a health professional who is familiar with public schools to provide guidance to school districts.

Individuals sick with 2009-H1N1, and those who need to care for affected family members, face a loss of income or employment if they stay home from work. Similarly, holders of tickets for travel or sporting events face potentially substantial economic losses from nonrefundable ticket expenses. Such barriers may make them less willing to participate in social mitigation strategies that the government may propose. Both government and private organizations may need to take actions to lower such barriers. For example, the government can encourage businesses to promulgate more flexible sick leave and ticket reimbursement policies in response to an outbreak of influenza.


We recommend that the Domestic Policy Council and the Assistant to the President for Intergovernmental Affairs and Public Liaison meet with leaders of small businesses, industry, and labor to identify mechanisms that might encourage individuals to stay home while sick—for example, by alleviating economic losses employees might otherwise sustain from such responsible actions. These leaders could identify actions the President might advocate to reduce barriers to social mitigation actions, such as more liberal worker leave policies, flexible union rules, and refund­ able tickets for airlines, trains, or buses or for concerts, athletic, or other public events.

We also recommend that the Federal Government immediately initiate policies that, in the event of increasing spread of influenza virus, would allow Federal employees with respiratory illness (or those caring for a child with same) to stay at home without financial penalty.

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