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Highlights

What GAO Found

In the government’s ongoing response to the COVID-19 pandemic, the Congress and the administration have taken action on multiple fronts to address challenges that have contributed to catastrophic loss of life and profound economic disruption. These actions have helped direct much-needed federal assistance to support many aspects of public life, including local public health systems and private-sector businesses.

However, the nation faces continued public health risks and economic difficulties for the foreseeable future. Among other challenges, the public health system, already strained from months of responding to COVID-19 cases, will face the additional task of managing the upcoming flu season. At the same time, many of the federal, state, and local agencies responsible for responding to the ongoing public health emergency are called on to prepare for and respond to the current hurricane season. Timely and concerted federal leadership will be required in responding to these and other challenges.

GAO has identified lessons learned and issues in need of continued attention by the Congress and the administration, including the need to collect reliable data that can drive decision-making; to establish mechanisms for accountability and transparency; and to protect against ongoing cyber threats to patient information, intellectual property, public health data, and intelligence. Attention to these issues can help to make federal efforts as effective as possible.

GAO has also identified a number of opportunities to help the federal government prepare for the months ahead while improving the ongoing federal response:

Medical Supply Chain

The Department of Health and Human Services (HHS) and the Federal Emergency Management Agency (FEMA), with support from the Department of Defense (DOD), have taken numerous, significant efforts to mitigate supply shortages and expand the medical supply chain. For example, the agencies have coordinated to deliver supplies directly to nursing homes and used Defense Production Act authorities to increase the domestic production of supplies.

However, shortages of certain types of personal protective equipment and testing supplies remain due to a supply chain with limited domestic production and high global demand. The Food and Drug Administration (FDA) and FEMA have both identified shortages, and officials from seven of the eight states GAO interviewed in July and August 2020 identified previous or ongoing shortages of testing supplies, including swabs, reagents, tubes, pipettes, and transport media. Testing supply shortages have contributed to delays in turnaround times for testing results. Delays in processing test results have multiple serious consequences, including delays in isolating those who test positive and tracing their contacts in a timely manner, which can in turn exacerbate outbreaks by allowing the virus to spread undetected. In addition, states and other nonfederal entities have experienced challenges tracking supply requests made through the federal government and planning for future needs. GAO is making the following recommendations:
  • HHS, in coordination with FEMA, should immediately document roles and responsibilities for supply chain management functions transitioning to HHS, including continued support from other federal partners, to ensure sufficient resources exist to sustain and make the necessary progress in stabilizing the supply chain.
  • HHS, in coordination with FEMA, should further develop and communicate to stakeholders plans outlining specific actions the federal government will take to help mitigate supply chain shortages for the remainder of the pandemic.
  • HHS and FEMA—working with relevant stakeholders—should devise interim solutions, such as systems and guidance and dissemination of best practices, to help states enhance their ability to track the status of supply requests and plan for supply needs for the remainder of the COVID-19 pandemic response.

HHS and the Department of Homeland Security (DHS) objected to GAO’s initial draft recommendations. GAO made revisions based on their comments. GAO maintains that implementation of its modified recommendations is both warranted and prudent. These actions could contribute to ensuring a more effective response by helping to mitigate challenges with the stability of the medical supply chain and the ability of nonfederal partners to track, plan, and budget for ongoing medical supply needs.

Vaccines and Therapeutics

Multiple federal agencies continue to support the development and manufacturing of vaccines and therapeutics to prevent and treat COVID-19. These efforts are aimed at accelerating the traditional timeline to create a vaccine (see figure).

Traditional Timeline for Development and Creation of a Vaccine

Note: See figure 5 in the report.

As these efforts proceed, clarity on the federal government’s plans for distributing and administering vaccine, as well as timely, clear, and consistent communication to stakeholders and the public about those plans, is essential. DOD is supporting HHS in developing plans for nationwide distribution and administration of a vaccine. In September 2020, HHS indicated that it will soon send a report to Congress outlining a distribution plan, but did not provide a specific date for doing so. GAO recommends that HHS, with support from DOD, establish a time frame for documenting and sharing a national plan for distributing and administering COVID-19 vaccine, and in developing such a plan ensure that it is consistent with best practices for project planning and scheduling and outlines an approach for how efforts will be coordinated across federal agencies and nonfederal entities. DOD partially concurred with the recommendation, clarifying that it is supporting HHS in developing plans for nationwide distribution and administration of vaccine. HHS neither agreed nor disagreed with the recommendation, but noted factors that complicate the publication of a plan. GAO maintains that a time frame is necessary so all relevant stakeholders will be best positioned to begin their planning. On September 16, 2020, HHS and DOD released two documents outlining a strategy for any COVID-19 vaccine. GAO will evaluate these documents and report on them in future work. GAO will also continue to conduct related work, including examining federal efforts to accelerate the development and manufacturing of COVID-19 vaccines and therapeutics.

COVID-19 Data

Data collected by the Centers for Disease Control and Prevention (CDC) suggest a disproportionate burden of COVID-19 cases, hospitalizations, and deaths exists among racial and ethnic minority groups, but GAO identified gaps in these data. To help address these gaps, on July 22, 2020, CDC released a COVID-19 Response Health Equity Strategy. However, the strategy does not assess whether having the authority to require states and jurisdictions to report race and ethnicity information is necessary to ensure CDC can collect such data. CDC’s strategy also does not specify how it will involve key stakeholders, such as health care providers, laboratories, and state and jurisdictional health departments. GAO recommends that CDC (1) determine whether having the authority to require the reporting of race and ethnicity information for cases, hospitalizations, and deaths is necessary for ensuring more complete data, and if so, seek such authority from Congress; (2) involve key stakeholders to help ensure the complete and consistent collection of demographic data; and (3) take steps to help ensure its ability to comprehensively assess the long-term health outcomes of persons with COVID-19, including by race and ethnicity. HHS agreed with the recommendations.

In addition, HHS’s data on COVID-19 in nursing homes do not capture the early months of the pandemic. HHS’s Centers for Medicare & Medicaid Services (CMS) began requiring nursing homes to report COVID-19 data to CDC by May 17, 2020, starting with information as of May 8, 2020, but made reporting prior to May 8, 2020 optional. By not requiring nursing homes to submit data from the first 4 months of 2020, HHS is limiting the usefulness of the data in helping to understand the effects of COVID-19 in nursing homes. GAO recommends that HHS, in consultation with CMS and CDC, develop a strategy to capture more complete data on COVID-19 cases and deaths in nursing homes retroactively back to January 1, 2020. HHS partially agreed with this recommendation by noting the value of having complete data, but expressed concern about the burden of collecting it. GAO maintains the importance of collecting these data to inform the government’s continued response and recovery, and HHS could ease the burden by incorporating data previously reported to CDC or to state or local public health offices.

Economic Impact Payments

The Department of the Treasury’s (Treasury) Internal Revenue Service (IRS) has issued economic impact payments (EIP) to all eligible individuals for whom IRS has the necessary information to do so; however, not everyone eligible was able to be initially identified. To help ensure all eligible recipients received their payments in a more timely manner, IRS took several actions to address challenges GAO reported on in June, including a policy change—reopening the Non-Filers tool registration period for federal benefit recipients and extending it through September 30—that should allow some eligible recipients to receive supplemental payments for qualifying children sooner than expected. However, Treasury and IRS lack updated information on how many eligible recipients have yet to receive these funds. The lack of such information could hinder outreach efforts and place potentially millions of individuals at risk of missing their payment. GAO recommends that Treasury, in coordination with IRS, (1) update and refine the estimate of eligible recipients who have yet to file for an EIP to help target outreach and communications efforts and (2) make estimates of eligible recipients who have yet to file for an EIP, and other relevant information, available to outreach partners to raise awareness about how and when to file for EIP. Treasury and IRS neither agreed nor disagreed with the recommendations and described actions they are taking in concert with the recommendations to notify around 9 million individuals who may be eligible for an EIP.

Coronavirus Relief Fund

The Coronavirus Relief Fund (CRF) is the largest program established in the four COVID-19 relief laws that provides aid to states, the District of Columbia, localities, tribal governments, and U.S. territories. Audits of entities that receive federal funds, including CRF payments, are critical to the federal government’s ability to help safeguard those funds. Auditors that conduct single audits follow guidance in the Single Audit Act’s Compliance Supplement, which the Office of Management and Budget (OMB) updates and issues annually in coordination with federal agencies. OMB issued the 2020 Compliance Supplement in August 2020, but the Compliance Supplement specified that OMB is still working with federal agencies to identify the needs for additional guidance for auditing new COVID-19-related programs, including the CRF payments, as well as existing programs with compliance requirement changes. According to OMB, an addendum on COVID-19-related programs, including the CRF payments, will be issued in the fall of 2020. Further delays in issuing this guidance could adversely affect auditors’ ability to issue consistent and timely reports. GAO recommends that OMB, in consultation with Treasury, issue the addendum to the 2020 Compliance Supplement as soon as possible to provide the necessary audit guidance, as many single audit efforts are underway. OMB neither agreed nor disagreed with the recommendation.

Guidance for K-12 Schools

State and local school district officials tasked with reassessing their operating status and ensuring their school buildings are safe are generally relying on guidance and recommendations from federal, state, and local public health and education officials. However, portions of CDC’s guidance on reopening K-12 schools are inconsistent, and some federal guidance appears misaligned with CDC’s risk-based approach on school operating status. Based on GAO’s review, Education has updated the information and CDC has begun to do so. GAO recommends that CDC ensure that, as it makes updates to its guidance related to schools’ operating status, the guidance is cogent, clear, and internally consistent. HHS agreed with the recommendation.

Tracking Contract Obligations

Federal agencies are tracking contract actions and associated obligations in response to COVID-19 using a National Interest Action (NIA) code in the Federal Procurement Data System-Next Generation. The COVID-19 NIA code was established in March 2020 and was recently extended until March 31, 2021, while a draft of this report recommending that DHS and DOD extend the code beyond September 30, 2020, was with the agencies for comment. GAO has identified inconsistencies in establishing and closing these codes following previous emergencies, and has continued concerns with the criteria that DHS and DOD rely on to determine whether to extend or close a code and whether the code meets long-term needs. GAO recommends that DHS and DOD make updates to the 2019 NIA Code Memorandum of Agreement so as to enhance visibility for federal agencies, the public, and Congress on contract actions and associated obligations related to disaster events, and to ensure the criteria for extending or closing the NIA code reflect government-wide needs for tracking contract actions in longer-term emergencies, such as a pandemic. DHS and DOD did not agree, but GAO maintains implementation of its recommendation is essential.

Address Cybersecurity Weaknesses

Since March 2020, malicious cyber actors have exploited COVID-19 to target organizations that make up the health care and public health critical infrastructure sector, including government entities, such as HHS. GAO has identified numerous cybersecurity weaknesses at multiple HHS component agencies, including CMS, CDC, and FDA, over the last 6 years, such as weaknesses in key safeguards to limit, prevent, and detect inappropriate access to computer resources. Additionally, GAO’s March 2019 high-risk update identified cybersecurity and safeguarding the systems supporting the nation’s critical infrastructure, such as health care, as high-risk areas. As of July 2020, CMS, FDA, and CDC had made significant progress by implementing 350 (about 81 percent) of the 434 recommendations GAO issued in previous reports to address these weaknesses. Based on the imminent cybersecurity threats, GAO recommends that HHS expedite implementation of GAO’s prior recommendations regarding cybersecurity weaknesses at its component agencies. HHS agreed with the recommendation.

Why GAO Did This Study

As of September 10, 2020, the U.S. had over 6.3 million cumulative reported cases of COVID-19 and over 177,000 reported deaths, according to federal agencies. The country also continues to experience serious economic repercussions and turmoil.

Four relief laws, including the CARES Act, were enacted as of September 2020 to provide appropriations to address the public health and economic threats posed by COVID-19. As of July 31, 2020, the federal government had obligated a total of $1.6 trillion and expended $1.5 trillion of the COVID-19 relief funds as reported by federal agencies on USAspending.gov.

The CARES Act includes a provision for GAO to report bimonthly on its ongoing monitoring and oversight efforts related to the COVID-19 pandemic. This third report examines key actions the federal government has taken to address the COVID-19 pandemic and evolving lessons learned relevant to the nation’s response to pandemics.

GAO reviewed data, documents, and guidance from federal agencies about their activities and interviewed federal and state officials, as well as industry representatives.

What GAO Recommends

GAO is making 16 new recommendations for agencies that are detailed in this Highlights and in the report.

Recommendations

Recommendations for Executive Action

Recommendations for Executive Action

We are making a total of 16 recommendations to federal agencies:
NumberAgencyRecommendation
1Department of Health and Human Services

The Secretary of Health and Human Services in coordination with the Administrator of the Federal Emergency Management Agency—who head agencies leading the COVID-19 response through the Unified Coordination Group—should immediately document roles and responsibilities for supply chain management functions transitioning to the Department of Health and Human Services, including continued support from other federal partners, to ensure sufficient resources exist to sustain and make the necessary progress in stabilizing the supply chain, and address emergent supply issues for the duration of the COVID-19 pandemic. (Recommendation 1)
2Department of Health and Human Services

The Secretary of Health and Human Services in coordination with the Administrator of the Federal Emergency Management Agency—who head agencies leading the COVID-19 response through the Unified Coordination Group—should further develop and communicate to stakeholders plans outlining specific actions the federal government will take to help mitigate remaining medical supply gaps necessary to respond to the remainder of the pandemic, including through the use of Defense Production Act authorities. (Recommendation 2)
3Department of Health and Human Services

The Secretary of Health and Human Services—who heads one of the agencies leading the COVID-19 response through the Unified Coordination Group—consistent with their roles and responsibilities, should work with relevant federal, state, territorial, and tribal stakeholders to devise interim solutions, such as systems and guidance and dissemination of best practices, to help states enhance their ability to track the status of supply requests and plan for supply needs for the remainder of the COVID-19 pandemic response. (Recommendation 3)
4Department of Homeland Security : Directorate of Emergency Preparedness and Response : Federal Emergency Management Agency

The Administrator of the Federal Emergency Management Agency—who heads one of the agencies leading the COVID-19 response through the Unified Coordination Group—consistent with their roles and responsibilities, should work with relevant federal, state, territorial, and tribal stakeholders to devise interim solutions, such as systems and guidance and dissemination of best practices, to help states enhance their ability to track the status of supply requests and plan for supply needs for the remainder of the COVID-19 pandemic response. (Recommendation 4)
5Department of Health and Human Services

The Secretary of Health and Human Services, with support from the Secretary of Defense, should establish a time frame for documenting and sharing a national plan for distributing and administering COVID-19 vaccine, and in developing such a plan ensure that it is consistent with best practices for project planning and scheduling and outlines an approach for how efforts will be coordinated across federal agencies and nonfederal entities. (Recommendation 5)
6Department of Health and Human Services : Public Health Service : Centers for Disease Control and Prevention

As the Centers for Disease Control and Prevention (CDC) implements its COVID-19 Response Health Equity Strategy, the Director of the Centers for Disease Control and Prevention should determine whether having the authority to require states and jurisdictions to report race and ethnicity information for COVID-19 cases, hospitalizations, and deaths is necessary for ensuring more complete data, and if so, seek such authority from Congress. (Recommendation 6)
7Department of Health and Human Services : Public Health Service : Centers for Disease Control and Prevention

As CDC implements its COVID-19 Response Health Equity Strategy, the Director of the Centers for Disease Control and Prevention should involve key stakeholders to help ensure the complete and consistent collection of demographic data. (Recommendation 7)
8Department of Health and Human Services : Public Health Service : Centers for Disease Control and Prevention

As CDC implements its COVID-19 Response Health Equity Strategy, the Director of the Centers for Disease Control and Prevention should take steps to help ensure CDC’s ability to comprehensively assess the long-term health outcomes of persons with COVID-19, including by race and ethnicity. (Recommendation 8)
9Department of the Treasury

The Secretary of the Treasury, in coordination with the Commissioner of Internal Revenue, should update and refine the estimate of eligible recipients who have yet to file for an economic impact payment to help target outreach and communications efforts. (Recommendation 9)
10Department of the Treasury

The Secretary of the Treasury, in coordination with the Commissioner of Internal Revenue, should make estimates of eligible recipients who have yet to file for an economic impact payment, and other relevant information, available to outreach partners to raise awareness about how and when to file for economic impact payments. (Recommendation 10)
11Executive Office of the President : Office of Management and Budget

The Director of the Office of Management and Budget, in consultation with the Department of the Treasury, should issue the addendum to the 2020 Compliance Supplement as soon as possible to provide the necessary audit guidance. (Recommendation 11)
12Department of Health and Human Services : Public Health Service : Centers for Disease Control and Prevention

The Director of the Centers for Disease Control and Prevention should ensure that, as it makes updates to its federal guidance related to reassessing schools’ operating status, the guidance is cogent, clear, and internally consistent. (Recommendation 12)
13Department of Homeland Security

The Secretary of Homeland Security, in coordination with the Secretary of Defense, should (1) revise the criteria in the 2019 National Interest Action code memorandum of agreement to clearly identify steps they will take to obtain input from key federal agencies prior to extending or closing a National Interest Action code, (2) establish timelines for evaluating the need to extend a National Interest Action code, and (3) define what constitutes a consistent decrease in contract actions and routine contract activity to ensure the criteria for extending or closing the National Interest Action code reflect government-wide needs for tracking contract actions in longer term emergencies, such as a pandemic. (Recommendation 13)
14Department of Defense

The Secretary of Defense, in coordination with the Secretary of Homeland Security, should (1) revise the criteria in the 2019 National Interest Action code memorandum of agreement to clearly identify steps they will take to obtain input from key federal agencies prior to extending or closing a National Interest Action code, (2) establish timelines for evaluating the need to extend a National Interest Action code, and (3) define what constitutes a consistent decrease in contract actions and routine contract activity to ensure the criteria for extending or closing the National Interest Action code reflect government-wide needs for tracking contract actions in longer term emergencies, such as a pandemic. (Recommendation 14)
15Department of Health and Human Services

The Secretary of Health and Human Services, in consultation with the Centers for Medicare & Medicaid Services and CDC, should develop a strategy to capture more complete data on confirmed COVID-19 cases and deaths in nursing homes retroactively back to January 1, 2020, and to clarify the extent to which nursing homes have reported data before May 8, 2020. To the extent feasible, this strategy to capture more complete data should incorporate information nursing homes previously reported to CDC or to state or local public health offices. (Recommendation 15)
16Department of Health and Human Services

Based on the imminent cybersecurity threats, the Secretary of Health and Human Services should expedite implementation of our prior recommendations regarding cybersecurity weaknesses at its component agencies. (Recommendation 16)
View recommendation(s) status

Introduction 


Congressional Committees

The Coronavirus Disease 2019 (COVID-19) pandemic has resulted in catastrophic loss of life and substantial damage to the global economy, stability, and security. Worldwide, there were 27,738,000 reported cases and 900,000 reported deaths due to COVID-19 as of September 10, 2020; within the United States, there were 6,344,000 cumulative reported cases and over 177,000 reported deaths.[1] The country also continues to experience serious economic repercussions and turmoil. As of August 2020, there were 13.6 million unemployed individuals, compared to nearly 5.9 million individuals at the beginning of the calendar year.[2] Due to the potential for increasing infections in the fall and winter, which would coincide with the hurricane and flu seasons, this is a pivotal time for the federal government to enhance preparations.

In response to the far-reaching public health and economic crisis, Congress and the administration have taken a series of actions. For example, in March 2020, Congress passed, and the President signed into law, the CARES Act, which provides over $2 trillion in emergency assistance and health care response for individuals, families, and businesses affected by COVID-19.[3]

The CARES Act includes a provision for us to conduct monitoring and oversight of the federal government’s efforts to prepare for, respond to, and recover from the COVID-19 pandemic.[4] We are to report on, among other things, the effect of the pandemic on public health, the economy, and public and private institutions. As of September 9, 2020, we had 76 audits under way related to the pandemic examining a variety of issues, including vaccines, COVID-19 testing, the Strategic National Stockpile (SNS), use of the Defense Production Act (DPA), the Department of Veterans Affairs’ (VA) response to COVID-19, child welfare and education, worker safety, and homeowner and renter protections. We continue to actively coordinate our audits with other accountability organizations, including the Pandemic Response Accountability Committee, federal inspectors general, and state and local auditors.[5]

On August 31, 2020, we issued a report that provided a brief update on federal spending on the nation’s COVID-19 response efforts and indicators for monitoring the public health system’s preparedness for, response to, and recovery from COVID-19 and key areas of the economy targeted by federal efforts.[6]

This report examines
  1. the key actions the federal government has taken, to date, to respond to and recover from COVID-19 and
  2. evolving lessons learned relevant to the nation's response to the COVID-19 pandemic.

This report also includes 30 enclosures on a range of topics focused on the federal response to the pandemic. They are presented in appendix I.

Given the government-wide scope of this report, we undertook a variety of methodologies to complete the work, including examining a wide range of data sources and interviews with federal and state agencies and other entities. We examined federal laws, agency documents, guidance, processes, and procedures. In addition, we reviewed published reports and research papers related to our reporting objectives.

More information on our scope and methodology is in appendix II. Additionally, a list of ongoing COVID-19 related work and the status of recommendations made in the June 2020 report are in appendices III and IV, respectively.

We conducted this performance audit from May 2020 to September 2020 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Background 


After a spike of about 65,000 new cases per day in late July, on average, the United States had about 40,000 reported new COVID-19 cases per day in early September.[7] Figure 1 shows the reported U.S. COVID-19 cases per day as a 7-day moving average.

Figure 1: Reported COVID-19 Cases per Day in the United States, as of September 10, 2020

Note: Reported COVID-19 cases include confirmed and probable cases. Beginning April 14, 2020, states could include probable as well as confirmed COVID-19 cases in their reports to CDC. Prior to that time, counts only included confirmed cases. According to CDC, the actual number of cases is unknown for a variety of reasons, including that people who have been infected may have not been tested or may have not sought medical care. The data presented in the figure were last updated on September 10, 2020. The 7-day moving average of new cases (current day plus 6 preceding days divided by 7) was calculated to smooth variations in daily counts.

The number of reported new cases has varied geographically. For example, in early September, the states with the highest reported new cases adjusted by population were North Dakota, South Dakota, Arkansas, Iowa, and Oklahoma. Figure 2 shows reported cases per 100,000 population by state, from September 3–9, the most recent data available at the time of this analysis.

Figure 2: Reported COVID-19 Cases September 3–9, 2020, by State, per 100,000 Population

Note: Reported COVID-19 cases include confirmed and probable cases. Beginning April 14, 2020, states could include probable as well as confirmed COVID-19 cases in their reports to CDC. Prior to that time, counts only included confirmed cases. According to CDC, the actual number of cases is unknown for a variety of reasons, including that people who have been infected may have not been tested or may have not sought medical care. The data presented in the figure were last updated on September 9, 2020. Rates were calculated using population estimates from U.S. Census Bureau, 2018 American Community Survey 1-Year Estimates as the number of cases per 100,000 population.

According to the Centers for Disease Control and Prevention (CDC), the fall and winter months may present additional challenges. First, colder months tend to decrease the availability of outdoor spaces and activities. Indoor spaces are more risky than outdoor spaces because there is less ventilation and it may be harder to keep people sufficiently distanced, which could increase the spread of infectious disease.

Second, according to CDC, it is likely that influenza (commonly known as flu) viruses and the virus that causes COVID-19 will both be spreading during the 2020–2021 flu season. Flu and other respiratory viruses are most common during the fall and winter. While the exact timing and duration of flu seasons can vary, flu activity often begins to increase in October. CDC estimates that influenza has resulted in approximately 9–45 million illnesses, 140,000–810,000 hospitalizations, and 12,000–61,000 deaths in the United States annually since 2010, though the severity of each flu season can vary.

Federal COVID-19 Funding and Spending

As of July 31, 2020, about $2.6 trillion had been appropriated to fund response and recovery efforts for—as well as to mitigate the public health, economic, and homeland security effects of —COVID-19 (see fig. 3).[8] As of July 31, 2020, the most recent date for which government-wide information was available, the federal government had obligated a total of $1.6 trillion and expended $1.5 trillion of the COVID-19 relief funds as reported by federal agencies on USAspending.gov.[9] The Business Loan Programs, Economic Stabilization and Assistance to Distressed Sectors programs, unemployment insurance, economic impact payments, the Public Health and Social Services Emergency Fund, and the Coronavirus Relief Fund represent $2.2 trillion, or 85 percent, of the total amounts appropriated.[10] For these six largest spending areas, agencies estimated obligations totaling $1.4 trillion and expenditures totaling $1.4 trillion as of July 31, 2020.[11]

Figure 3: Appropriations for COVID-19 Response from COVID-19 Relief Laws Enacted, as of July 31, 2020, by Major Spending Area

Notes: COVID-19 relief appropriations reflect amounts appropriated under the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, Pub. L. No. 116-123, 134 Stat. 146; Families First Coronavirus Response Act, Pub. L. No. 116-127, 134 Stat. 178 (2020); CARES Act, Pub. L. No. 116-136, 134 Stat. 281 (2020); and Paycheck Protection Program and Health Care Enhancement Act, Pub. L. No. 116-139, 134 Stat. 620 (2020). These data are based on appropriations warrant information provided by the Department of the Treasury as of July 31, 2020. These amounts could increase in the future for programs with indefinite appropriations, which are appropriations that, at the time of enactment, are for an unspecified amount. In addition, this figure does not represent transfers of funds that federal agencies may make between appropriation accounts or transfers of funds they may make to other agencies.

Major Findings 

Key Federal Actions to Respond to and Recover from COVID-19

Public Health Response

In this section, we cover the Department of Health and Human Services’ (HHS), the Federal Emergency Management Agency’s (FEMA), and other stakeholders’ public health response to the COVID-19 pandemic. HHS and FEMA are leading the COVID-19 response through the Unified Coordination Group (UCG).[12] These efforts include managing the medical supply chain; increasing testing capacity; developing, manufacturing, and distributing COVID-19 vaccines and therapeutics; and collecting data on racial and ethnic disparities as they relate to COVID-19. However, challenges remain. We are making nine recommendations to improve the federal government’s public health response. [13]

According to HHS, the department had obligated about $144 billion of its more than $250 billion in COVID-19 relief funds and expended about $99 billion as of July 31, 2020. As of that date, FEMA reported that it had expended $2.5 billion for COVID-19 related assistance.

Medical Supply Chain

The federal government has continued to take steps to put supplies in the hands of those who need them. However, the availability of certain types of personal protective equipment (PPE) remains constrained and testing supply shortages persist due to a supply chain overwhelmed by the demands of the global pandemic and certain supplies not being produced domestically. In addition, states and other nonfederal entities have experienced challenges tracking supply requests made through the federal government and planning for future needs.

Federal efforts to mitigate supply chain shortages. HHS and FEMA—with support from the Department of Defense (DOD)—have taken numerous actions to mitigate supply shortages and expand the medical supply chain, chiefly through the Supply Chain Advisory Group (Advisory Group).[14] Charged by the UCG with maximizing the nationwide availability of supplies and equipment, the Advisory Group has focused on four key supply activities, according to its officials:
  • Helping preserve existing supplies. The Advisory Group worked with CDC and the Food and Drug Administration (FDA) to provide guidance to health care providers and others on PPE decontamination and equipment efficiencies, such as techniques for using one ventilator to provide oxygen to two individuals simultaneously.[15]
  • Accelerating the delivery of supplies. On June 30, 2020, FEMA concluded its operation of Project Air Bridge, which expedited the delivery of materials from overseas, such as masks and gloves.[16] Additionally, based on the Advisory Group’s efforts to understand national demand, HHS and FEMA used DPA Title I authorities to place priority ratings on at least 18 contracts from March through May 2020 to acquire ventilators, N95 respirators, and other face coverings, with most types of items scheduled to be delivered by August 31, 2020.[17] DPA Title I authorities require the contractor (and the contractor’s supply chain) to provide preferential treatment to fulfill the delivery requirements of the rated contract or order.
  • Expanding the production of supplies. The Advisory Group and others have continued efforts to increase the domestic production of supplies. For example, as of August 15, 2020, DOD had used DPA Title III authorities and other funds to award about $627 million on 17 projects to expand domestic production of medical (including testing) supplies, such as N95 respirators, testing kits, and swabs.[18]

    These efforts to increase supply production will also help HHS accumulate stockpiles to prepare for future shortages when current demand for supplies abates. Specifically, HHS intends to build a 90-day supply of PPE in the SNS, including N95 respirators, gloves, and testing supplies, in case of an increase in COVID-19 cases.[19]
  • Gathering data to help allocate scarce supplies. To aid in the allocation of PPE, the Advisory Group gathered supply and demand data from a variety of sources, including interagency partners and industry. For example, by obtaining and aggregating proprietary information on supply orders to, and fulfillments from, the six largest domestic medical supply distributors, officials said they received real-time information on the movement of critical medical supplies and a sense of gaps and shortfalls in supplies.[20] The Advisory Group transitioned this data collection effort to HHS, and ASPR officials told us the transition was completed September 1, 2020.

FEMA and HHS also have taken other steps to fulfill the critical supply needs of state, local, tribal, and territorial governments and health care facilities, including the following:
  • Nursing home distributions. FEMA also coordinated the delivery directly to Medicare- and Medicaid-certified nursing homes of a 14-day supply of gloves, surgical masks, gowns, and eye protection from May through August 2020. Additionally, in July 2020, HHS announced that it would provide point-of-care testing devices and kits to all nursing homes across the country, beginning with distribution to 2,000 prioritized nursing homes.[21] According to HHS’s Daily Communications Report, as of September 3, 2020, the federal government had shipped 9,894 nursing homes almost 3 million tests and 10,637 testing instruments.
  • Monthly state testing allocations. According to HHS officials, states received monthly allocations of certain testing supplies based, in part on each state’s testing plan, utilization of supplies from the prior month, epidemiological indicators, and logistical considerations. HHS officials also said that states are able to request additional testing supplies when needed, which HHS makes every effort to accommodate.

    Additionally, CDC’s International Reagent Resource continues to distribute reagents—substances needed to process tests—and other resources to public health laboratories; CDC officials told us they are able to fulfill 90 percent or more of the requests they receive.[22]
  • Federal delivery deferrals. According to Advisory Group officials, the federal government is renegotiating contracts with some of its manufacturers to defer delivery of N95 respirators to federal warehouses to help ensure supplies are available on the commercial market. Additionally, the government will work with the manufacturers to allocate those supplies to nursing homes, hospitals, and other groups that had not been previously prioritized, such as dentists’ offices.

In total, as of September 1, 2020, the federal response had provided approximately 92.4 million N95 respirators, 28.1 million nonsurgical gowns, 79.7 million gloves, 228.4 million face masks, as well as other PPE to state, tribal, and territorial entities, according to federal data provided in a COVID-19 senior leadership brief. In addition, according to HHS’s Daily Communications Report dated September 10, 2020, the federal government had distributed over 95 million swabs and 76 million units of test tubes and transport media (solution for transporting viral material to keep samples viable for testing) to states, as well as point-of-care tests and kits among other items.[23]

Officials with the Advisory Group, FEMA, and the office of the Assistant Secretary for Preparedness and Response (ASPR) told us that the supply chain for many items had improved greatly since earlier in the response, and FEMA is taking additional actions to help with distribution of medical supplies now and in the future. For example, FEMA reported that supply of some types of gloves (latex as well as vinyl examination and surgical gloves) has largely caught up with demand.[24] This was echoed by officials representing seven of the eight states we spoke to in July and August 2020, who said that the situation related to PPE had improved since earlier in the response. Additionally, officials in all eight states we interviewed told us that they had or were in the process of building stockpiles of PPE—with most building at least a 30-day supply—indicating an improvement in the availability of certain PPE.

FEMA and HHS are taking additional actions to help address supply chain issues. HHS announced it has established a National Testing Implementation Forum to bring together key stakeholders from across commercial, public health, academic, and other sectors to help identify and devise solutions to address testing supply issues, among other things.[25]

Additionally, on August 17, 2020, FEMA announced it was establishing a 5-year voluntary agreement to enhance coordination, planning, and information sharing between federal departments and agencies and private sector partners around the manufacture and distribution of medical supplies for COVID-19 and future pandemics, under DPA Title VII authorities.[26] The DPA provides participants to the agreement limited protection from antitrust liability for specific actions taken in developing and executing the agreement.

Remaining medical supply chain challenges. Even with the federal efforts taken and improved availability of some supplies, there are ongoing constraints around certain types of PPE and testing supplies:
  • FDA announced a list of devices determined to be in short supply. On August 14, 2020, FDA published a list of devices—PPE, testing supplies and equipment, and ventilation-related products—that it had determined to be in shortage during the duration of the COVID-19 pandemic (see fig. 4).[27] The Advisory Group and FEMA officials also acknowledged the constrained availability of supplies, in part due to limited U.S. manufacturing and high global demand. For example, FEMA stated that the agency had open requests from state, local, tribal, and territorial governments for more than 139 million nitrile gloves (which Advisory Group officials said were not domestically manufactured), 11 million surgical gowns, and 6 million N95 respirators, as of August 4, 2020.[28] FEMA also noted that the supply of N95 respirators for medical use is not expected to catch up to demand until January 2021. Officials within HHS’s Office of the Assistant Secretary for Health (OASH), who lead federal efforts to support states in their COVID-19 testing plans, acknowledge that there are testing supply shortages. In particular, they noted shortages around some of the more efficient testing platforms requiring specialized and proprietary supplies.

Figure 4: Food and Drug Administration (FDA) List of Devices Determined to be in Shortage, as of August 2020

  • Officials from seven of eight states interviewed in July and August 2020 and stakeholder groups we interviewed also identified ongoing constraints around certain types of PPE. For example, one state official told us that the state was unable to fulfill local entities’ requests for N95 respirators and nitrile gloves, but that the state had a sufficient supply of other items, such as face shields.

    Additionally, two states’ officials we interviewed expressed concern about the uncertain path of the virus and the impact of a fall surge on supply availability. As such, while the commercial market is currently the route for most states to obtain supplies, some state officials told us they plan to continue to request supplies from FEMA for items with more limited availability.
  • Information reported by nursing homes and medical provider associations also indicated ongoing specific constraints with PPE. According to data that nursing homes self-reported to CDC, about 22 percent of nursing homes reported they did not have a 1-week supply of at least one or more of the following: N95 respirators, surgical masks, gloves, eye protection, or gowns, as of July 26, 2020. The American Nurses Association surveyed both members and nonmembers in late July and early August about their PPE experiences over the prior 2 weeks. Their results found that 88 percent of the over 14,000 responding nurses reported being required or encouraged to reuse single-use N95 respirators. For those who reported reusing N95 respirators, 62 percent expressed concerns about their safety as a result. Additionally, the biggest obstacle to physicians reopening their practices is “ongoing shortages of PPE, especially N95 masks and gowns,” according to a June 30, 2020, American Medical Association letter to the Vice President, who leads the White House Coronavirus Task Force.[29]
  • States and associations also report pervasive testing supply shortages. Consistent with FDA’s reporting of key testing supply shortages for the duration of the pandemic, officials from seven of the eight states we interviewed in July and August 2020 identified previous or ongoing shortages of testing supplies, including swabs, reagents, tubes, pipettes, and transport media.[30]

    The Association of Public Health Laboratories reported in early August that 23 percent of public health laboratories reported they would run out of reagents or other testing supplies within a week.[31] Officials in six of the eight states we interviewed identified difficulty acquiring reagents and test kits from the commercial market, and one state official noted that challenges obtaining testing supplies have grown with the increase in testing demand across the country. Hospitals in Arkansas have had to limit their COVID-19 testing to 10 percent of full capacity due to a shortage of reagents, according to a July 2020 letter from members of the Arkansas congressional delegation to the Vice President.[32] Furthermore, officials from three of eight states and two stakeholder groups that we interviewed in July and August identified plastic supplies such as pipettes as a new type of item in shortage.

    In HHS’s initial COVID-19 Strategic Testing Plan, submitted to Congress in May 2020, HHS did not identify specific actions it or other federal agencies would take to address certain testing supply shortages.[33] For example, the May COVID-19 Strategic Testing Plan stated that because an efficient reagent marketplace was already in place, the federal government did not intend to purchase and distribute reagents on behalf of states; however, we heard from several states that they were experiencing reagent shortages.

    The subsequent COVID-19 Strategic Testing Plan, submitted to Congress in August 2020, outlined recent actions that the federal government had taken to enhance the testing supply chain, including using DPA authorities for supplies such as reagents, and that HHS would consider further use of DPA authorities moving forward.[34] However, the August COVID-19 Strategic Testing Plan did not identify actions to address pipettes and other plastic supplies that states and stakeholders have recently reported to be in short supply.

Although officials, including within OASH, acknowledged ongoing supply challenges, they provided their perspective on the issue:
  • ASPR officials noted that “shortages” are subjective and depend upon several factors, including the amount and target number of days of supplies the state or hospital has determined to stockpile, or the time that it takes between requesting and receiving supplies—a perspective echoed by Advisory Group officials.
  • FEMA and ASPR officials noted that state, local, tribal, and territorial governments have overestimated their needs for supplies. For example, ASPR officials noted that one state with a population of around 11 million people overestimated its need by requesting approximately 15 million N95 respirators. FEMA officials said it was difficult for states and others to assess their true resource needs, in particular, earlier in the pandemic. This exacerbated the view that shortages existed, which in turn may have led to current needs being exaggerated in the volume of open requests for supplies, according to ASPR officials.
  • Some federal officials and stakeholders we spoke with noted that testing supply shortages can be fluid in nature. Many components are required to run a laboratory-based test, and many testing instruments require specialized and proprietary supplies to operate. According to some state officials, the market can experience a shortage in supply for one component that is then resolved, only to be followed by the shortage in supply of another component. For example, one state reported that early in the pandemic response, there were reported shortages of swabs, but as those shortages resolved, shortages of other instrument-specific items, such as reagents, emerged.

Federal actions for mitigating remaining supply challenges uncertain. HHS, FEMA, and their federal partners have taken numerous actions to respond to the unprecedented need for medical supplies. Yet, as supply constraints continue, we found that HHS and FEMA have not developed plans outlining specific actions the federal government will take to help mitigate remaining medical supply gaps needed to respond to the pandemic, including through the use of DPA authorities.

FEMA and Advisory Group officials agreed a plan is an important step, and Advisory Group officials said they have begun to think about its development as federal responsibilities for supplies shift and in preparation for the potential that other agencies may need to step back and shift to other responsibilities. ASPR officials noted that they have not had an opportunity to develop a plan due to the need to focus on immediate supply needs, especially for the fall.

ASPR officials also said that they are beginning the planning process through an interagency working group, known as the Logistics, Supply Chain, and Next Generation SNS working group, to ensure that supplies are available, including through the SNS, in case of an increase in COVID-19 cases in the fall. This interagency working group provides one opportunity for developing plans outlining any specific actions the federal government will take—that could be communicated to states and other stakeholders—so that stakeholders can plan accordingly. HHS’s COVID-19 Strategic Testing Plan, last updated in August and updated every 90 days, provides another opportunity for HHS to articulate plans for specific actions to mitigate remaining testing supply gaps. Plans outlining specific forward-looking actions the federal government will take could help provide certainty to stakeholders.

The March 13, 2020, U.S. Government COVID-19 Response Plan, known as the PanCap Adapted, outlines several objectives to help ensure a stabilized and resilient medical supply chain that would also be consistent with developing, and sharing with stakeholders, plans outlining specific federal actions the federal government will to take to help mitigate remaining medical supply gaps. The PanCap Adapted also notes the importance of engaging state, local, tribal, and territorial entities and nongovernmental health care organizations in achieving these objectives:
  • assessing critical medical supply chain requirements and gaps,
  • identifying and implementing strategies to resolve and mitigate gaps and shortfalls between production and supplies, and
  • developing contingency capacity and capability to address future gaps or shortfalls.[35]

Moreover, the PanCAP Adapted calls for the development of an up-to-date, federally executable health care supply chain management strategy that includes prioritized supplies to sustain the health care infrastructure.

Until HHS and FEMA develop and communicate to stakeholders—such as state, local, tribal, and territorial governments—plans outlining specific actions the federal government will take to help mitigate remaining medical supply gaps, uncertainty will persist regarding whether the federal response will align with needs. Further, such plans would provide needed clarity to federal partners and nonfederal entities on priority needs and ongoing efforts to address those needs. It will be especially important to develop and communicate plans that detail 1) specific actions for increasing domestic production of medical supplies, such as circumstances under which agencies will consider use of DPA authorities, and 2) the conditions under which federal agencies would consider additional supply support. Taking such steps before the fall, when the United States will move into flu season and see a possible uptick in COVID-19 cases, both of which could further disrupt supply availability, will be important.

These plans for the ongoing pandemic can help inform a longer-term, comprehensive national supply chain strategy, which in turn could help better position all stakeholders for future pandemics or other chemical, biological, nuclear, or radiological events of this scale. We have ongoing work that could also inform the development of such a long-term national supply chain strategy, including work examining the use of the DPA to expand domestic production of critical medical supplies, federal efforts to overcome barriers to domestic drug manufacturing, and the SNS.

We will also continue to monitor actions taken in response to two recent Executive Orders focused on strengthening the domestic medical supply chain in response to challenges highlighted by COVID-19:
  • In May 2020, the President signed an Executive Order authorizing the Chief Executive Officer of the International Development Finance Corporation to make loans and take other actions to expand domestic production of strategic resources to respond to the pandemic.[36]
  • In August 2020, the President signed an Executive Order intended to increase domestic production of essential medicines, medical countermeasures including PPE, and their critical inputs.[37] It directs the FDA Commissioner, in consultation with the Director of the Office of Management and Budget, ASPR, the Assistant to the President for Economic Policy, and the Director of the Office of Trade and Manufacturing Policy, to create a list of these items within 90 days. It also directs federal agencies to take various steps to increase domestic production of these items.

Medical supply management responsibility shifting to HHS. Complex medical supply management responsibilities that have been shared between many agencies during the nationwide response to COVID-19 are now transitioning to HHS:
  • Responsibility for procuring and distributing testing swabs and transport media to states transitioned from FEMA to HHS’s OASH in July 2020, according to HHS officials.
  • Responsibility for monitoring commercial supply availability to, for example, inform procurement decisions by analyzing data from domestic medical supply distributors transitioned from the Advisory Group to ASPR in September 2020, according to ASPR officials.
  • Responsibility for other supply acquisition conducted by DOD on behalf of ASPR—including market research, contract solicitation, proposal evaluation, and contract execution—will begin to transition to ASPR in September. In preparation for this transition, DOD is currently guiding ASPR staff on these activities, according to officials from both agencies.
  • Responsibility for fulfilling state, local, tribal, and territorial governments’ requests for supplies and other resources will transition from FEMA to the SNS, according to HHS officials and documentation we received from ASPR.[38]

HHS has been a partner in many of the supply chain management efforts used to respond to COVID-19. Moreover, ASPR officials noted that these activities would help augment their current capabilities as the lead for the public health and medical services response.[39] However, this amount of responsibility at the scale the response necessitates may require continued support from HHS’s federal partners to sustain the progress made to date for the duration of the pandemic.

For example, ASPR will take over supply acquisition responsibilities from DOD, including awarding funds for domestic production expansion projects, which DOD and ASPR officials said requires knowledge of the DPA and other applicable authorities to execute. However, only three of ASPR’S 20 contracting officers had experience using DPA authorities prior to COVID-19, according to agency officials, and hiring could be a challenge. ASPR officials acknowledged that they will need to hire acquisition staff with expertise in DPA contracting in the future, adding that staff with such expertise can be hard to locate.

ASPR officials also noted they would require new authority to enable greater supply acquisition coordination through the SNS. Specifically, ASPR does not currently have the authority to sell to, or enter into joint acquisition agreements with, states, which ASPR officials said would benefit state, local, tribal, and territorial governments.

We found that federal partners have not yet determined in what capacities or for how long they will continue to support HHS as the department takes on these additional responsibilities. ASPR officials said they meet weekly with other agency counterparts to discuss the logistics for transitioning responsibilities beginning in September, but have not yet developed written plans because the response necessitates a constant real-time evaluation of each agency’s abilities. Our prior work has identified leading practices that can help sustain collaboration, such as developing a plan identifying roles and responsibilities for parties included in the collaborative effort.[40] Transition planning efforts are under way for many of the responsibilities mentioned, but have not yet culminated in a document that clearly defines the roles and responsibilities in the various aspects of supply chain management.

It is critically important that HHS and FEMA work with their federal partners to define roles and responsibilities for managing the medical supply chain to sustain supply chain progress. Until HHS and FEMA work with their federal partners to immediately document roles and responsibilities for supply chain management functions transitioning to HHS, they risk losing the momentum and expertise developed up to this point in the response. Additionally, without clearly defined roles and responsibilities, the federal response structure may be unable to respond to new supply chain challenges that could emerge.

State, territory, and tribal challenges managing supplies. As the federal government works to procure and distribute supplies through multiple channels to meet critical medical supply needs, its state and other nonfederal partners have experienced a variety of challenges managing supply needs—such as tracking the status and delivery of supplies from the federal government and budgeting for ongoing needs. Interviews with state and territorial officials with responsibility for managing supply needs and budgets and associations representing state, territorial, and tribal officials have identified the following challenges:
  • Knowing when or which supplies will arrive. Officials from the majority of 10 states we interviewed, as well as officials from one FEMA regional office and an association representing emergency managers, described challenges regarding deliveries.[41] For example, an official from one state described frustrating experiences verifying the delivery of supplies and said that manifests containing tracking information often arrived several days behind the arrival of the actual shipment. The official noted that the people delivering federal supplies did not provide estimated times of arrival and said that on multiple occasions, the delivery went to a place other than the expected delivery site, requiring state officials to respond to phone calls at 2 or 3 a.m. to help manage the resulting confusion.

    An official from another state similarly described frustrations with uncertainty about when PPE would be delivered, saying that even a number of months into the response, the state's staff cannot say with any confidence when items will arrive; rather, shipments “just show up” without advance notice.
  • Tracking deliveries made directly to local points of care. Officials from the majority of the states we interviewed, as well as officials from one FEMA regional office, reported having trouble confirming that the right entities received correct and usable supplies when supplies provided through federal programs arrive directly at local points of care, such as hospitals, laboratories, or nursing homes. For example, officials from one state described trying to track supplies delivered directly to medical facilities, and after raising the issue with FEMA and HHS representatives, received only a list of which counties received the supplies but not the specific facilities where those supplies were delivered. Another state official in a different FEMA region said that the FEMA regional office provided information stating that FEMA had shipped supplies to somewhere in the state, but the information did not specify where the supplies went or to whom they were delivered.
  • Budgeting for ongoing supply needs. State officials described challenges determining how to best apply funding from various federal programs and make budgeting decisions for future supply needs:
    • Officials from the majority of the 10 states we interviewed expressed concerns and frustrations over uncertainty about whether and to what extent states and other recipients would be responsible for sharing the cost of supplies provided by the federal government. Officials from the majority of FEMA regional offices we interviewed also described states’ confusion about reimbursement, cost share responsibility, and concerns about potential duplication of benefits.

      FEMA generally reimburses 75 percent of the eligible cost of medical supplies that states purchase under its Public Assistance program and received through mission assignments.[42] Conversely, supplies that states and other recipients receive directly from the SNS are covered at 100 percent and are not subject to cost sharing. To illustrate, officials from at least two states described being uncertain as to which supplies and delivery efforts were provided by FEMA programs and which were provided through another federal channel because shipments did not always contain paperwork indicating the provider, compounding confusion about whether their states would be responsible for sharing the cost for such supplies and activities.
    • State officials also reported that different timelines and guidance for FEMA’s Public Assistance Program and the CRF make it difficult for nonfederal entities to optimize resources from these programs. Certain supplies are eligible under both programs.

      In addition, the Department of the Treasury (Treasury) has provided information describing use of the CRF to meet the nonfederal cost share for FEMA assistance. Therefore, state, territorial, and tribal officials have to make decisions about the best way to apply these funds to meet their medical supply needs. According to one state official, the different timelines and requirements for each program, particularly the requirement that payments from the CRF may only be used to cover costs incurred by the end of calendar year 2020, have made deciding the best way to use these funds challenging. [43] Completing Public Assistance projects typically takes time, and users can face delays during the review and approval process.

Challenges tracking supplies limit the ability of state, territorial, and tribal officials to determine if their supply requests have been met, which orders are pending, and what additional requests they may need to make. These tracking challenges, combined with uncertainty about the eventual cost share responsibility states and other nonfederal entities have, limits the information they can use to understand their overall supply picture and to budget for ongoing and future supply needs.

The PanCAP Adapted anticipates that states would request federal assistance when requirements exceeded state, local, tribal, and territorial capabilities to respond to COVID-19. In addition, it describes the responsibilities of federal agencies to ensure stabilization of the medical supply chain, including the distribution of critical medical supplies. However, for the distribution of supplies, it focuses on use of the SNS, and as we reported in June 2020, nationwide need for critical supplies to respond to COVID-19 quickly exceeded the quantity of supplies contained in the SNS.[44] When this condition became clear, the federal government and its nonfederal partners had to employ numerous additional avenues to meet supply needs.

Findings from Crimson Contagion—a 2019 national exercise that approximated some of the conditions of the COVID-19 pandemic—foreshadowed this challenge.[45] The findings noted that resource request and allocation tracking was not transparent to the range of state, local, tribal, territorial, and federal response partners because these resources are all tracked via different processes in different systems and across several agencies, which posed a challenge to developing a comprehensive common operating picture to track resource needs and supply movement.

The provision of supplies through federal programs for COVID-19 involved using systems that previously had not worked together to deliver supplies at this scale or in a situation with this level of worldwide resource scarcity, and required pursuit of numerous avenues to try to meet the needs. For example, one FEMA region reported that its states and territories sourced PPE requests through all of the following channels: (1) state and federal stockpiles, (2) existing contracts (while applying for reimbursements through FEMA’s Public Assistance Program), (3) FEMA mission assignments, and (4) donations.

The scale and nature of this response, global supply shortages, and rapidly shifting ground conditions have added to the challenges faced by states, territories, and tribes—some of which are working with their own complex organizational arrangements, such as large and decentralized health care networks consisting of both public and private entities. At the same time, state officials and FEMA regional officials we interviewed have noted that federal guidance and communication to help address these issues have not always been provided consistently and effectively to state decision makers to help them to stay abreast of changing conditions and policy interpretations.

Further, standards for internal control state that management should communicate the necessary quality information externally to achieve the entity’s objectives and address related risks.[46] In the case of the COVID-19 response, providing the states, territories, and tribes with clear and consistent information about critical supply needs is an indispensable part of supporting their critical role in response to nationally significant biological incidents like COVID-19. In addition, it will be important in the immediate term as the crisis continues.

Officials from the Advisory Group told us they are able to track daily transactional information from six major medical supply distributors. By tracking orders from hospitals, nursing homes, and other users to help understand the aggregate national demand; monitoring movement of materials from manufacturers to distributors; and monitoring order fulfillment, the Advisory Group is able to visualize where supplies are moving in the country.

Nevertheless, the challenges that states, territories, and tribes have faced in tracking the status and fulfillment of supplies continue to hamper their efforts to plan for and help ensure their supply needs are met. Officials from the Advisory Group acknowledged that, although the group shares what it can of the information it uses to visualize supply demand and usage nationwide, some of this information is proprietary and there are limits on sharing with nonfederal partners. At the same time, officials from the Advisory Group noted that some states have had more success tracking supplies delivered through federal and other channels, and there may be an opportunity to identify best practices that help states better monitor their overall supply operating picture.

As the nation prepares for additional COVID-19 cases this fall and winter, it is essential that agencies leading the response through the UCG take steps to address the information challenges nonfederal partners are experiencing and help ensure better capability in the coming months. The UCG has the opportunity to design interim systems and guidance and disseminate best practices to help address the challenges states, territories, and tribes face in the immediate COVID-19 response effort. Until these agencies devise such interim solutions to address challenges tracking the status of supply requests during the pandemic, states and other nonfederal entities will continue to be limited in their ability to plan for supply needs for the remainder of the COVID-19 pandemic response.

Given the complexity of the problem, the number of federal and nonfederal entities involved, and the complex and decentralized environment in which a response like this operates, building long-term capability solutions will be challenging. Establishing reliable, end-to-end logistics tracking capabilities from points of care back through the multiple distribution channels required in a response of this scale is a significant undertaking and not likely to be resolved in the near term. We have ongoing and planned work on planning and building capabilities for nationally significant biological events, as well as work on the future of the SNS. We will continue to monitor long-term issues and solutions through this work.

GAO Recommendations Related to the Medical Supply Chain
  • The Secretary of Health and Human Services in coordination with the Administrator of the Federal Emergency Management Agency—who head agencies leading the COVID-19 response through the Unified Coordination Group—should immediately document roles and responsibilities for supply chain management functions transitioning to the Department of Health and Human Services, including continued support from other federal partners, to ensure sufficient resources exist to sustain and make the necessary progress in stabilizing the supply chain, and address emergent supply issues for the duration of the COVID-19 pandemic. (Recommendation 1)
  • The Secretary of Health and Human Services in coordination with the Administrator of the Federal Emergency Management Agency—who head agencies leading the COVID-19 response through the Unified Coordination Group—should further develop and communicate to stakeholders plans outlining specific actions the federal government will take to help mitigate remaining medical supply gaps necessary to respond to the remainder of the pandemic, including through the use of Defense Production Act authorities. (Recommendation 2)
  • The Secretary of Health and Human Services —who heads one of the agencies leading the COVID-19 response through the Unified Coordination Group—consistent with their roles and responsibilities, should work with relevant federal, state, territorial, and tribal stakeholders to devise interim solutions, such as systems and guidance and dissemination of best practices, to help states enhance their ability to track the status of supply requests and plan for supply needs for the remainder of the COVID-19 pandemic response. (Recommendation 3)
  • The Administrator of the Federal Emergency Management Agency—who heads one of the agencies leading the COVID-19 response through the Unified Coordination Group—consistent with their roles and responsibilities, should work with relevant federal, state, territorial, and tribal stakeholders to devise interim solutions, such as systems and guidance and dissemination of best practices, to help states enhance their ability to track the status of supply requests and plan for supply needs for the remainder of the COVID-19 pandemic response. (Recommendation 4)
Source: GAO. | GAO-20-701

Testing Capacity

Federal agencies have taken several key actions in recent months to increase testing. Diagnostic testing in the U.S. increased in July compared to June, while remaining about the same from July to August, according to testing data available on the HHS website.[47] However, testing capacity has struggled at times to keep up with increased demand, driven in part by the supply shortages described above. This has led to some delays in turnaround times for testing results. HHS and some researchers suggest that in light of testing constraints, tests should be prioritized for people with symptoms and other high-risk populations. Emerging testing innovations and approaches may offer increased access to testing moving forward.

Key federal actions to support testing. HHS has undertaken several key actions to expand testing levels and capacity since our June report.[48] HHS’s COVID-19 Strategic Testing Plan states that the role of the federal government is to provide strategic guidance and help scale supplies, among other things, while states, territories, and tribes are responsible for formulating and implementing testing plans.[49]
  • Continued federal expenditures for testing. The COVID-19 relief laws appropriated a total of $26.5 billion to HHS to support COVID-19 testing. HHS reported total testing-related obligations of about $14.35 billion as of July 31, 2020, and total expenditures of $1.17 billion.[50] See table 1 for HHS-reported obligations and expenditures for testing-related activities.
    Table 1: HHS’s Reported Obligations and Expenditures for Testing-Related COVID-19 Response Activities, as of July 31, 2020

    Key Activity

    Obligations
    ($ billions)

    Expenditures
    ($ billions)

    Percentage of obligations expended, as of July 31, 2020

    Support to state, local, territorial, and tribal organizations’ preparedness

    $12.690

    $0.867

    7%

    Testing for uninsured

    0.163

    0.161

    99

    Testing

    1.496

    0.137

    9

    Total

    14.349

    1.165

    8
    Source: GAO analysis of Department of Health and Human Services (HHS) information. | GAO-20-701

    Note: the percentages represent the share of obligations for each key activity that were expended as of July 31, 2020.

    We requested information from HHS to explain why expenditures represent a small share of total obligations. HHS responded that it was primarily due to the slow rate at which states have used the funds they were awarded; however, HHS’s response did not address why its expenditures of amounts allocated for federal testing activities comprised 9 percent of its obligations. HHS noted that the length of time it will take to spend all federal appropriations allocated for testing is highly dependent on the progression of the COVID-19 pandemic and its impact on specific U.S. geographic locations and populations.

    The Paycheck Protection Program and Healthcare Enhancement Act required each state, territory, or local jurisdiction receiving funding to submit to HHS a plan for how they will meet their testing targets.[51] Officials from states we interviewed told us they intend to use these funds to support testing in various ways, such as by procuring additional testing supplies when available, creating partnerships with local private sector entities to expand testing capacity, improving mobile testing capacity, expanding the laboratory and epidemiological workforce, and investing in information technology upgrades. HHS officials told us that the funding is available to recipients for 30 months and is expected to be expended over time.
  • Enhanced support for testing supplies. As described above, FEMA and HHS have continued to procure swabs, transport media, and point-of-care tests on behalf of states and territories. FEMA and HHS also procured point-of-care tests on behalf of certain federal agencies.[52] HHS will continue to procure these supplies through December 2020.
  • Invested in new testing technologies. In late July, the National Institutes of Health's (NIH) Rapid Acceleration of Diagnostics (RADx) initiative awarded contracts totaling nearly $250 million to seven companies to support new testing technologies. NIH stated that these investments have the potential to increase the number, type, and availability of tests by fall 2020.[53] Four of the technologies could increase testing capacity while reducing the time to receive test results. Three of the technologies use platforms that can give rapid results in non-laboratory settings, such as work sites, nursing homes, and schools. In early September, NIH announced an additional round of awards totaling over $129 million to nine companies.[54]
  • Invested in capacity expansion for two laboratories. On August 13, 2020, HHS announced a $6.5 million dollar investment in two commercial laboratories.[55] Specifically, the agency is providing these companies with resources, such as testing equipment and supplies, to increase testing capacity by up to an additional 4 million tests per month starting in early October.
  • Expanded support for testing sites. HHS established public-private partnerships with a commercial laboratory company and retail pharmacy and grocery store chains to implement and reimburse testing through August 2020.[56] As of mid-August, these sites had tested more than 1.6 million individuals, according to HHS documentation. In addition, HHS set up surge temporary testing sites in multiple communities to increase federal support in areas with recent spikes in new cases and hospitalizations.[57]
  • Clarified guidance and implemented enforcement mechanisms to enhance testing data. Shortly before the August 1, 2020 testing data reporting deadline, HHS published implementation specifications with standard definitions for all of the data that laboratories are required to report to CDC through state and territorial health departments.[58] These specifications are aimed to help improve the quality of testing data CDC receives, and in turn allow the agency to more accurately monitor testing. According to CDC, 40 of the 56 states and territorial jurisdictions had completely developed the capability to relay detailed testing data to CDC as of August 24, 2020.

    To improve consistency and uniformity in the reporting of testing data, on September 2, 2020, CMS published an interim final rule that provides sanctions for laboratories that fail to report COVID-19 testing data consistent with the form and manner specified by HHS.[59] We will monitor the implementation of this guidance in our ongoing work.

Testing capacity constraints. Although HHS has undertaken efforts to increase testing across the country, laboratory testing capacity has been constrained due to shortages in supplies and equipment, as well as increased demand for tests associated with emerging hotspots in disease transmission. These constraints have led to delays in the turnaround times for testing results. Such delays have multiple serious consequences, including delays in isolating and tracing the contacts of those who test positive, which can exacerbate outbreaks by allowing the virus to spread undetected.

Two large commercial laboratories reported delays in July 2020:
  • In early July, LabCorp announced on its website that its average time to deliver test results was 4 to 6 days, citing constraints in the availability of supplies and equipment.[60]
  • Quest Diagnostics announced in late July that the average turnaround time for reporting test results had increased to 7 days or more for nonpriority populations.[61]

Both companies reported their turnaround times had decreased to 1-3 days by August 10, 2020, citing the use of new testing techniques that helped to increase their capacity.[62] Similarly, the Association of Public Health Laboratories reported that most public health laboratories were able to meet their COVID-19 testing demand in the first 2 weeks of August.[63] According to HHS documentation, 97 percent of tests run by six commercial laboratories returned results within 3 days by early September.[64] However, future surges in demand for tests could lead to further delays in testing turnaround times if laboratory supply shortages and other capacity constraints have not abated.

To help alleviate laboratory testing capacity constraints, HHS and some researchers have suggested that testing should be prioritized for certain populations. Some states have also recommended prioritizing testing for specific populations.
  • In the HHS COVID-19 Strategic Testing Plan, submitted to Congress on August 22, 2020, HHS stated that communities seeing increased turnaround times for test results may choose to prioritize testing to only those who “need” a test according to CDC or state and local guidelines; however, HHS did not define who needs a test in this plan. Subsequently, on August 24, CDC revised its testing guidelines to state that asymptomatic individuals with a known exposure to COVID-19 do not necessarily need a test unless they are a vulnerable individual or their health care provider or state or local public health officials recommend a test. Further, the revised guidelines stated that asymptomatic individuals without a known exposure do not need to be tested.[65]

    Several public health organizations, including the American Medical Association, the National Association of County and City Health Officials, and others, have expressed concern over CDC’s guidelines for asymptomatic people who have been exposed to COVID-19, citing the need for a rationale for the change. For example, the Association of American Medical Colleges expressed concern that the new CDC guidelines will result in less testing of asymptomatic individuals, who may go on to infect others if they carry the virus. GAO will continue to monitor this issue.
  • Several states, including Alabama, California, Michigan, Minnesota, and Virginia, have issued guidelines for prioritizing testing of certain populations, such as people requiring hospitalization and health care workers. Guidelines from California, Minnesota, Michigan, and Virginia recommend prioritizing testing for asymptomatic individuals who are close contacts of confirmed COVID-19 cases.
  • In May 2020, the University of Minnesota’s Center for Infectious Disease Research and Policy noted that the need for testing will likely far outpace capacity, particularly during surges, and recommended prioritizing testing based on CDC guidelines at that time.[66]

Emerging testing technologies and approaches. Recent innovations in testing technology provide the potential to alleviate capacity constraints. For example, in July 2020, FDA authorized the first two COVID-19 diagnostic tests for use with pooled samples.[67] In a pooled testing strategy, laboratories pool samples from multiple individuals in one batch to run a single test, and samples are subsequently tested individually only if the pooled batch returns a positive or inconclusive result.[68] According to LabCorp and Quest Diagnostics, two laboratory companies that have received authorizations for pooled testing, this technique can help to optimize testing capacity. The White House Coronavirus Task Force encouraged this testing approach for counties with a test positivity rate between 5 and 10 percent, stating that it could increase access to testing and reduce turnaround times for results.[69] Additionally, on August 15, 2020, FDA authorized a new laboratory-based saliva viral test that does not require specialized collection supplies or certain reagents that have been, at times, in short supply.[70]

In addition, as an alternative approach to addressing laboratory testing capacity constraints, some researchers have proposed an increased use of point-of-care antigen tests as a means to increase access to testing while reducing strain on laboratories.[71] Antigen tests can be administered and processed at care settings, such as clinics, and results are available in about 15 minutes, eliminating the risk of delayed turnaround times. Antigen tests are also less costly than other viral diagnostic tests. However, antigen tests have lower sensitivity than other viral tests, meaning they have a higher chance of producing false negatives.[72]
  • Public health researchers from the Rockefeller Foundation and Harvard University have called for an increased use of antigen tests in a screening capacity, including among asymptomatic individuals, noting that this approach would be useful when re-opening certain settings, such as schools and large workplaces.
  • In July and August 2020, the federal government awarded contracts to manufacturers of three antigen tests to purchase or increase production of these tests. For example, HHS awarded a contract for the delivery of 150 million Abbott BinaxNOW COVID-19 Ag Card Point of Care tests, with the intention of distributing them for testing at schools and for testing other special needs populations.[73] Also, in August 2020, 10 states joined together to conduct group purchasing of 5 million antigen tests.[74]

We have a body of ongoing work related to testing, and we will continue to monitor testing levels and federal efforts to address testing capacity constraints, among other things.

Vaccine and Therapeutics Development, Manufacturing, and Distribution

Multiple federal agencies continue to support the development, manufacturing, and distribution of vaccines and therapeutics to prevent and treat COVID-19. Through Operation Warp Speed—a partnership between DOD and HHS, including HHS’s Biomedical Advanced Research and Development Authority (BARDA), CDC, and NIH—DOD is supporting HHS in developing plans for nationwide distribution and administration of any licensed or authorized COVID-19 vaccine. However, as of September 4, 2020, HHS had not documented or shared its plans, being developed with support from DOD, with relevant stakeholders or the public. Early understanding of planning efforts—such as key assumptions being made about how a vaccine will be prioritized, allocated, and administered—is essential to help ensure that coordination takes place across all levels of government and with other stakeholders and that clear and consistent messages are shared with the public on the safety and efficacy of any available vaccines. On September 16, 2020, HHS and DOD released two documents outlining a strategy for any COVID-19 vaccine. GAO will evaluate these documents and report on them in future work.

Federal efforts on developing and manufacturing vaccines and therapeutics. Federal agencies have provided funding to accelerate the development and manufacturing of vaccines and therapeutics for COVID-19.[75] (See fig. 5 for an overview of the traditional timeline for development and FDA licensure of a vaccine.) Many of these activities are part of Operation Warp Speed.[76]
  • HHS and DOD have announced a total of about $12.6 billion in awards to support Operation Warp Speed and to accelerate the development, manufacturing, and distribution of COVID-19 vaccines and therapeutics, as of September 1, 2020.[77] For example, HHS and DOD announced an award of a $138 million contract for the production of more than 100 million prefilled syringes by the end of 2020.
  • Manufacturing capacity is being advanced for selected Operation Warp Speed vaccine candidates while they are still in development; typically, large-scale manufacturing of vaccine occurs after it is shown to be safe, pure and potent (i.e., safe and effective). According to HHS, the federal government is taking a financial risk by manufacturing certain selected vaccines before information about the vaccines’ safety and efficacy is known to ensure vaccines are available as soon as possible, once such information is determined.
  • A memorandum of understanding between DOD and HHS states that DOD will coordinate the logistics, supply chain, development, and manufacturing of vaccines and therapeutics in support of Operation Warp Speed, among other things.

Figure 5: Traditional Timeline for Development and Licensure of a Vaccine

Note: Phase 1 clinical trials test the safety of a product with a small group of people (usually less than 100). Phase 2 clinical trials look at questions such as the maximum tolerated dose, the optimal schedule for giving the product (how many doses and at what time intervals), and whether the immune system is having the desired responses. These studies are conducted with a medium-size population of volunteers (usually a few hundred to 1,000). Phase 3 clinical trials look at things like whether the product prevents new infections or, if people become infected, if the product helps control the infections so they do not become severe. These studies involve many thousands of people, usually including participants who are at increased risk for infection.
Additionally, licensure of a vaccine requires that the establishment in which the vaccine is manufactured, processed, packed, or held meets standards designed to assure that the vaccine continues to be safe, pure, and potent (i.e., safe and effective).

Additionally, BARDA is making investments in the development of vaccines and therapeutics for COVID-19.
  • As of August 18, 2020, BARDA had awarded about $10.8 billion in support of seven vaccine candidates; these awards included support for the development, manufacturing, and purchase of vaccine doses. Of these seven vaccine candidates, one was in phase 1 of clinical trials, one was in phase 1 and phase 2 of clinical trials, one was in phase 2, three were in phase 3, and the remaining vaccine candidate was not yet in clinical trials, as of September 3, 2020.[78]
  • BARDA also awarded about $1 billion for nine therapeutic candidates as of August 18, 2020, and two of these candidates were in phase 1 of clinical trials, one was in phase 2 of clinical trials, and one was in phase 3 trials as of September 1, 2020. In addition, two therapeutics that received BARDA awards had been in phase 3 clinical trials but were no longer supported by BARDA.[79]

NIH has also established a COVID-19 Prevention Network that aims to enroll thousands of volunteers in large-scale phase 3 trials of vaccines and of monoclonal antibodies—laboratory-made antibodies that may be able to serve as another prevention option until a vaccine becomes available.[80] For each of the phase 3 trials, NIH is working to enroll 30,000 people and include as diverse a population as possible, including different racial and ethnic groups and a range of age groups, according to HHS.[81]

Federal efforts on distribution, including prioritizing and allocating vaccine. The federal government has taken some steps to begin determining how any licensed or authorized vaccine might be distributed, including which groups may have priority and how it might be allocated and administered. Among actions taken are the following:
  • HHS and DOD announced that McKesson Corporation will be a central distributor of COVID-19 vaccines and related supplies in support of Operation Warp Speed. McKesson, which distributed the H1N1 vaccine during the H1N1 pandemic, will work under CDC’s guidance to deliver COVID-19 vaccine to administration sites, according to HHS and DOD announcements released on August 14, 2020.
  • HHS has announced it is planning a tiered approach for vaccine distribution. This tiered approach will build on a methodology developed as part of pandemic influenza planning and will be adjusted based on experience during the first wave of the COVID-19 response, among other things, according to an Operation Warp Speed Fact Sheet.
  • CDC and NIH have sponsored a committee of experts to develop a framework to assist policymakers in planning for the equitable allocation of COVID-19 vaccine. This committee—convened through the National Academies of Sciences, Engineering, and Medicine and the National Academy of Medicine—held its most recent public meeting in early September 2020. On September 1, 2020, the committee released a discussion draft of a potential allocation framework for public comment.[82] The committee’s final report, expected early this fall, will include a final recommended allocation framework, according to a press release announcing the draft framework. The press release also noted that the committee’s final report will address related issues, such as vaccine hesitancy, demand, and promotion as well as risk communication and strategies for community engagement.[83]
  • CDC’s Advisory Committee on Immunization Practices has established a COVID-19 vaccine work group to consider approaches for vaccine distribution.[84] This work group intends to collect, analyze, and prepare information related to COVID-19 vaccines for presentation, discussion, deliberation, and vote by the advisory committee.[85] It is expected to make recommendations on the groups for vaccine prioritization to CDC and HHS leadership.[86] As of August 26, 2020, these recommendations had not yet been made. According to HHS, the advisory committee recognizes that vaccine prioritization will be an iterative process that will be continually refined as more information about the COVID-19 virus, vaccines, and vaccine availability becomes known.
  • CDC sent early distribution planning documents to states. CDC sent several documents to state and local jurisdictions in late August 2020 to help them prepare for COVID-19 vaccination. These documents include (1) planning scenarios for state and local jurisdictions to use to develop operational plans for early COVID-19 vaccination when vaccine supply may be constrained, (2) planning assumptions, such as the potential timing for initial availability of a vaccine and storage and handling requirements, and (3) a checklist of early planning action items, such as identifying existing community vaccination providers.

Representatives of state, local, and territorial health officials and health care providers, including physicians, nurses, and immunization managers we interviewed, emphasized the need for the federal government to develop and share plans for the distribution and administration of COVID-19 vaccine before one becomes available. For example:
  • Representatives said they would need time to enroll additional providers if a COVID-19 vaccine is distributed using the established immunization network that was used during the H1N1 pandemic in 2009.[87]
  • It will be important to consider if using uniformed military personnel will improve or undermine confidence in a COVID-19 vaccine, if DOD is expected to play a role in vaccine distribution and administration. This is particularly true in certain minority and underserved communities, where trust in the medical and political systems is strained, according to state, local, and territorial health officials.
  • Advanced planning will be needed to develop and disseminate clear public health messaging to help ensure public acceptance and uptake of the vaccine. It will be important to address vaccine hesitancy for people concerned about the safety or effectiveness of the vaccine and to manage expectations about vaccine availability, according to representatives of state, local, and territorial health officials and immunization managers.[88]

HHS officials agreed that developing a national plan is critical. In congressional testimony on July 2, 2020, HHS officials said that critical plans needed to be developed for how a COVID-19 vaccine would be distributed and administered across the United States and that critical components include ensuring vaccine safety, effectiveness, and ultimately, vaccine confidence. [89] On September 4, 2020, HHS indicated that it would soon send a report to Congress outlining a distribution plan that takes into consideration the frameworks for vaccine distribution the department is developing, but did not provide a specific date for doing so.

In finalizing its distribution and administration plans, it will be important for HHS to define the specific roles and responsibilities for the various federal and nonfederal entities involved and include plans for public messaging to help ensure vaccine confidence. Our past work and that of others have demonstrated that proper planning—including incorporating best practices for project planning and scheduling and sharing information with stakeholders in a timely manner—will also be critical to the success of distributing and administering any licensed or authorized vaccine.[90]

By establishing a time frame for documenting and sharing a national distribution and administration plan, HHS, with support from DOD, can better ensure that all relevant stakeholders are best positioned to help plan and prepare for administering a vaccine and manage public expectations regarding a vaccine’s availability, safety, and efficacy. Moreover, in developing a plan that is consistent with best practices for project planning and scheduling and outlines the approach for how efforts will be coordinated across federal agencies and nonfederal entities, HHS, with support from DOD, can help prepare for a timely, effective, and well-coordinated response involving any licensed or authorized vaccine. On September 16, 2020, HHS and DOD released two documents outlining a strategy for any COVID-19 vaccine. These documents were released after we completed our audit work and we will evaluate and report on them in future reports.

We will continue to conduct work related to vaccines and therapeutics, including examining federal efforts to accelerate the development, manufacturing, and distribution of COVID-19 vaccines and therapeutics through Operation Warp Speed. We also plan to continue work examining the federal government’s plans to distribute and administer any licensed or authorized COVID-19 vaccine as well as plans for public messaging to stakeholders and the public about vaccine availability, efficacy, and safety.

GAO Recommendation Related to Vaccine Distribution

The Secretary of Health and Human Services, with support from the Secretary of Defense, should establish a time frame for documenting and sharing a national plan for distributing and administering COVID-19 vaccine, and in developing such a plan ensure that it is consistent with best practices for project planning and scheduling and outlines an approach for how efforts will be coordinated across federal agencies and nonfederal entities. (Recommendation 5)
Source: GAO. | GAO-20-701

HHS Efforts to Collect COVID-19 Data by Race and Ethnicity

HHS, particularly CDC, collects and makes publicly available data on various indicators of COVID-19 burden, including cases, hospitalizations, and deaths. CDC also collects and makes publicly available data on testing, such as the total number of positive tests out of the total number of tests reported.

Available data, although limited, suggest that a disproportionate burden of COVID-19 cases, hospitalizations, and deaths exists among racial and ethnic minority groups. For example, CDC found that non-Hispanic American Indian/Alaska Native persons were hospitalized with COVID-19 from March 1, 2020, to August 1, 2020, at a rate 5.2 times that of non-Hispanic White persons, and that non-Hispanic Black and Hispanic or Latino persons were hospitalized at a rate 4.7 times that of non-Hispanic White persons when adjusting for age.[91]

In addition, it is important to assess the potential long-term effects of those who have had COVID-19, including an examination of effects among different populations. Preliminary research suggests that individuals who have had COVID-19, including those who have been hospitalized, may suffer long-term health outcomes, such as heart, brain, or lung abnormalities.[92]

Gaps in data HHS collects by race and ethnicity and actions to improve data. The following describes four types of data HHS, including CDC, collects and gaps we identified in these data specific to race and ethnicity, as well as actions to improve some of these data.
  • Testing. CDC publishes data on COVID-19 testing results on its website, such as the total number of positive tests out of the total number of tests reported. However, it does not include results by race and ethnicity, as these data are not typically collected by laboratories or sent to laboratories by providers, according to some stakeholders we interviewed.[93] We previously reported that since August 1, 2020, all laboratories have been required to report data on COVID-19 test results by race and ethnicity to CDC.[94] On July 31, 2020, HHS published guidance with standard definitions for all information that should be included in testing data, including categories to be used for race and ethnicity data.[95]
  • Cases. CDC collects and makes available data on COVID-19 cases, including those that are probable or confirmed, from state and jurisdictional health departments. However, as of July 31, 2020, race and ethnicity data were not available for more than half—52.6 percent—of cases with case report forms received by CDC, or 63.8 percent of total cases reported.[96] CDC officials stated that they have worked with state and local partners to improve the completeness of demographic data, including race and ethnicity, obtained through case reporting.

    In addition, CDC updated its epidemiological case report form on May 15, 2020, to encourage state and jurisdictional health departments to report more detailed demographic case data, including race and ethnicity, when reporting case information.[97] CDC is also working to expand electronic case reporting through an initiative called Electronic Case Reporting Now, which the agency expects will improve the completeness of race and ethnicity data for cases.[98]
  • Hospitalizations. CDC collects and makes available data on COVID-19 hospitalizations, including by race and ethnicity. CDC’s COVID-19-Associated Hospitalization Surveillance Network (COVID-NET) makes data available on hospitalizations by race and ethnicity. However, as of August 1, 2020, these data were limited to approximately 10 percent of the U.S. population because the data represent select counties in 14 participating states.[99] CDC also collects data on hospitalizations from states and jurisdictions that voluntarily report cases; however, according to CDC officials, these data are incomplete.
  • Deaths. CDC collects and makes available data on COVID-19 deaths through death certificates collected in the National Center for Health Statistics’ National Vital Statistics System (NVSS).[100] According to CDC, as of August 7, 2020, data on race and ethnicity were available for almost all (over 99 percent) of COVID-19 deaths reported through this system.

    CDC also collects and makes available data on deaths reported to the case surveillance system from state and jurisdictional health departments. However, CDC reported that as of July 30, 2020, several states did not provide data on race and ethnicity for deaths reported through case reporting. Race and ethnicity data were available for 83.4 percent of deaths with case report forms received by CDC, or 64.6 percent of total deaths reported through case reporting, as of July 31, 2020.[101] According to CDC, it is important to have complete data on deaths by race and ethnicity through case reporting because these data are generally available 2 weeks before data reported through NVSS, allowing state and jurisdictional health departments to identify trends more rapidly.

Gaps will likely persist in data by race and ethnicity. CDC expects that the steps it and HHS have taken will improve the availability of race and ethnicity information for some of the data it collects on testing and indicators of COVID-19 burden. However, gaps in data we identified will likely continue to persist for a variety of reasons, as described below.
  • Testing. HHS’s testing guidance requires laboratories to report demographic data and recommends that health care or other providers, such as public health testing providers who do not require a doctor’s order, report demographic data to laboratories. However, some stakeholders we interviewed said it would be difficult for laboratories to comply with HHS’s guidance on testing because providers may not collect demographic data from patients at the point of care and are unlikely to do so unless there are requirements or incentives associated with capturing these data.[102]

    To help address these difficulties, CDC officials stated that the agency has conducted outreach to provider organizations such as the American Medical Association to offer education and assistance on collecting testing data. HHS officials stated that ongoing support for health care providers will be needed to help ensure complete and consistent collection and reporting of testing data.
  • Cases. CDC encourages state and jurisdictional health departments to report information on race and ethnicity through its case report form, but agency officials stated that CDC does not have the authority to require the reporting of this information. Further, CDC may not be receiving consistent race and ethnicity data on cases.

    HHS reported that as of June 25, 2020, 21 state health departments reported race for cases using combined categories, such as including American Indian/Alaska Native and Native Hawaiian/Pacific Islander in an “Other” category.[103] CDC noted that while its case report form includes these two racial groups as separate, state and jurisdictional health departments may report categories for race and ethnicity as “Other” within their state or jurisdictional case reporting systems. HHS stated that it is important to separate data on these two racial groups for testing and all indicators of COVID-19 burden, including cases, hospitalizations, and deaths. HHS explained that the practice of grouping race categories together into an “Other” category can disguise issues that may be unique to specific minority populations, which can further exacerbate existing disparities.
  • Hospitalizations. CDC officials stated that the agency does not have plans to require hospitals to report race and ethnicity data for hospitalizations because it does not have the authority to do so. HHS recently released guidance that directs hospitals to provide hospital capacity and utilization data directly to HHS, rather than to CDC; however, this guidance does not include a requirement for hospitals to include race and ethnicity information in their reporting to HHS.[104] Although CDC officials stated that the agency’s collection of hospitalization data, including race and ethnicity information, through COVID-NET has not been affected by this guidance, COVID-NET is limited to 14 participating states, and CDC officials noted that the agency has no immediate plans to expand it to additional states.
  • Deaths. CDC officials stated that the agency does not have plans to require states to report race and ethnicity data for deaths reported through the case surveillance system because it does not have the authority to do so.

Electronic systems are incompatible and CDC does not have a comprehensive mechanism to assess long-term health outcomes. Gaps in race and ethnicity data may also persist due to electronic system incompatibilities, and CDC lacks a comprehensive mechanism to assess the long-term health outcomes of people who have had COVID-19.
  • CDC officials noted that electronic systems that share data between providers, laboratories, and state and jurisdictional public health departments are often not compatible, resulting in difficulties in transferring complete information on race and ethnicity for testing and indicators of COVID-19 burden. For example, officials stated that information on race and ethnicity from patients’ medical records may not be transferred electronically to laboratories when providers order tests. Further, the officials said that some state and jurisdictional public health departments are not able to automatically incorporate laboratory results, including any associated demographic data such as race and ethnicity, directly into their electronic surveillance systems for case reporting.
  • In addition, CDC does not have a comprehensive mechanism to assess the long-term health outcomes of people who have had COVID-19, including by race and ethnicity, to identify potential long-term health effects, such as heart, brain, or lung abnormalities over many months and years. CDC stated that it is funding several studies, including a cohort study that will follow 3,900 patients with COVID-19 6 months after infection, to assess potential complications from COVID-19, including by race and ethnicity. Two additional studies will examine long-term health outcomes of persons with COVID-19 in specific groups, such as American Indian populations. However, these studies are limited to specific groups and time frames, so they are not able to identify long-term health outcomes across other population subgroups that are not included.

    Some research institutions have recommended the formation of registries that identify and follow individuals who have had COVID-19 over time to better understand the long-term effects on individual and population health.[105] Further, it may be important for CDC to coordinate with other HHS agencies, such as NIH, which conducts and funds long-term public health studies. Assessing the long-term effects of COVID-19 is particularly important for groups who are disproportionately affected by COVID-19, such as racial and ethnic minority groups, to effectively direct care, inform interventions, and tailor public health messaging to these communities.

The gaps in consistency and completeness in the data collected by HHS, including CDC, that we have identified are inconsistent with the Paycheck Protection Program and Health Care Enhancement Act, which includes a provision that requires HHS to produce regular reports to Congress on COVID-19 testing, cases, hospitalizations, and deaths, disaggregated by demographic characteristics including race and ethnicity.[106] The act also specifies that these reports should include epidemiological analysis of such data, which could include an analysis of the long-term health outcomes of individuals who have had COVID-19 by race and ethnicity.

CDC equity strategy aims to reduce gaps. To help address these gaps, on July 22, 2020, CDC released a COVID-19 Response Health Equity Strategy to accelerate progress toward reducing disparities in indicators of COVID-19 burden, among other efforts to achieve health equity.[107] The strategy includes a priority to expand the evidence base by collecting and reporting complete data on COVID-19 indicators by race and ethnicity categories, among other things. It also identifies outcomes, such as ensuring that timely, complete, and representative data are available to the public and other stakeholders within 3 to 12 months to help inform how CDC addresses racial and ethnic disparities related to COVID-19.

However, CDC’s equity strategy is missing critical details to help it achieve its priority of collecting complete data on testing and indicators of COVID-19 burden by race and ethnicity. In particular, the strategy does not include an assessment of whether having the authority to require states and jurisdictions to report race and ethnicity information is necessary to ensure CDC can collect more complete data, and if so, whether CDC should seek such authority from Congress.

Moreover, CDC’s strategy does not specify how it may involve key stakeholders who participate in the collection of information on race and ethnicity—such as health care providers, laboratories, and state and jurisdictional health departments—to obtain complete information for testing and indicators of COVID-19 burden. These key stakeholders are essential to CDC’s strategy, as they are responsible for the collection of the data on race and ethnicity, and therefore their involvement is of paramount importance in ensuring the collection of complete and consistent data. Lastly, CDC’s strategy does not specify how, if at all, CDC plans to assess the long-term health outcomes of individuals with COVID-19, including by race and ethnicity.

Leading practices to inform COVID-19 data collection by race and ethnicity. Our previous work has shown that strategic planning for activities below the agency-wide level is a leading practice for successful agencies, and can help agencies integrate activities, align goals, and coordinate performance management across different parts of the organization.[108] Another leading practice is to involve key stakeholders when defining desired outcomes to ensure that agency efforts and resources are targeted at the highest priorities.[109] In addition, CDC has highlighted the importance of collecting data on the recoveries of persons with COVID-19, as such information is critical to directing care, informing interventions, and tailoring public health messaging to groups that may be disproportionately affected.[110]

As CDC moves forward with its plans for implementing its COVID-19 Response Health Equity Strategy, it will be important for the agency to determine whether it is necessary to require states and jurisdictions to report race and ethnicity data, and if so, to seek authority from Congress to require the reporting of this information. In making such a determination, CDC can better ensure it is addressing gaps in critical information.

It will be equally critical for CDC to involve key stakeholders, such as health care providers, laboratories, and state and jurisdictional health departments, in implementing its equity strategy. By involving key stakeholders, the agency can help ensure that it collects complete race and ethnicity data and in a consistent manner. Moreover, by ensuring the ability to assess comprehensively data on the long-term health outcomes of persons with COVID-19, including by race and ethnicity, CDC can better ensure it is positioned to consider how groups may be disproportionately affected over time and how to address any disparate impacts. Without taking these critical steps, CDC may not be able to target most effectively its pandemic response efforts to racial and ethnic minority groups that may be disproportionately affected.

We will continue to conduct work examining HHS’s, CDC’s, and other component agencies’ ongoing work regarding indicators of COVID-19 and disparities that exist for various populations.

GAO Recommendations Related to COVID-19 Data by Race and Ethnicity
  • As the Centers for Disease Control and Prevention (CDC) implements its COVID-19 Response Health Equity Strategy, the Director of the Centers for Disease Control and Prevention should determine whether having the authority to require states and jurisdictions to report race and ethnicity information for COVID-19 cases, hospitalizations, and deaths is necessary for ensuring more complete data, and if so, seek such authority from Congress. (Recommendation 6)
  • As CDC implements its COVID-19 Response Health Equity Strategy, the Director of the Centers for Disease Control and Prevention should involve key stakeholders to help ensure the complete and consistent collection of demographic data. (Recommendation 7)
  • As CDC implements its COVID-19 Response Health Equity Strategy, the Director of the Centers for Disease Control and Prevention should take steps to help ensure CDC’s ability to comprehensively assess the long-term health outcomes of persons with COVID-19, including by race and ethnicity. (Recommendation 8)
Source: GAO. | GAO-20-701

Table 2 provides a summary of additional information on the federal public health response presented in enclosures in appendix I, which also include descriptions of GAO’s future work.
Table 2: Areas in Which the Federal Government Has Taken Action in the Public Health Response to COVID-19

Area name

Federal government’s actions

Medical Supply Chain

The lack of domestic medical supplies combined with a supply chain that was overwhelmed by the demands of the global pandemic prompted numerous federal and state actions to stabilize the supply chain and increase inventories; however, there continue to be ongoing constraints around certain types of personal protective equipment (PPE) and continued testing supply shortages.

COVID-19 Testing Data

On June 4, 2020, the Department of Health and Human Services (HHS) required laboratories to begin reporting data on each COVID-19 test by August 1, 2020. Since this requirement was issued, HHS agencies have taken steps to improve testing data, but they acknowledged ongoing challenges to collecting complete and consistent data.

Vaccines and Therapeutics

Many challenges associated with efforts to develop and manufacture COVID-19 vaccines and therapeutics need to be overcome. It is also of paramount importance to have clarity on the planning for their distribution and administration, as well as timely, clear, and consistent communication to states and the public about their availability, efficacy, and safety.

Health Disparities

HHS plays a key role in collecting and making data available on indicators of COVID-19 burden, including cases, hospitalizations, and deaths. While race and ethnicity information is incomplete in these reported data, available data demonstrate racial and ethnic disparities in indicators of COVID-19 burden.

Relief for Health Care Providers

HHS continues to disburse the $175 billion appropriated for the Provider Relief Fund to financially support health care providers and finance care for COVID-19 patients and underserved populations. As of July 31, 2020, $129.7 billion had been allocated and about $92.4 billion had been disbursed to providers.

Nursing Homes

COVID-19 challenges for nursing homes remain, including challenges related to personal protective equipment, testing, and staffing shortages.

Medicaid Spending

The potential exists for two HHS agencies to issue duplicative or erroneous payments to providers, and challenges in public reporting of Medicaid COVID-19 spending continue to pose risks to transparency and oversight.

HHS COVID-19 Funding

The COVID-19 relief laws appropriated more than $250 billion to HHS to address various aspects of the public health response to COVID-19, of which about $144 billion (about 58 percent) had been obligated and about $99 billion (about 40 percent) had been expended as of July 31, 2020, according to department officials. This represents an increase of 43 percent and 47 percent since May 31, 2020, when reported obligations and expenditures were $101 billion and $67 billion, respectively.

Veterans Health Care

The Veterans Health Administration hired thousands of physicians and nurses to strengthen its capacity to respond to the pandemic.

Military Health

The Department of Defense’s plan for potential surges in COVID-19 cases among department personnel focuses on accelerating screening and surveillance testing, and the department has identified CARES Act funding in excess of current Defense Health Program requirements, resulting in a redirection of funds.

Defense Support of Civil Authorities

The Department of Defense continues to support civil authorities by providing personnel and supplies in response to requests for assistance from other federal agencies on a fully reimbursable basis.
Source: GAO. | GAO-20-701

Assistance to Individuals

This section provides information on government assistance to individuals, including economic impact payments and unemployment insurance.

Economic Impact Payments

Data on economic impact payment recipients. Treasury and the Internal Revenue Service (IRS) have issued an EIP to all eligible individuals for whom IRS has the necessary information to do so. However, Treasury and IRS lack updated information on how many eligible recipients have yet to receive an EIP, which could hinder outreach efforts and place potentially millions of individuals at risk of missing their payment. In April 2020, Treasury estimated that 30 million individuals who do not normally file a tax return (referred to as non-filers) were eligible for an EIP.[111] At the time, Treasury estimated that the 30 million individuals included 16 million Social Security and Railroad Retirement Board (RRB) benefit recipients for whom data were available, and 14 million individuals who do not normally file a tax return or receive federal benefits and for whom no data were available.[112]

Based on IRS data, as of July 31, 2020, 5.3 million individuals had used an online IRS tool known as the Non-Filers tool to help them receive their EIP,[113] meaning there could be 8.7 million or more individuals who are eligible but have not received their EIP.

Treasury has not updated its April estimate of those who have yet to receive their EIP to account for actual numbers of filers, recipients of federal benefits who received their EIP, those who used the Non-Filers tool, or other new analyses or data. Treasury officials described the April estimate as unofficial, citing the uncertainty in the estimate, and stated they have no plans to share it with IRS’s outreach partners.[114]

Internal control standards state that management should obtain relevant data from reliable sources and use that information to achieve its objectives.[115] This standard is captured in Treasury’s strategic plan, which sets a goal of improving analytics to accomplish objectives.[116] Treasury officials cited two reasons for not updating the April estimates. First, the administration has not produced economic forecasts that include the effects of the pandemic. However, it is not clear why Treasury would need an updated economic forecast to estimate the number of individuals eligible for an EIP when Treasury can use 2018 and 2019 tax data and EIP payment figures to inform its estimates. Second, according to Treasury officials, updated estimates would not provide the detailed information needed for outreach. Treasury officials said that, for purposes of potential outreach, they were examining information that third parties use to notify government agencies and taxpayers about taxable payments to identify individuals with a valid Social Security number who have not received an EIP.

An updated and refined estimate of individuals who have yet to receive their EIP from Treasury or IRS could provide greater clarity about which populations may be at risk of missing out on the payment. Without an updated estimate, Treasury, IRS, other federal agencies, and IRS’s outreach partners are limited in their ability to appropriately scale and target outreach and communication efforts to individuals who may be eligible for a payment. Representatives from two organizations that are conducting outreach on the payments said that an estimate of the number of individuals who still need the payment, particularly if matched with ZIP code data, could help them to focus outreach and communication resources. One IRS outreach partner also said eligible recipients who have not yet filed for the payment are outside the tax system, likely to be very low-income, and could most use the payment.

IRS’s outreach partnerships. IRS publicized the EIP by partnering with other federal agencies, nonprofits, and state and local entities. For example, IRS provided its outreach partners with toolkits that contain information on filing that can be repackaged for social and traditional media campaigns. IRS also set up a website, the Economic Impact Payment Information Center,[117] which includes EIP frequently asked questions (FAQs) and a tool to check eligibility and the status of payments. According to IRS officials, the website has been visited over 500 million times.

Officials from IRS outreach partners we spoke with complimented IRS on its rapid response, especially in answering their questions and pushing out helpful and timely information, when possible. They also noted some challenges. For example, several said that the EIP Information Center website was comprehensive, but that it could also be challenging to navigate, especially for an audience unfamiliar with the tax system or IRS’s website. Two IRS outreach partners said they repackaged information from the IRS website into simpler language. They also said the online tool could be difficult to access and navigate, particularly on a mobile device, which may be the only device readily available to some individuals.

Data coordination. IRS used federal agency data from IRS, VA, the Social Security Administration (SSA), and RRB to identify and pay individuals eligible for an EIP but have not explored other data sources that may identify eligible recipients. Treasury has said that recipients of Medicaid and Supplemental Nutrition Assistance Program (SNAP) benefits likely contain a significant number of non-filers who have not yet received an EIP. However, Treasury and IRS do not have plans to obtain such data from either HHS or the Department of Agriculture.

According to Treasury officials, Treasury and IRS want all individuals who are eligible for an EIP to be able to claim one and are taking steps to raise awareness. However, they are also concerned about the difficulty of combining data from various agencies, which can be time-consuming, as well as potential legal restrictions that limit IRS’s ability to share data. The CARES Act provided explicit authority to use data from SSA and RRB for making payments.[118] In addition, IRS worked with VA and was able to obtain data and automatically deliver payments to those benefit recipients.

We will continue to explore whether Treasury and IRS could further coordinate with other federal agencies to obtain and use data to help identify individuals eligible for an EIP before two upcoming deadlines: October 15, 2020, is the deadline to use the Non-Filers tool to file for an EIP in 2020, and December 31, 2020, is the last day IRS will issue an EIP in 2020.[119]

Disbursing payments to tax filers and non-filers. As of July 31, 2020, Treasury and IRS had disbursed 163.9 million EIPs totaling $273.5 billion.[120] Treasury and IRS had disbursed the majority of payments by May 22, as shown in figure 6. Between May 22 and July 31, Treasury disbursed nearly 410,000 payments on average each week. IRS officials reported that as of July 29, the five U.S. territories had received $4.6 billion, 91 percent of the total amount of EIPs for which they are estimated to be eligible.[121]

Figure 6: Number of Economic Impact Payments the Department of the Treasury and Internal Revenue Service Disbursed to Tax Filers and Non-Filers, as of July 31, 2020

Note: Volumes reflect the latest cycle and payment type in which an economic impact payment was paid to an individual. Likewise, payments are the net of all payment attempts and reversals. Non-filers may receive more than one of the relevant government benefits, and an individual may be classified as a recipient of more than one government benefit.

According to IRS data, as of July 31, more than 26 million non-filers had received a payment, including around 21 million who received an automatic payment and more than 5.3 million non-filers who used the online tool to receive an EIP.[122]

Addressing payment challenges. According to analysis by the Treasury Inspector General for Tax Administration (TIGTA), IRS correctly computed the payment for at least 98 percent of EIPs issued as of May 21, 2020.[123] IRS is working to correct underpayments, and other errors, and provide guidance for how recipients can claim the correct payment amount.[124] IRS identified almost 1.1 million recipients of the almost 164 million payments made as of July 31 who received an EIP but who may be owed additional money due to a number of circumstances. For example:
  • Non-filers with qualifying children. We reported in June 2020 that individuals who used the Non-Filers tool between April 10 and May 17 did not receive a payment that included additional money for qualifying children.[125] As of July 24, IRS identified 355,103 non-filers who received an individual payment but were still waiting to receive an additional $500 per qualifying child. On August 5, IRS stated on its EIP FAQ webpage that impacted non-filers were to receive the payment via direct deposit on August 5, and paper checks or debit cards were scheduled to be mailed August 7.

    Additionally, IRS recently announced a policy change that should allow some eligible recipients to receive supplemental payments for qualifying children sooner than expected. As we previously reported, the benefit data IRS had used to automatically send payments to non-filers did not include information on qualifying children, so those recipients were asked to use the Non-Filers tool. However, Social Security and RRB benefit recipients, who comprised nearly 14 million EIP recipients, were given only a few days’ notice to add in information about qualifying children before they would no longer be able to do so. VA and SSI benefit recipients had 2 weeks to add qualifying children and totaled 2.5 million payments by the time of the deadline.

    Initially, IRS announced that those who missed the deadline would have to wait to file a tax return in 2021 to get a payment for qualifying children.[126] However, the CARES Act requires Treasury and IRS to make the payments as “rapidly as possible.”[127] Waiting 9 to 12 months before an individual or family receives a complete payment during the 2020 tax filing season would not provide the immediate relief intended by the law. Therefore, in the course of our audit work, we asked IRS officials whether they planned to reopen the Non-Filers tool to those individuals who missed the deadline to provide EIPs for qualifying children of non-filers sooner than 2021. IRS officials said they could not reopen the tool to those who missed the deadline to add qualifying children because they would have to manually process the additional information and they lacked the resources to do so, given backlogs caused by the COVID-19 closure of IRS service centers.

    On August 14, IRS changed this policy with an announcement that it would reopen the registration period. Federal beneficiaries who did not previously receive $500 per qualifying child now have until September 30, 2020, to enter information on their qualifying children and receive the supplemental $500 payments.[128] According to IRS officials, IRS figured out an automated solution that would allow IRS to add information to payments already made. Opening the registration period and extending it through September 30 allows more eligible recipients to seek the financial relief to which they are entitled and owed by law.
  • Injured spouses and domestic abuse survivors. IRS is also taking action to issue payments to injured spouses—married taxpayers whose payments were used to cover the past-due child support of a spouse or ex-spouse. As of July 31, 2020, IRS estimated that 49,522 individuals filed an injured spouse claim and may be owed an adjustment. On August 25, IRS announced these catch-up payments will be mailed as checks to any eligible spouse the week of August 31. [129]

    There also may be some eligible EIP recipients who are domestic abuse survivors but may not have been able to claim their portion of the EIP if it was provided to an individual’s bank account or address to which eligible recipients do not have access. IRS said it is considering options that may provide relief to domestic abuse survivors, including outreach to advocacy groups for victims of domestic abuse who can advise survivors of legal and other options they can pursue in such situations.
  • Widows, widowers, and spouses of deceased and incarcerated individuals. In some cases, Treasury stopped payments to surviving spouses before they were disbursed to account for the death or incarceration of a spouse. IRS did not yet have an estimate of the number of spouses of incarcerated individuals who had their portion of the payment stopped. IRS also estimates nearly 700,000 individuals may have had their payment stopped due to being the spouse of a decedent. IRS plans to pay the eligible spouses by late summer.

Reissuing lost or destroyed EIP debit cards. Treasury and IRS also experienced some challenges related to sending “pre-paid” debit cards—cards with the set amount of EIP loaded onto them—to recipients. Treasury officials said they sent debit cards to recipients for whom the IRS had no bank account information.[130] As of July 31, 2020, 87 percent of the 3.6 million debit cards that had been mailed to payees had been activated. An additional 204,267 or 5.6 percent of the mailed cards had been reported as lost, stolen, or destroyed, and therefore a card was reissued. While Treasury and IRS posted several press releases at the same time the debit cards were mailed, Treasury and IRS officials also acknowledged that they could have done more to alert recipients about when to expect the cards and how to activate them.

According to Treasury officials, the plain white envelopes in which the debit cards were sent were intended to provide a degree of security by helping to prevent theft of the cards. However, some recipients may have thought that the envelope was junk mail or that the debit card was a scam. Treasury sent a follow-up letter in early July to almost 790,000 recipients of the debit cards who had yet to activate their card. According to Treasury officials, as they became aware of discarded cards, they worked with the card issuer to waive the fee for the first reissuance of any EIP card and reverse any initial reissuance fee that was charged to a recipient.

GAO Recommendations Related to Economic Impact Payments
  • The Secretary of the Treasury, in coordination with the Commissioner of Internal Revenue, should update and refine the estimate of eligible recipients who have yet to file for an economic impact payment (EIP) to help target outreach and communications efforts. (Recommendation 9)
  • The Secretary of the Treasury, in coordination with the Commissioner of Internal Revenue, should make estimates of eligible recipients who have yet to file for an EIP, and other relevant information, available to outreach partners to raise awareness about how and when to file for EIP. (Recommendation 10)
Source: GAO. | GAO-20-701

Unemployment Insurance

According to the Department of Labor (DOL) as of July 1, 2020, almost all states had implemented the three CARES Act UI programs, and were paying benefits under the programs.[131] DOL’s data also showed that states have taken advantage of emergency administrative funding authorized under the Families First Coronavirus Response Act to assist with processing the unprecedented numbers of UI claims. According to National Association of State Workforce Agencies representatives, states have used Families First Coronavirus Response Act funding to support claims processing by, for example, hiring and training new staff, hiring contractors, contracting with call centers and consultants, and enhancing their information technology systems. The three CARES Act UI programs are as follows:
  • Pandemic Unemployment Assistance (PUA) program. Generally authorizes up to 39 weeks of UI benefits to individuals not otherwise eligible for UI benefits, such as self-employed and certain gig economy workers, who are unable to work as a result of COVID-19, available through December 2020.[132]
  • Federal Pandemic Unemployment Compensation (FPUC) program. Generally authorized an additional $600 benefit that augmented weekly UI benefits available under the regular UI program, as well as CARES Act UI programs, through July 2020.[133]
  • Pandemic Emergency Unemployment Compensation (PEUC) program. Authorizes an additional 13 weeks of UI benefits to those who exhaust their regular UI benefits, available through December 2020.[134]

On August 8, 2020, the President signed a memorandum directing FEMA to provide up to $44 billion in lost wages assistance from the Disaster Relief Fund.[135] Pursuant to the presidential memorandum, upon receiving a FEMA grant, states and territories may provide eligible claimants $300 or $400 per week, which includes a $300 federal contribution.[136] As of September 9, 2020, FEMA had approved lost wages assistance grants to 48 states, the District of Columbia, and Guam.

While the number of initial claims in the regular UI program has declined overall since the beginning of April 2020, the number of UI claims receiving benefits remains persistently high, which has put pressure on states’ capacity to pay for them. DOL’s latest data for the week ending September 5, 2020, showed that initial claims in the regular UI program declined from a high of over 6.2 million for the week ending April 4, 2020 to 857,148.[137] Despite this overall decline in initial claims, nationwide, about 13 million regular UI claims were made for continuing unemployment during the week ending August 22, 2020.[138]

As a result of the persistently high volume of claims overall, several states have exhausted their funds to pay UI benefits, according to DOL. While the CARES Act UI programs are federally funded, regular UI is primarily funded through state and federal taxes on employers. When a state exhausts those funds, it may borrow from the federal government. From January 1, 2020, through August 31, 2020, 13 states—California, Colorado, Connecticut, Hawaii, Illinois, Kentucky, Massachusetts, Minnesota, New Jersey, New York, Ohio, Texas, and West Virginia—and the U.S. Virgin Islands took out such loans, totaling about $26 billion. According to DOL, the need for these loans was especially acute, as the pandemic had exacerbated shortfalls in states’ funds that existed before the pandemic began.[139] DOL data indicate that such shortfalls were caused by many states not taking in enough funds to pay UI benefits according to the standard set in DOL regulations providing for interest-free loans to states.[140]

The expiration of the $600 additional weekly UI benefit under the FPUC program at the end of July 2020 will likely negatively affect unemployed workers—in particular, their housing and food security—and the economy. With the $600 enhancement, some UI claimants received more in total UI benefits than they would have earned in their regular wages if they were still employed, and others received less. In general, individuals receiving enhanced benefits were better positioned to spend at pre-pandemic levels without accumulating debt or using retirement savings than they would have been without the enhanced benefit.

Further, according to a recent post on the Census Bureau’s website, adults in lower-income and younger households who suffered job losses during the COVID-19 pandemic reported that they have less confidence that they can pay their next month’s rent or mortgage on time and that they will suffer more food insecurity.[141] With regard to nutrition assistance, generally, those who receive UI benefits may not qualify for SNAP benefits. This is because, according to the Department of Agriculture, UI is generally treated as income for purposes of SNAP eligibility, and in some cases, claimants who continue to receive regular UI benefits may be ineligible for SNAP after their enhanced benefit under the FPUC program expires.

Enhanced benefits under the FPUC program likely limited the effects of labor market disruptions on consumer spending and helped stabilize the economy, according to multiple studies.[142] For example, according to recent University of Chicago research, although consumer spending has recovered somewhat since mid-April 2020, it remains severely depressed relative to prepandemic levels. The researchers explain that declines in income due to phasing out broad stimulus too quickly would result in declines in aggregate demand by low-income workers, which could pose challenges to reemployment if businesses close or scale down due to lower consumer demand.[143]

In addition to continuing to provide technical assistance and monitor states’ implementation of the CARES Act UI programs, DOL has issued additional guidance on those programs and taken other actions to reinforce program integrity. For example, DOL’s Occupational Safety and Health Administration has issued COVID-19 guidelines for employers on providing safe workplaces. According to DOL, however, most state laws allow claimants to refuse offers of employment for good cause—which may include, but is not limited to, the degree of risk to an individual’s health and safety—and still maintain UI benefits. DOL has encouraged states to ask employers to provide information to state UI agencies when workers decline suitable work without good cause.

Following a recommendation in our June 2020 report, DOL issued guidance on August 12, 2020, addressing potential risks that certain workers being paid wages with Paycheck Protection Program (PPP) proceeds could also simultaneously be receiving UI benefits.[144] The guidance clarified that individuals working full-time and being paid through PPP are not eligible for UI, and that individuals working part-time and being paid through PPP would be subject to certain state policies, including policies on partial unemployment. Further, the guidance clarified that individuals being paid through PPP but not performing any services would similarly be subject to certain provisions of state law, and noted that an individual receiving full compensation would be ineligible for UI.

Table 3 provides a summary of additional information on federal assistance to individuals presented in enclosures in appendix I, which also include descriptions of GAO’s future work.
Table 3: Areas in Which the Federal Government Has Taken Action to Assist Individuals in Response to COVID-19

Area name

Federal government’s actions

Child Nutrition

Almost 400 million fewer meals for children were provided in March and April 2020 as compared with March and April 2019, and school districts and other providers reported ongoing and potential challenges to providing meals during the pandemic.

Employer Tax Relief

Some information is available about how employers are claiming refundable tax credits, but the extent of claims for the first and second quarters of 2020 will remain unknown until the relevant forms have been filed and processed; the Internal Revenue Service and the Small Business Administration are collaborating on a data-sharing agreement to ensure the applicable tax credit recipients are not also receiving loans and are in compliance with law.

Unemployment Insurance Programs

As the unemployment insurance system continues to face a high number of initial claims, the Department of Labor continues to monitor states’ implementation of the CARES Act unemployment insurance programs, has issued additional guidance, and has taken steps to address program integrity.

Head Start

The Office of Head Start is awarding CARES Act funds to all grantees (based on their existing enrollment) to be used to address a variety of COVID-19 related needs, and it is finalizing plans for how it will collect detailed information on grantees’ use of these funds and monitor what is spent.

Worker Safety

In the Occupational Safety and Health Administration’s effort to ensure safe and healthful conditions for workers during the COVID-19 pandemic, the agency has primarily relied on guidance, and few onsite inspections have been made.

2020 Tax Filing

The COVID-19 pandemic required the Internal Revenue Service to halt certain essential filing season functions and customer service operations; thus, it now faces a large backlog of work including unprocessed tax returns—which may lead to delayed refunds to taxpayers—as well as increased refund interest payments and decreased revenue collection.
Source: GAO. | GAO-20-701

Assistance to Industry and the Economy

This section provides information on government assistance to industry and the economy, including the PPP and the housing industry.

Paycheck Protection Program

The CARES Act and the Paycheck Protection Program and Health Care Enhancement Act appropriated a total of $670 billion for PPP, including for lender fees.[145] PPP loans, which are made by lenders but guaranteed 100 percent by the Small Business Administration (SBA), are low interest (1 percent) and fully forgivable if certain conditions are met. The Paycheck Protection Program Flexibility Act of 2020 modified the program, including provisions related to loan forgiveness.[146] As modified, at least 60 percent of the loan forgiveness amount must be for payroll costs to qualify for full loan forgiveness.

As of June 30, 2020—the date PPP was originally scheduled to end—about $132 billion in loan funding remained. On July 4, 2020, PPP was extended for another 5 weeks until August 8, 2020.[147] SBA reopened the program for applications 2 days later. As of August 8, 2020, lenders had made over 5.2 million loans totaling more than $525 billion, excluding canceled loans.[148] According to SBA, canceled loans may include, but are not limited to, duplicative loans, loans not closed for any reason, and loans that were paid off.

Geographic distribution of PPP funds. As of August 8, 2020, businesses in 10 states had received $9,000 or more in PPP loans for every small business employee in that state (see fig. 7).[149]

Figure 7: Paycheck Protection Program Loans by State, as of August 8, 2020

Note: Numbers of small business employees and small businesses are from the Small Business Administration’s 2020 Small Business Profile, and dollar amounts and number of loans are from its Paycheck Protection Program data as of August 8, 2020. We excluded U.S. territories from the figure because the 2020 Small Business Profile used different measures for them.

PPP loan size over time. Most of the large loans (above $2 million) were made during the first phase of the program (April 3–26, 2020), and most of the smallest loans (under $50,000) were made during subsequent phases (see fig. 8). SBA has provided us loan-level data on all PPP loans approved as of August 8, 2020, including loans under $150,000.[150] According to our analysis of these loan-level data, 75 percent of approved loans above $2 million were approved during the first phase of the program. As discussed in more detail later in this section, the demand for larger loans may have diminished over time due to increased scrutiny from the public, Treasury, and SBA. In contrast, 60 percent of smaller loans (less than $50,000) were approved during the second phase of the program. Of all loans approved, smaller loans (less than $50,000) comprised 46 percent during the first phase, 75 percent during the second phase, 90 percent during the third phase, and 93 percent during the fourth phase.

Figure 8: Percentage of Approved Paycheck Protection Program Loans, by Amount and Program Phase, as of August 8, 2020

Note: This analysis includes loans that were approved and subsequently canceled. Canceled loans may include, but are not limited to, duplicative loans, loans not closed for any reason, and loans that were paid off. The first phase of the program extends from April 3, 2020, when the Small Business Administration (SBA) first began accepting applications, through April 26, 2020, the day before SBA resumed accepting applications again following the second appropriation of funding (the first appropriation lapsed on April 16, 2020).
The second phase extends from April 27, 2020, when SBA resumed accepting applications, through June 4, 2020, the day before the Paycheck Protection Program Flexibility Act of 2020 was enacted (which extended the period for eligible loan forgiveness expenses from 8 weeks to up to 24 weeks). The third phase extended from June 5, 2020, through June 30, 2020, the initial loan application deadline. The fourth phase extended from July 1, 2020, through August 8, 2020, the current loan application deadline.

PPP loans by business size. The vast majority of loans to businesses that reported employees (94 percent) went to businesses with 100 or fewer employees (see table 4).
Table 4: Paycheck Protection Program Loans, by Business Size, as of August 8, 2020

Number of employees

Number of approved loans

Dollar amount of approved loans

Percentage of approved loans

Percentage of approved amount

Not reported or zero

231,260

11,794,604,768

4.4

2.2

1

1,448,737

16,717,316,163

27.8

3.2

2–10

2,387,327

91,259,559,977

45.8

17.4

11–100

1,054,665

246,556,076,954

20.2

47.0

101–500

85,913

142,437,640,445

1.6

27.1

500+a

4,226

16,247,002,816

0.1

3.1

Total

5,212,128

525,012,201,124

100.0

100.0
Source: GAO analysis of Small Business Administration data. | GAO-20-701

aSome businesses with more than 500 employees were eligible for Paycheck Protection Program loans if they were considered small in their industries per the Small Business Administration’s size standards or if they were in the accommodation and food services industry and had not more than 500 employees per physical location.

Types of businesses approved for PPP loans over time. Several types of businesses received PPP loans, but corporations and limited liability companies received the largest percentages of the approved loan amounts—40 percent and 26 percent, respectively (see fig. 9).

Figure 9: Percentage of Approved Paycheck Protection Program Loans and Approved Dollars, by Business Type, as of August 8, 2020

Note: S corporations are corporations that are taxed through their shareholders rather than through the corporation itself. The data field for “other business types” includes cooperatives, employee stock ownership plans, joint ventures, limited liability partnerships, partnerships, professional associations, and trusts.

In addition, certain types of businesses participated in the program in greater numbers at certain times. Ninety-six percent of loans to independent contractors and self-employed individuals were approved during the last three phases of the program (from April 27, 2020, through August 8, 2020). SBA did not post application guidelines for these two groups until 18 calendar days after the CARES Act was enacted (2 days before the first phase of PPP funding was exhausted).[151] Similarly, 85 percent of sole proprietorships were approved during the last three phases (from April 27, 2020, through August 8, 2020).

Canceled PPP loans. Borrowers of loans in varying amounts canceled PPP loans.[152] As of August 8, 2020, lenders had canceled about 311,000 loans totaling about $46 billion. Following reports that publicly traded companies had received PPP loans, SBA issued guidance reminding borrowers that they should carefully review the required economic necessity certification to ensure that they qualify.[153] In subsequent rules and guidance, SBA announced that borrowers who had previously applied for a PPP loan could repay the loan in full by May 18, 2020, and would be considered to have made their economic necessity certification in “good faith.” About 15 percent of all loans over $2 million were canceled (see table 5). However, the majority of loans that were canceled (about 75 percent) were less than $50,000.
Table 5: Canceled Paycheck Protection Program Loans, by Loan Amount, as of August 8, 2020

Amount of loan ($)

Number of canceled loans

Amount of canceled loans ($)

Percentage of approved loans canceled

Percentage of approved amount canceled

50,000 and less

232,946

3,425,420,004

6

5

50,001–150,000

38,991

3,409,857,567

4

4

150,001–2,000,000

33,296

17,113,890,518

5

6

More than 2 million

5,336

22,351,390,851

15

17

Total

310,569

46,300,558,940

6

8
Source: GAO analysis of Small Business Administration data. | GAO-20-701

Note: For purposes of this analysis, canceled loans are those in SBA’s loan-level data with a status of “fully canceled.”

Demographic data on PPP loans. The loan-level data that SBA provided include limited demographic data on borrowers, as SBA did not ask for demographic information on the PPP loan application. According to SBA officials, SBA does not have the legal authority to require a borrower to submit demographic data on a loan application. In a May 2020 report, the SBA Office of Inspector General noted that SBA did not request optional demographic information on the PPP loan application and suggested that the agency (1) revise the borrower application to request these optional data and (2) include optional demographic information on the loan forgiveness form.[154] SBA did not revise the borrower application to collect such information in an effort to streamline the application process, according to agency officials. Consequently, information was not reported for business owners’ race for 90 percent of approved loans, gender for 79 percent of approved loans, and veteran status for 85 percent of approved loans.

To collect some demographic information, SBA has included an optional form as part of the loan forgiveness application. The form requests information such as the race, gender, and ethnicity of the borrower’s principal business owner or owners. Data are not yet available to determine whether this optional form will increase the available demographic data on PPP borrowers.

Data on jobs retained with PPP loans. The system lenders were required to use to submit information on approved PPP loans to SBA included a field for the number of jobs retained, although borrowers were not asked to include this information on their loan applications.[155] Consequently, while SBA’s loan-level data includes data on jobs retained with PPP loans, questions exist about the completeness and accuracy of these data. For example, for 18 percent of loans, these data were either not reported or indicated zero jobs retained, and for 1 percent of loans (about 24,000), the number of jobs retained exceeded the number of employees reported. Although SBA has addressed how applicants should count employees and calculate payroll for PPP in guidance and regulation, none of the guidance on its website includes instructions to help lenders calculate jobs retained.

When SBA released updated PPP loan-level data as of August 2020, the agency changed the data field previously labeled as jobs retained to jobs reported. According to SBA officials, this change properly identifies the source of the column’s data since the information in it was taken from the PPP loan borrower application where applicants were asked to report their number of employees. However, the system asked lenders for both jobs retained and the number of current employees, and the two numbers sometimes differed in the data we received from SBA. The difference between what lenders were asked to report and how these data are characterized by SBA raises further questions about the quality of the jobs data.

According to SBA officials, lenders will have an opportunity to update or supplement data when they report on disbursed loans and during the loan forgiveness process.[156] SBA has added a form to its website that borrowers and lenders can use to correct any data errors. We will continue to examine the reliability of these data.

SBA’s oversight plans. Although SBA has begun developing its oversight plans, including of the loan forgiveness process, it had not yet finalized or implemented them as of August 14, 2020. In our June 2020 report, we recommended that SBA develop and implement plans to identify and respond to risks in PPP to ensure program integrity, achieve program effectiveness, and address potential fraud, including in loans of $2 million or less.[157] SBA neither agreed nor disagreed with our recommendation. Because SBA had limited time to implement up-front safeguards for the PPP loan approval process and assess program risks, we reported that ongoing oversight would be crucial. We also reported that although SBA had announced efforts to implement safeguards after loan approval, the agency had provided limited information on how it would implement these safeguards.

According to SBA officials, SBA is currently working with Treasury and contractors to finalize plans for loan reviews and loan forgiveness reviews. As we previously reported, SBA and Treasury announced that SBA would review all loans of more than $2 million, and SBA said these reviews would focus on the borrower’s good faith certification concerning the economic necessity of the loan request. SBA officials later clarified that the agency also would review these loans, as necessary, for compliance with general program requirements.

SBA officials told us that a contractor and SBA staff will conduct the reviews of loans over $2 million and provided the following details. The contractor will review all loans using an automated review tool and will conduct additional manual reviews of some loans based on risks detected by the automated review tool. The contractor also will review the borrower’s economic necessity certification. Following the contractor’s portion of the review, SBA will review all loans over $2 million with a combination of SBA contract and federal staff. In addition, a separate and independent contractor will provide a quality assurance review on a sample of loans. As of August 14, 2020, SBA was still working with Treasury and a contractor to finalize the specific review procedures its contractors and staff would follow.

In an interim final rule posted on May 22, 2020, SBA noted that it may review any PPP loan it deems appropriate, which includes loans of less than $2 million.[158] According to SBA officials, all of the loans will undergo an automated review to flag potentially questionable loans. They stated that selected loans will undergo a manual review that may include whether a borrower was eligible for the PPP loan, calculated the loan amount correctly and used loan proceeds for the allowable uses, or was entitled to loan forgiveness in the amount claimed. On July 28, 2020, SBA officials said that the agency plans to review loans identified through specific reports of potential noncompliance or fraud and through stratified statistical sampling based on various loan characteristics. They also noted that they had begun reviews based on reports of potential noncompliance or fraud. As of August 14, 2020, SBA was working with Treasury and contractors to finalize plans to review loans of less than $2 million.

SBA officials also told us that they refer questionable loans to the SBA Office of Inspector General or the Department of Justice for further investigation. Since May 2020, the Department of Justice has publicly announced charges in over 40 fraud-related cases associated with PPP funds. The charges—filed across the United States and investigated by a range of law enforcement agencies—include making false statements and engaging in identity theft, wire and bank fraud, and money laundering.

According to GAO’s Fraud Risk Framework, one of the leading practices in managing fraud risks involves the use of data analytics to detect suspicious activity, anomalies, or patterns so that managers can determine which cases of potential fraud to review in detail or identify high-risk program participants for increased oversight or review.[159] However, the usefulness of data analytics for fraud detection can be limited by the data’s reliability. In conducting PPP oversight, SBA will be relying on data provided by lenders and borrowers during the loan approval and loan forgiveness processes. We and others have identified some gaps, outliers, duplicates, and anomalies in PPP loan-level data provided by lenders. Although further analysis is needed to determine whether these instances are errors that could be corrected by borrowers and lenders or whether they indicate fraud, they underscore the importance of reliable data for oversight purposes. As noted previously, SBA officials told us lenders will have an opportunity to correct loan-level data when they report on disbursed loans and during the loan forgiveness process, and borrowers can submit a form to SBA requesting a correction. It remains to be seen how much of SBA’s oversight also will involve improving the quality of the data.

We maintain the importance of our prior recommendation that SBA develop and implement plans to identify and respond to risks in PPP, including risks of fraud and improper payments. As SBA finalizes the oversight plans currently under development, such plans could focus on data quality.

Loan forgiveness process. SBA posted additional guidance on the loan forgiveness process on July 23, 2020, August 4, 2020, and August 11, 2020, including on how lenders would transmit their decisions on loan forgiveness to SBA. Based on our review of SBA’s rules and discussions with lender associations, uncertainty remains about some aspects of lenders’ role in the process. In addition, according to SBA officials, SBA was still developing its plans for overseeing the loan forgiveness process as of August 14, 2020.
  • SBA’s interim final rules on loan forgiveness and a procedural notice issued on July 23, 2020, indicate that the lender is to review the borrower’s application for loan forgiveness and make the decision on forgiveness.[160] However, the extent of lender review required is unclear.[161] Prior to making the decision, lenders are expected to perform a “good-faith review” in a reasonable amount of time of the borrower’s calculations and supporting documents and confirm the borrower’s calculations concerning amounts eligible for loan forgiveness. The interim final rules and procedural notice do not clearly define the extent of review required but one rule provides an example.[162] At the same time, the loan review procedures interim final rule and the procedural notice state that an accurate calculation of the loan forgiveness amount is the responsibility of the borrower and that lenders may rely on borrower representations.

    On August 4, 2020, SBA posted responses to frequently asked questions on loan forgiveness that answer technical questions, but do not address broader questions about lenders’ role. After SBA issued additional guidance in July and August 2020, representatives of two lender associations we interviewed still had questions or concerns about the lender’s role in the forgiveness process, including the level of review required and the extent to which lenders could rely on borrower certifications and calculations.
  • In its July 23, 2020, procedural notice, SBA noted that it had contracted with a company to develop and make available a secure platform for lenders to submit loan forgiveness decisions, supporting documentation, and requests for forgiveness payments.[163] SBA launched the platform on August 10, 2020. SBA officials told us they did not expect to receive a large number of loan forgiveness decisions from lenders until early August 2020 due to the timing of the CARES Act and SBA rules.[164]
  • According to SBA officials, as part of its oversight SBA will put all lender decisions granting full or partial loan forgiveness through the automated review tool provided by one of its contractors. SBA’s interim final rule on loan review procedures and the July 23, 2020, procedural notice indicate that SBA reserves the right to direct a lender to deny an application or to review the lender’s decision.[165] As of August 14, 2020, SBA was still developing its processes for loan reviews, which include overseeing loan forgiveness.[166]

New Renters’ Relief Follows Expiration of Key CARES Act Provisions

Many credit the CARES Act with ensuring short-term housing stability during the pandemic by temporarily halting evictions for non-payment of rent and providing an additional $600 in weekly unemployment benefits. These provisions expired at the end of July, potentially leaving many millions of renters at risk of eviction.

On September 1, 2020, the CDC issued an order halting evictions of qualifying renters to prevent the further spread of COVID-19. This moratorium is in effect from September 4, 2020, through December 31, 2020 and potentially covers up to 44 million renter households.[167]

Section 4024 of the CARES Act prohibited evictions of renters living in any property with a federally backed mortgage or tenants living in rental units participating in specified federal programs for 120 days from enactment, or through July 24, 2020, for the nonpayment of rent.[168] In total, this moratorium applied to at least 17 million renters (or about 39 percent of all renter households).[169] Depending on how many households meet the criteria the September 2020 moratorium, it could potentially cover more renter households than the Section 4024 moratorium.

In addition, the CARES Act created and funded a number of temporary UI programs, including the FPUC program, which authorized an additional $600 in weekly unemployment benefits through July 2020.[170] Many stakeholders said these enhanced benefits likely have helped unemployed households to continue paying their rent in the short term.[171] On August 8, 2020, the President signed a memorandum directing FEMA to provide up to $44 billion in lost wages assistance from the Disaster Relief Fund. Pursuant to the memorandum, upon receiving a FEMA grant, states and territories may provide eligible claimants $300 or $400 per week, which includes a $300 federal contribution.

However, available data suggest many renters continue to struggle to pay their rent during the pandemic, despite the moratoriums and enhanced unemployment benefits. According to the Census Bureau’s Household Pulse Survey, an estimated 46 to 51 percent of renters reported being unemployed from May–July 2020.[172] Further, a number of stakeholders have observed lower and declining rent payments since April 2020, and others have cited higher use of credit to make payments.[173] The Census Bureau’s Household Pulse Survey further estimated that in July 2020, an estimated 18 percent of renters did not pay their rent during the previous month, up from an estimated 14 percent in May.[174] Over the same time frame, an estimated 27 to 33 percent of renters reported they had no or slight confidence in their ability to pay rent next month.[175] Historical data on mortgage and consumer credit delinquency rates show that a household’s ability to pay its debts generally decreases in an economic downturn.[176] Some renters may also lack awareness of available rent relief options.[177]

In addition, some stakeholders have noted that despite the section 4024 moratorium, some landlords continued to file evictions and some local courts continued to process them, including evictions resulting from the non-payment of rent in circumstances that might be covered by the Section 2024 moratorium.[178] It is too soon to assess the effect of the September 2020 moratorium on eviction filings and evictions.

Moreover, while the section 4024 moratorium prevented and the September 2020 moratorium is expected to prevent eviction for many renters, they did not preclude landlords from seeking payment for accumulated rent, which some say could lead to insurmountable one-time payments for renters.[179] While landlords may be managing short-term reductions in rental payments, continued partial payment or non-payment could force some into forbearance or foreclosure.[180]

The September 2020, extension of the moratorium could help ensure renters remain housed over the duration of the pandemic, especially in states and localities without their own moratoriums.[181] However, this extension does not address longer-term issues, including how affected renters would pay their rent (including back rent and other housing expenses, such as utilities) or how landlords would pay their mortgages.[182] Policymakers and other stakeholders have suggested more comprehensive measures to help ensure housing and financial stability.[183] Additionally, as previously described, income support (such as enhanced UI benefits) can also help households continue to pay their rent in the short term.

Table 6 provides a summary of additional information on federal support for industry and the economy presented in enclosures in appendix I, which also include descriptions of GAO’s future work.
Table 6: Areas in Which the Federal Government Has Taken Action to Support Industry and the Economy in Response to COVID-19

Area name

Federal government’s actions

Paycheck Protection Program

The Paycheck Protection Program closed to new applicants on August 8, 2020, and as of that date, lenders had made over 5.2 million loans totaling more than $525 billion. The Small Business Administration has started accepting loan forgiveness applications. In response to our recommendation that the Small Business Administration develop and implement plans to identify and respond to risks in the program, the agency has begun to develop oversight plans but has not yet finalized or implemented them.

Eviction Moratorium

Eviction moratoriums have helped keep renters housed, but do not address longer-term issues for renters and property owners related to unpaid rent.

Economic Injury Disaster Loan Program

After an initial backlog in processing applications, the Small Business Administration decreased its processing times for loans and advances made under the Economic Injury Disaster Loan program, but various challenges remain related to communication of program information and potential fraud.

Federal Reserve Emergency Lending Programs

Since early June 2020, seven additional emergency lending programs (or facilities) supported through CARES Act-appropriated funds became operational, resulting in a total of nine operational CARES Act facilities as of September 4, 2020. Modifications to the initial terms of the Main Street facilities serving small- and mid-size businesses continued into June and, according to Board of Governors of the Federal Reserve System officials, contributed to the facilities not becoming operational—that is, not accepting loans—until early July. The Main Street facilities serving nonprofits became operational in early September. Overall, the CARES Act facilities’ transactions and purchases of assets have been relatively limited.

Financial Assistance to Aviation and Other Eligible Businesses

The Department of the Treasury continues to provide assistance out of the $78 billion available to help the nation’s aviation industry and other businesses critical to national security recover from the economic effects of the COVID-19 pandemic.

Agriculture Spending

The U.S. Department of Agriculture continues to spend CARES Act funds for direct payments to agricultural producers and food purchases for redistribution to food banks, nonprofits, and other entities.

Federal Food Safety Inspections

The U.S. Department of Agriculture continues to spend CARES Act funds—more than $7.5 million spent from $33 million appropriated—to maintain staffing for federal inspections of meat and poultry plants as well as to provide personal protective equipment and supplies.
Source: GAO. | GAO-20-701

Assistance to States, Localities, Territories, and Tribes

This section describes the federal government’s assistance to states, localities, territories, and tribes, including the CRF and guidance on physically reopening K-12 schools for in-person education.

The COVID-19 relief laws provided an estimated $335 billion in funds to agencies for assisting U.S. states, localities, territories, and tribes in their responses to the COVID-19 pandemic. As we reported in June 2020, the six programs listed in the table below account for approximately 89 percent, or $299 billion, of the total estimated federal funding to states, localities, territories, and tribes from the COVID-19 relief laws. These programs have continued to disburse funds to states, localities, territories, and tribes, totaling $176 billion as of July 31, 2020 (see table 7). This represents additional federal expenditures of $17 billion since May 31, 2020.
Table 7: Appropriations and Expenditures for Selected Federal Programs Providing COVID-19-Related Aid to States, Localities, Territories, and Tribes

Program

Appropriations ($)

Cumulative Federal Expenditures ($)

As of May 31, 2020

As of June 30, 2020

As of July 31, 2020

Coronavirus Relief Fund

150 billion

147 billion

149 billion

149 billion

Medicaid

52 billiona

7 billion

7 billion

13 billion

Federal Emergency Management Agency Disaster Relief Fund

45 billion

1 billion

2 billionb

3 billionb

Transit grants

25 billion

3 billion

6 billion

8 billion

Education Stabilization Fund

17 billionc

83 million

514 million

907 million

Airport grantsd

10 billion

288 million

931 million

2 billion
Source: GAO analysis of federal laws; Congressional Budget Office data, and information and data from the Centers for Medicare & Medicaid Services and the Departments of Education, Homeland Security, Transportation, and the Treasury. | GAO-20-701

Note: The COVID-19 relief laws appropriating the amounts described in this table are the Families First Coronavirus Response Act, Pub. L. No. 116-127, 134 Stat. 178 (2020) and the CARES Act, Pub. L. No. 116-136, 134 Stat. 281 (2020). Some appropriation amounts include an amount available for administration expenses or for the relevant inspectors general. An expenditure is the actual spending of money, or an outlay. Numbers are rounded to the nearest million or billion.
aSeveral provisions in the Families First Coronavirus Response Act, Pub. L. No. 116-127, 134 Stat. 178 (2020), authorized an increase in Medicaid funds for states and territories. The largest increase to federal Medicaid spending is based on a formula change rather than a specific appropriated amount. The Congressional Budget Office estimated that federal expenditures from this change would be approximately $50 billion.
bThis amount represents all expenditures as of June 30 and July 31, 2020, from the Disaster Relief Fund for COVID-19. This amount includes expenditures associated with the major disaster declarations, but, according to Federal Emergency Management Agency (FEMA) officials, does not include expenditures related to the nationwide emergency or surge activity. FEMA officials also said that the agency has not obligated or expended any money appropriated to the Disaster Relief Fund by the CARES Act and, instead, has funded, and continues to fund, its obligations and expenditures related to COVID-19 relief operations from the balances of prior year appropriations to the Disaster Relief Fund. Some of the expenditures were for FEMA’s Public Assistance program, which provides emergency protective assistance to state, local, territorial, and tribal governments. Expenditures for the Public Assistance program as of June 30, 2020 and July 31, 2020 were $1 billion and $2 billion, respectively.
cThis amount is an approximation and includes funds for the Elementary and Secondary School Emergency Relief Fund; the Governor’s Emergency Education Relief Fund; Education Stabilization Fund discretionary grants; formula grants to the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa (which are referred to in the law as outlying areas); and programs operated or funded by the Bureau of Indian Education. It does not include the nearly $14 billion in aid for institutions of higher education through the Education Stabilization Fund.
dFunds are available to eligible sponsors of airports. Nearly all of these airports are under city, state, county, or public-authority ownership.

State and local governments face increased expenditures and decreased revenues stemming from the pandemic and the resulting economic effects. In addition to updating their revenue forecasts, state and local governments have taken actions to respond to these fiscal challenges including freezing hiring, furloughing staff, restricting contracts and new spending, and freezing discretionary spending. A number of states also tapped their reserve funds to balance budgets for fiscal year 2020.

Coronavirus Relief Fund Guidance

As shown in table 7, Treasury has disbursed nearly all of the $150 billion CRF, the largest program that provides aid to states, the District of Columbia, localities, tribal governments, and U.S. territories from the four COVID-19 relief laws.[184] Given the statutory requirement to disburse CRF payments within 30 days, Treasury made payments while Treasury, Treasury’s Office of Inspector General, and OMB were still developing guidance and recipient accountability measures.[185]

Guidance. Treasury began issuing guidance on its interpretation of the eligible use of CRF payments in April 2020, at the same time it disbursed most of the CRF funds. Since that time, Treasury has continued to update its guidance on its interpretation of the eligible use of CRF payments, but has not clearly communicated that information to recipients, according to officials from associations representing state and local governments. According to Treasury officials, Treasury disseminated guidance to CRF recipients primarily by posting information on its webpage, including periodically updating an FAQ document. For example, Treasury updated its guidance document on June 30 to clarify the period in which costs must be incurred by recipients to be eligible. Treasury also updated the FAQ document on July 8 to clarify that states should transfer CRF funds to local governments that did not receive direct CRF payments, and to clarify that the costs of administering and auditing CRF funds are eligible uses.[186]

Treasury officials told us they update the FAQs to help address questions Treasury receives from CRF recipients and state and local government associations, among others. Treasury officials said they expect to continue to have an active role in policy matters related to the CRF, including providing additional guidance and responding to questions related to eligible use of funds, even after Treasury has disbursed all CRF payments. According to Treasury officials, they made efforts to participate in regular conference calls scheduled by the White House Office of Intergovernmental Affairs and calls sponsored by relevant associations when updated guidance or FAQs were released.

However, Treasury only recently began alerting individual CRF recipients when it updated the guidance and identifying the new or revised information in the guidance. For example, the Treasury CRF guidance and FAQ document both indicated the date each document was last updated, but until recently, the documents did not identify which information was new or revised. Officials from associations representing state and local governments told us that while Treasury was generally accessible and responsive to questions, their members said it was challenging to continually monitor Treasury’s web page for updates and search the CRF guidance documents for any changes or additions.

According to association officials, some states delayed disbursing CRF funds to subrecipients, such as local governments, because they needed additional guidance on the eligible use of CRF payments, including reporting and compliance requirements. We discussed these concerns with Treasury officials on July 30, 2020, and, when Treasury next updated its CRF FAQ document on August 10, 2020, it notified CRF recipients of the revised guidance and clearly identified which information in the guidance was new. Treasury officials told us they plan to continue these actions moving forward.

Audit requirements. The Single Audit Act establishes requirements for states, the District of Columbia, local governments, U.S. territories, Indian tribes, and nonprofit organizations that receive federal awards to undergo single audits of those awards annually (unless a specific exception applies), when their expenditures of the award meet a certain dollar threshold.[187] The audits required by the act are critical to the federal government’s ability to help safeguard federal funds. Specifically, a single audit may identify deficiencies in the award recipient’s compliance with applicable provisions of laws, regulations, contracts, or grant agreements and in its financial management and internal control systems. Correcting such deficiencies can help reasonably assure the effective use of federal funds and reduce the likelihood of federal improper payments.

Auditors who conduct single audits follow guidance in the Single Audit Act’s Compliance Supplement, which OMB updates and issues annually in coordination with federal agencies. In a May 28, 2020, FAQ Treasury provided guidance that CRF payments are considered federal financial assistance subject to single audits. OMB’s 2020 Compliance Supplement, issued in August 2020, specified that OMB is still working with federal agencies to identify the needs for additional audit guidance for new COVID-19 related programs, including the CRF, as well as existing programs with compliance requirement changes. OMB plans to publish an addendum to this Supplement in the fall of 2020. According to an official from the National Association of State Auditors, Comptrollers and Treasurers, many single audit efforts are already underway. Given that some auditors usually start their interim testing in April for June 30 year-end single audits, further delays in issuing this guidance could adversely affect auditors and the results and timing of their work, and may lead to inconsistent reporting.

GAO Recommendation Related to Coronavirus Relief Fund Audit Requirements

The Director of the Office of Management and Budget, in consultation with the Department of the Treasury, should issue the addendum to the 2020 Compliance Supplement as soon as possible to provide the necessary audit guidance, as many single audit efforts are underway. (Recommendation 11)
Source: GAO. | GAO-20-701

Guidance for K-12 Schools

In light of the pandemic, state and local school district officials have been tasked with reassessing their operating status and ensuring their school buildings are safe. Decisions about K-12 education are primarily a state and local issue, and these officials are the key decision makers about how and when to reopen schools for in-person learning. In doing so, state and local officials generally look to federal, state, and local public health officials and the Department of Education (Education) for guidance and information to do so in a way that helps protect America’s 50 million students and 6 million teachers and staff, and slows the spread of COVID-19. On July 23, CDC announced updated guidance to help schools, school districts, and states consider how to return to in-person instruction in the fall, as well as reassess their operating status throughout the school year as local health conditions change.[188]

CDC’s updated guidance includes sections for school and program administrators on preparing for a safe return and operating schools safely (including considerations for when schools should close for in-person learning). The guidance also includes sections for parents and caregivers containing decision tools and checklists designed to give families information on why the administration believes it is critical to send children safely back to school in person, how to weigh the risks and benefits of available educational options, and how to plan for the 2020–21 school year.

Education officials said that to be as helpful as possible, they also made available guidance and resources for state and local officials and education administrators. Education’s website provides information on COVID-19 for schools and school personnel, including links to CDC’s guidance and various federal websites with COVID-19 information. Its technical assistance center also includes links to various federal websites with COVID-19 information. However, portions of CDC’s guidance on reopening K-12 schools are internally inconsistent, and some CDC, White House, and Education statements appear incongruent with a risk-based approach to determining school operating status.

Inconsistent CDC guidance. CDC’s guidance on screening children and employees entering K-12 schools is internally inconsistent. For example, CDC’s updated guidance, Screening K-12 Students for Symptoms of COVID-19: Limitations and Considerations, does not recommend that schools conduct daily symptom screening for all K-12 students, noting that since some people with COVID-19 are asymptomatic, there are limitations to such screenings. However, contradictory guidance remained accessible on CDC’s website several weeks later. For example, CDC’s Considerations for K-12 Schools Readiness and Planning Tool, still directed schools to develop a plan to conduct daily health checks (e.g., temperature screening or symptom checking) of staff and students.

Further, a CDC decision tool for physically reopening, Schools During the Covid-19 Pandemic, explicitly stated that schools should not physically open unless they are able to screen students and employees upon arrival for symptoms and history of exposure and are ready to protect children and employees at higher risk for severe illness.

CDC guidance on what to do if a student or staff member tests positive for COVID-19 is also inconsistent. In its FAQ for School Administrators on Reopening Schools, CDC notes that in most instances, a single case of COVID-19 in a school would not warrant closing the entire school. In contrast, in the K-12 Schools and Childcare Programs FAQ for Administrators, Teachers, and Parents, CDC notes that if a student or staff member is confirmed to have COVID-19, “you will likely dismiss students and most staff for 2–5 days.” As we reported in June 2020, in the midst of a nationwide emergency, clear and consistent communication with health care providers and to the public—across all levels of government—is key.

In commenting on a draft of this report, CDC stated that it strives to ensure that all content is consistent and up to date. It noted that updating these documents is an iterative and ongoing process and, as a result, there can be periods of time where some documents are updated and others are not. CDC further stated that it is working to update its decision tools and re-opening guidance to align with its updated guidance, and that it has removed the decision tool, Schools During the Covid-19 Pandemic, from its website.

Relatedly, Education’s website and technical assistance center contained incomplete summary information on CDC’s mitigation strategies. Specifically, neither summary included wearing cloth masks or staying 6 feet apart when possible—strategies CDC identified as key for slowing the spread of COVID-19. We discussed this with Education, and as of August 7, the summaries on both websites had been removed. The websites still include direct links to CDC’s guidance.

Certain federal guidance appears misaligned with risk-based decision-making. CDC and the Secretary of Education have both noted that school reopening plans should be tailored to the needs of local communities. Many school districts developed hybrid plans that call for students to learn remotely for part of the time, while others—including most of the nation’s largest school districts—moved to remote-only learning. Yet, CDC’s updated July guidance begins with a statement urging schools to reopen in person, and information encouraging schools to reopen in person is embedded throughout the guidance.

Further, the White House has urged that all schools “fully reopen” and suggested that current or future federal funds may be withheld from school districts that do not return to in-person education. The Secretary of Education also noted that the “American investment in education is a promise to students and their families. If schools aren’t going to reopen and not fulfill that promise, they shouldn’t get the funds. Then give [the funds] to the families to decide to go to a school that is going to meet that promise.”[189] Education officials told us these comments were policy or rhetorical statements. Regardless, such statements do not appear to align with a risk-based decision-making approach, and appear incongruent with the Secretary’s own statements that returning to in-person education is a state and local decision.

Although the decision to physically reopen schools is primarily a state and local issue, state and local school district officials look to the federal government for leadership and clear guidance including recommendations about how to do so safely. Unclear federal guidance and messaging risks contributing to conflict, confusion, and indecision for schools.

School facility conditions present a host of other challenges that could complicate efforts to reopen school buildings safely. For example, CDC’s guidelines say to ensure ventilation systems operate properly and increase circulation of outdoor air as much as possible. However, in June 2020, based on our nationally representative survey of school districts, we estimated that 36,000 schools were in need of heating, ventilation, and air conditioning updates.[190] Safe drinking water poses another challenge for reopening schools that have been shuttered since spring 2020. CDC recommends flushing water systems after prolonged shutdown to reduce the risks of lead and legionella. However, our 2018 work on lead in school drinking water showed that an estimated 69 percent of school districts do not have flushing programs in place.[191]

Exacerbating the situation, the poorest school districts may be least able to pay for efforts to retrofit and update schools to address COVID-19-related risks. These districts educate about 1.5 million more students than wealthy districts. We also know from our past work that 80 percent of students attending the poorest schools are Black or Hispanic, and that these students already face myriad educational challenges, from less access to coursework that prepares them for college to widespread discipline disparities.

Beyond serving as safe places for tens of millions of children to learn and millions of teachers to work each day, public school facilities play an integral role in society for community members who rely on them as community centers, voting places, and emergency shelters. Returning to in-person instruction safely and securely is of paramount concern to all, and is key to sustaining economic recovery, particularly given the large numbers of parents of school-age children in the workforce.[192] As schools make their reopening plans for the fall, cogent, clear, and consistent federal guidance is critical to helping state and local officials make safe, risk-based decisions for their students, teachers, staff, and communities.

GAO Recommendation Related to Guidance for K-12 Schools

The Director of the Centers for Disease Control and Prevention should ensure that, as it makes updates to its federal guidance related to reassessing schools’ operating status, the guidance is cogent, clear, and internally consistent. (Recommendation 12)
Source: GAO. | GAO-20-701

Table 8 provides a summary of additional information on federal assistance to states, territories, localities, and tribes presented in enclosures in appendix I, which also include descriptions of GAO’s future work.
Table 8: Areas in Which the Federal Government Has Taken Action to Assist States, Localities, Territories, and Tribes in Response to COVID-19

Area name

Federal government’s actions

K-12 Education

Education Stabilization Fund spend rates remain low and federal guidance on reassessing schools’ operating status should be cogent, clear, and internally consistent.

Transit Industry

The Federal Transit Administration continues to distribute CARES Act funding, with nearly all funds obligated thus far going to transit agency operating costs.

Coronavirus Relief Fund

Guidance and oversight are critical to ensure that the $150 billion in COVID-19 relief disbursed through the Coronavirus Relief Fund to states, localities, tribal governments, the District of Columbia, and U.S. territories are used appropriately.

Airport Grants

The Federal Aviation Administration continues to provide funding to help the nation’s airports respond to and recover from the economic effects of the COVID-19 pandemic. As of July 31, 2020, the agency has processed grant applications for 3,213 U.S. airports, totaling about $8.7 billion.
Source: GAO. | GAO-20-701

Federal Contracting

This section presents information on the federal government’s contracting practices during the pandemic, including government-wide contracting obligations, tracking of contract actions, and terminated contracts.

Government-wide Contract Obligations

Government-wide contract obligations in response to the COVID-19 pandemic totaled about $24.3 billion as of July 31, 2020, with HHS continuing to account for almost half, or about 44 percent, of total obligations (see fig. 10).[193]

Figure 10: Contract Obligations in Response to COVID-19 by Agency, as of July 31, 2020

Consistent with what we reported in June 2020, medical equipment and supplies—including ventilators and PPE—continue to be the largest area of obligations.[194] Obligations for medical equipment and supplies increased by about $1.3 billion since May 31, 2020, and accounted for about $6.8 billion, or 28 percent of total obligations. See figure 11 for additional details on the top goods and services procured.

Figure 11: Contract Obligations for Top Goods and Services Procured through Federal Contracts in Response to COVID-19, as of July 31, 2020

Since our June 2020 report, government-wide contract obligations have increased by about $7.4 billion—from $16.9 to $24.3 billion.[195] As shown in figure 12, federal contract obligations underwent the greatest increase from the middle to the end of March, following the President’s March 13, 2020, nationwide emergency declaration.[196] As of March 15, 2020, federal agencies reported obligating about $604 million on contracts in response to COVID-19.[197] By March 29, 2020, government-wide obligations were more than $4.4 billion, an increase of more than 600 percent.

Figure 12: Government-wide Contract Obligations Related to COVID-19 by Week, as of July 31, 2020

As of July 31, 2020, about $12.2 billion, or 50 percent of government-wide contract obligations, were on contracts we identified as awarded noncompetitively. Agencies cited an urgent need for awarding contracts noncompetitively for about two-thirds, or $8.2 billion, of contract obligations. Awarding contracts under the unusual and compelling urgency exception to full and open competition can be necessary in certain circumstances, but our prior work has noted that promoting competition—even in a limited form—increases the potential for quality goods and services at a lower price in urgent situations.[198]

The next most cited reason for awarding contracts noncompetitively was that only one source was available to provide the goods or services; such contracts accounted for $2.2 billion, or 18 percent, of the noncompeted contract obligations.[199] Agencies competed contracts for goods less frequently than contracts for services—about 39 percent of obligations for goods were on competed contracts compared to 64 percent of obligations for services. For example, about $6 billion, or 89 percent of the $6.8 billion in obligations for medical and surgical equipment, were on contracts awarded noncompetitively.

Agencies have reported using a variety of contracting techniques to respond to COVID-19. For example, undefinitized contracts allow contractors to begin work before reaching a final agreement with the government on all contract terms and conditions. As of July 31, 2020, about $2.2 billion, or 9 percent of government-wide contract obligations on contracts awarded in response to COVID-19, were undefinitized contract actions. DOD reported about $1.3 billion, or about 24 percent of its COVID-19-related contract obligations, as undefinitized contract actions.

Undefinitized contract actions can allow the government to fulfill requirements that are urgent or need to be met quickly when there is insufficient time to use normal contracting vehicles. However, our prior work has noted that these types of contracts can pose risks to the government, such as when contractors lack incentives to control costs before all contract terms and conditions are defined.[200] Our work has also found that a portion of reported government-wide contract obligations have been associated with implementing a contractor paid leave provision of the CARES Act.[201]

In addition to contract obligations, some agencies have reported using other transaction agreements in response to COVID-19. For example, as of July 31, 2020, DOD reported obligating an additional $6.5 billion in prototype and production other transaction agreements, including a $2.1 billion agreement for large-scale antibody and vaccine manufacturing in response to COVID-19. Within the federal procurement data system, we found that HHS also reported obligating about $47.7 million for another transaction for clinical trials. Other transactions enable federal agencies to negotiate terms and conditions specific to a project without requiring them to comply with certain federal laws and regulations. However, our prior work has noted their use carries the risk of reduced accountability and transparency.[202] Our future work will further examine agencies’ use of competition, undefinitized contract actions, and other transaction agreements.

Tracking Contract Activity

Federal agencies are tracking contract actions and associated obligations in response to COVID-19 through the use of a NIA code in the Federal Procurement Data System-Next Generation. The COVID-19 NIA code was established on March 13, 2020, to track contract actions. Since then, the code was extended to September 30, 2020, and most recently, was extended until March 31, 2021 while our draft report recommending that the Department of Homeland Security (DHS) and DOD extend the code beyond September 30, 2020, was with the agencies for comment.[203]

According to officials at DOD and DHS, they consider the criteria identified in the memorandum of agreement between DOD, DHS, and the General Services Administration (GSA) prior to making a determination of whether to close the NIA code. For example, according to the agreement, prior to closing the NIA code the agencies will consider whether government-wide contract actions show a consistent decrease in the actions awarded or if the remaining or predicted contracting activity has become routine, indicating it is no longer necessary to track contract actions.

Our prior work noted that the NIA code provides consistent tracking and government-wide visibility into contracting related to disaster events through a publicly available database, but we identified inconsistencies in establishing and closing these codes following previous disasters or emergencies. In April 2019, we recommended that GSA, in coordination with DHS and DOD, assess whether the criteria in their current NIA code agreement meet the long-term needs for high visibility events and of users, such as FEMA, other agencies, and Congress.[204] GSA and DOD concurred with our recommendation (DHS did not respond), and in August 2019 GSA, DOD, and DHS revised their agreement. However, the revised agreement did not fully address our recommendation. For example, it did not include consideration of the needs of NIA code users or the need for long-term visibility into contract actions, including awards and obligations.

We have continued concerns with the criteria DHS and DOD rely on in the memorandum of agreement to determine whether to extend or close a code, and whether the agreement meets the long-term needs for high visibility events and of users, such as other agencies and Congress. Recently, with regard to extending the NIA code for COVID-19 beyond its original expiration date of July 1, 2020, DHS and DOD notified agencies of their decision to extend the NIA code after they decided to extend it, both via email and, according to DOD officials, during an interagency meeting that included all 24 Chief Financial Officers Act agencies. However, DHS and DOD did not obtain input of key agencies before making the decision to extend the code to September 30, 2020—either in terms of the need to extend it or for how long.

For example, when we asked whether HHS, the agency obligating almost half of all government-wide contract obligations in response to COVID-19, had any contact with DHS and DOD related to extending the NIA code expiration date, HHS officials from the Office of Acquisitions told us that they were not aware of any such communications. VA officials stated that they did have communications with DHS regarding the need to extend the NIA code, and that those communications were initiated by VA. According to HHS officials, without a NIA code to track contract actions and associated obligations, they would have no way to differentiate HHS COVID-19 contract actions from other HHS actions and obligations.[205]

Federal internal control standards state that management should use quality information, and externally communicate that information to achieve its objectives.[206] This includes considering expectations of internal and external users, defining the information needed, and using quality information to make informed decisions. According to the memorandum of agreement, DHS is responsible for determining when a NIA code should end for civilian agency actions, and DOD is responsible for that determination for contingency operations.

The agreement further states that extending the NIA code is appropriate if two or more agencies have a current or anticipated need for tracking contract actions and do not have a reasonable alternate method of internally tracking them. However, the memorandum of agreement does not identify any processes or steps DHS and DOD can or should take to coordinate with the various agencies involved in emergency acquisitions to determine that need. The memorandum of agreement also does not identify how far in advance of the end date of a NIA code DHS and DOD should review contract actions to determine whether the code should be extended. Rather, the agreement states that decisions to end a NIA code can be made at any time, and that the code will, at a minimum, be reviewed at the end of each fiscal year.

Based on the current contracting environment and fluctuations in contract obligations, as shown in figure 12, it is unclear how DHS and DOD will apply some of the current criteria in the agreement for closing the NIA code—such as determining whether contract actions have shown a consistent decrease or whether predicted contracting activity has become “routine.” Given the number of federal agencies involved in contracting for the response to the pandemic, establishing a process to ensure that DHS and DOD are obtaining input on the need to extend or close the NIA code from the various agencies relying on it to track contract actions and associated obligations is imperative. Equally important is identifying clear timelines for evaluating and determining whether to extend NIA code in advance of its end date. Establishing such a process and timeline will help to address the need for federal agencies, the public, and Congress to have visibility into contract actions and associated obligations related to disaster events.
GAO Recommendation Related to Tracking Contract Activity
  • The Secretary of Homeland Security, in coordination with the Secretary of Defense, should (1) revise the criteria in the 2019 National Interest Action code memorandum of agreement to clearly identify steps they will take to obtain input from key federal agencies prior to extending or closing a National Interest Action code, (2) establish timelines for evaluating the need to extend a National Interest Action code, and (3) define what constitutes a consistent decrease in contract actions and routine contract activity to ensure the criteria for extending or closing the National Interest Action code reflect government-wide needs for tracking contract actions in longer term emergencies, such as a pandemic. (Recommendation 13)
  • The Secretary of Defense, in coordination with the Secretary of Homeland Security, should (1) revise the criteria in the 2019 National Interest Action code memorandum of agreement to clearly identify steps they will take to obtain input from key federal agencies prior to extending or closing a National Interest Action code, (2) establish timelines for evaluating the need to extend a National Interest Action code, and (3) define what constitutes a consistent decrease in contract actions and routine contract activity to ensure the criteria for extending or closing the National Interest Action code reflect government-wide needs for tracking contract actions in longer term emergencies, such as a pandemic. (Recommendation 14)
Source: GAO. | GAO-20-701

Terminated Contracts

The federal government can partially or fully end a government contract before the contractor completes performance by terminating the contract. Depending on the circumstances, the government can terminate the contract either (1) for the convenience of the government or (2) for cause or default. For example, when the government’s requirements change, rendering continued performance unnecessary, the government may choose to terminate the contract for convenience. On the other hand, when a contractor fails to perform its contractual requirements, the government may terminate the contract for cause or default.

Federal agencies reported terminating at least $229 million in contract obligations as of July 31, 2020. About three-quarters of that total ($171.3 million) was reported as terminated fully or partially for convenience, with the rest reported as terminated for cause or default. Most of the terminated contract obligations were for goods, including $97.1 million in medical equipment and supplies and $55.8 million in hospital and surgical clothing. For example, FEMA reported terminating a $53.5 million contract with Panthera Worldwide LLC for cause after the company failed to deliver 10 million N95 respirators. Both FEMA and VA also reported terminating contracts for N95 respirators with the same contractor—Federal Government Experts.[207] FEMA reported terminating a $1.9 million contract with the company for cause, while VA reported terminating a $35.4 million contract for convenience.

A variety of factors can lead the government to decide to terminate a contract. Clearly defining requirements for the type and amount of goods and services needed, based in part on market research, can help to ensure the government is contracting for what it needs. The Federal Acquisition Regulation also requires that contracts be awarded to responsible contractors, and that contracting officers take steps—such as ensuring prospective contractors have adequate financial resources and reviewing information on contractor performance and integrity—to affirm a contractor’s responsibility.[208] Our future work will further examine the government’s use of new vendors during the response to the pandemic, and agencies’ contracting practices as they relate to determining whether prospective contractors are responsible.

International Response

This section presents information on the federal government’s international response to the COVID-19 pandemic.

Agencies’ obligations of supplemental funds and support for international response activities.[209] Two COVID-19 relief laws appropriated about $3.1 billion in supplemental funding to support the U.S. government’s international response to the COVID-19 pandemic, including about $2.3 billion for diplomatic and foreign assistance programming administered by the Department of State (State) and the U.S. Agency for International Development (USAID), and at least $800 million designated for CDC’s international response activities.[210] State and USAID reported obligating about $1.2 billion of their supplemental funding, as of June 26, 2020.[211] State and USAID developed a strategy to use the supplemental funds for diplomatic and foreign assistance programming, organized under four pillars (see fig. 13). CDC reported obligating about $63 million of its supplemental funding, as of July 6, 2020. CDC developed a strategy for its global disease detection and emergency response to COVID-19, which focuses on supporting priority countries, multilateral institutions, and vulnerable populations to mitigate the global impact of the pandemic.

Figure 13: March 2020 Department of State and U.S. Agency for International Development Strategy on the Use of Supplemental Funding to Respond to COVID-19 Abroad

Note: The Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, appropriated $435 million (reflected in Pillar 2 in the figure) for the Global Health Programs account and directed that not less than $200 million be transferred and merged with the Emergency Reserve Fund established pursuant to section 7058(c)(1) of the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2017. Pub. L. No. 116-123, tit. IV, 134 Stat. 146, 152. The Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, and the CARES Act also appropriated $95 million to USAID for operating expenses and $1 million to the USAID Office of Inspector General for COVID-19-related work. Pub. L. No. 116-123, tit. IV, 134 Stat. at 152; Pub. L. No. 116-136, div. B, tit. XI, 134 Stat. 281, 590. In addition, $7 million of the $250 million appropriated for the Economic Support Fund Account in Pillar 4 was transferred to USAID for operating expenses, according to USAID officials.

Figure 14 shows State and USAID obligations, as of June 26, 2020, by strategic pillar and CDC’s obligations, as of July 6, 2020, for global disease detection and emergency response.

Figure 14: Agencies’ Obligations of Supplemental Appropriations for International Response to COVID-19

Note: State and USAID obligations are as of June 26, 2020. CDC obligations are as of July 6, 2020.

State and USAID. State and USAID provided details on their uses of supplemental funding, including the countries and types of activities they are supporting.
  • Pillar 1: Protecting U.S. Citizens and Maintaining U.S. Operations. State reported obligating supplemental funding to maintain consular operations, which faced a significant decline in visa and passport fees resulting from the pandemic. State planned to use supplemental funds to, among other things, increase secure communications bandwidth, accessibility, and support for those working remotely; expand cloud and email storage capacity; and support efforts by the Bureau of Medical Services to continue effectively and safely achieving State’s mission domestically and overseas by contracting for experts in areas such as infectious disease, mental health, and statistical analysis of health data. Efforts also included purchasing and distributing personal protective and testing equipment, targeted hiring, and adding capacity for medical evacuation travel and contract aviation to continue international operations in the face of reduced global commercial airline service.
  • Pillar 2: Global Health Assistance. USAID reported obligating supplemental funding as of June 6, 2020, to provide global health assistance for at least 73 countries affected by and at risk of COVID-19; regional activities in the Caribbean, Pacific Islands, and Asia; and worldwide activities. This assistance included preventing and controlling infections in health facilities; conducting contact tracing; improving readiness to rapidly identify and treat cases; raising awareness in populations through risk communication; screening people at points of entry and exit; and purchasing commodities, including ventilators.
  • Pillar 3: Humanitarian Assistance. USAID reported obligating supplemental International Disaster Assistance account funding as of June 6, 2020, for 11 countries, regional activities in the Pacific Islands, and worldwide activities. This funding focuses on mitigating widespread transmission of COVID-19, addressing public health consequences, and maintaining essential health services for crisis-affected populations, particularly displaced people. Assistance efforts have included support for health interventions; water, sanitation, and hygiene services; protection services, such as psychosocial support; and risk communication activities. This funding is also supporting response logistics and the response to the secondary impacts of COVID-19, including the enormous emergency food needs, according to USAID officials. In addition, State reported that it obligated supplemental Migration and Refugee Assistance account funding as of July 10, 2020, for 56 countries and regional and worldwide activities. These obligations support assistance efforts similar to those USAID has supported with International Disaster Assistance funds, but focus on the needs of specific populations of concern, including refugees, victims of conflict, internally displaced persons, stateless persons, and vulnerable migrants.
  • Pillar 4: Economic and Development Assistance. USAID reported that State and USAID obligated supplemental funding under Pillar 4 as of June 6, 2020, for nine countries, as well as regional and worldwide activities.[212] Examples of activities supported include providing technical assistance and access to credit for micro, small, and medium-sized enterprises; strengthening civil society; protecting and assisting vulnerable people; monitoring legal protection for journalists; and providing direct cash relief to households.

CDC. According to CDC officials, global disease detection and emergency response efforts involve several technical areas including emergency response capacity; laboratory, surveillance, and epidemiology; border health and community mitigation; infection prevention, control, and preparedness in health care facilities; and pandemic and vaccine preparedness planning. CDC also identified nearly 60 countries to which to target this assistance.

State and USAID officials identified several examples of challenges faced by implementing partners providing COVID-19-related assistance in affected countries.[213]
  • Host government COVID-19-related restrictions. Visa restrictions, curfews, quarantines, and movement restrictions have impeded the ability of humanitarian workers to operate in some countries. For example, according to USAID officials, Nigeria’s visa restrictions have created difficulty for relief workers to travel there, and Ethiopia has limited movements at land borders, except for the flow of cargo and essential goods. In Iraq, travel restrictions posed challenges delivering medical supplies to program sites.
  • Lack of key commodities. Due to concerns around possibly diverting scarce PPE, such as surgical masks and gloves, from the domestic response to the COVID-19 pandemic in the United States, USAID officials told us that they instructed all implementing partners in early March 2020 to temporarily pause any purchases of PPE products using USAID funds. According to USAID, this pause posed challenges for implementing partners in both protecting their own staff as well as ensuring the continuity of USAID’s emergency health assistance. On June 9, 2020, USAID ended the pause by issuing interim policy guidance to allow implementing partners to procure restricted PPE materials without prior authorization in the following two situations: (1) for their staff from any source, and (2) for the protection of beneficiaries of USAID programs from PPE manufactured locally or in the same region where USAID is providing assistance as long as the PPE is not, and could not reasonably be, intended for the U.S. market.[214] Some countries may continue to face shortages of PPE, according to USAID officials. For example, USAID officials told us in early July that USAID-funded partners working in Sudan had reported that the shortage of PPE across the health sector has made it difficult for relief workers to respond safely to COVID-19.
  • Lack of qualified partners or staff. For some countries with limited USAID presence, there are very few qualified partners to implement USAID-funded assistance. USAID partners have also faced challenges recruiting and training local staff to implement response activities. Additionally, USAID cited an example in which a program’s operations in Nigeria were suspended when a quarantine was imposed following the death of a relief worker who contracted COVID-19.
  • Additional challenges for humanitarian assistance. According to State officials, partner organizations face several challenges to providing COVID-19-related assistance to vulnerable populations that are already in the midst of a humanitarian crisis. These challenges include limited in-person implementation and monitoring; xenophobic violence directed at aid workers, refugees, migrants, and other foreigners believed to be importing the virus; closed borders; and delays in health care delivery, among many other concerns.

Table 9 provides a summary of additional information on federal actions related to the international response presented in enclosures in appendix I, which also includes descriptions of GAO’s future work.
Table 9: Areas in Which the Federal Government Has Taken Action on the International Response to COVID-19

Area name

Federal government’s actions

International Trade

While U.S. trade has declined overall, imports of COVID-19-related products have increased, and the U.S. government has made tariff modifications to reduce the cost of certain such products from China.

State's Repatriation Efforts

In response to the COVID-19 pandemic, the Department of State used existing authorities to transfer $260 million for efforts to evacuate and repatriate U.S. citizens.
Source: GAO. | GAO-20-701

Evolving Lessons Learned from the Ongoing COVID-19 Response Highlight Areas for Timely and Concerted Actions

This section presents new examples of previously identified lessons learned and issues in need of continued congressional oversight and action by the administration. Attention to these issues can help to make federal efforts as effective as possible.

In our June 2020 report, we identified several lessons learned from the government’s response to previous emergencies, as well as the initial response to the COVID-19 pandemic.[215] These lessons included establishing clear goals and defining roles and responsibilities among those responding to a crisis, providing clear communication, collecting and analyzing data to inform future decisions, and establishing mechanisms for accountability and transparency. Through our ongoing oversight, and as described in previous sections of this report and highlighted below, we have continued to observe the need for these lessons to be heeded. We have also identified an additional evolving lesson learned: the need to guard against cyber threats as another key effort in the response to the pandemic.

Lesson: Need to Establish Clear Goals and Define Roles and Responsibilities

As we reported in June 2020, the unprecedented scale of the COVID-19 pandemic and the whole-of-government response required to address it highlight the critical importance of clearly defining the roles and responsibilities for the wide range of federal departments and other key players involved.

Our ongoing work has identified areas in which federal roles and responsibilities could be better defined and communicated. For example, while multiple federal agencies currently share medical supply management responsibilities, these responsibilities are being transitioned to HHS. However, the precise timing and structure of some changes are undetermined. Similarly, multiple federal agencies are involved in the efforts to develop, distribute, and administer a vaccine, but the government lacks a plan that details the specific roles and responsibilities for the various federal and nonfederal entities.

As a result, officials from multiple federal, state, and local agencies expressed confusion about the federal agencies’ roles in certain key efforts, like medical supply management. For example, one public health official from a large city called the federal response “incoherent, confusing, and uncoordinated.” We have previously found that a lack of clarity in roles and responsibilities can lead to duplication, confusion, or gaps in preparedness.[216] We will continue to monitor this lesson in our future work.

Lesson: Provide Clear Communication

As we reported in June 2020, clear and consistent communication—among all levels of government, with health care providers, and to the public—is key during a nationwide emergency. Uncoordinated communication between the federal government and state and local jurisdictions, and with providers and the general public, can contribute to confusion and frustration.

Since our June report, we have continued to find examples of unclear and inconsistent communication. For example, as we previously noted, we found inconsistencies within CDC guidance on students entering schools and incongruent messaging from CDC, Education, and the White House on this issue. There has also been inconsistent and conflicting information from the White House and federal public health officials about the efficacy of hydroxychloroquine as a therapeutic for COVID-19 patients. Two public health experts that GAO interviewed noted that the confusing and conflicting communication from the federal government on the pandemic has hindered response and recovery efforts.

In its Crisis and Emergency Risk Communication Manual, which describes core crisis and emergency risk communication principles, CDC notes the importance of clear and consistent communication. For example, the manual states, “ensure that all communications from your organization and its partners share the same facts. Inconsistent messages increase anxiety and quickly undermine expert advice and credibility.” These potential consequences could deter individuals’ willingness to adopt recommended public health measures and interventions, such as vaccinations. We will continue to examine this important issue in our future work.

Lesson: Need to Collect and Analyze Adequate and Reliable Data to Drive Future Decisions

Nursing Home Data

HHS, through CMS, implemented a COVID-19 reporting requirement for nursing homes effective May 8, 2020.[217] Nursing homes are required to self-report data at least weekly through CDC’s National Healthcare Safety Network on suspected and confirmed COVID-19 cases and deaths among residents and staff, PPE supplies, access to testing, and staff shortages, among other things. These data are then posted on a CMS website. Prior to the implementation of this new requirement, HHS had not required that nursing homes submit data to CDC on COVID-19 cases or deaths.[218]

Although CMS now requires nursing homes to report COVID-19 data, the data reported to CDC do not capture the early months of the pandemic. Reports from the early months of the pandemic indicated that nursing homes were affected disproportionately by COVID-19 due to the vulnerability of frail residents living in close proximity. CMS began requiring nursing homes to report COVID-19 data to CDC by May 17, 2020, starting with information as of May 8, 2020. CMS made reporting prior to May 8, 2020 optional.

Our review of the data shows that some nursing homes with known COVID-19 outbreaks have opted not to submit data prior to May 8, 2020. As a result, the data do not provide HHS with a complete picture of the extent of the pandemic and its effect on nursing homes. For example, the Life Care Center in Kirkland, Washington—the site of one of the first major COVID-19 outbreaks reported in a United States nursing home in February 2020—submitted data to CDC. But, with reporting prior to May 8 optional, it reported zero total confirmed resident and staff cases and zero total deaths in the CDC data from May 8 through June 21. According to a CDC review, the February 2020 outbreak at this nursing home led to 81 resident cases and 34 staff cases, as well as 23 deaths.[219] These cases may have been reported to the state or local health department, but they were not reported to CDC.

Other nursing homes that had been widely reported as having multiple COVID-19 deaths in April and May, including a New York nursing home with reports of up to 60 resident deaths, similarly did not include those deaths in the CDC data as of June 21. In contrast, other nursing homes did report cases and deaths prior to May 8, but the data reported to CDC and posted to CMS’s website do not clearly distinguish between nursing homes that opted to report confirmed cases and deaths prior to this time and those that did not, which further complicates tracking of pandemic trends.

CMS has stated that the information collected will be used to assist with the national surveillance of COVID-19 in nursing homes and to inform public health policies and actions. According to CDC’s “Updated Guidelines for Evaluating Public Health Surveillance Systems,” the acceptability and representativeness of a surveillance system relate to the quality of its data, including data completeness.[220] Without high quality, complete data, the system cannot accurately represent the health-related event under surveillance. In addition, federal internal control standards require agencies to use quality information, such as relevant data from reliable sources, to achieve agency objectives.[221]

CMS noted that nursing homes are free to report COVID-19 data to CDC going back to January 1, 2020, if they choose and that CMS will post this information. CMS notes on its website that residents and families can ask their nursing home whether this information is available or not and that they can seek information to understand why it is not available.[222] CMS also notes in its guidance that state and local health departments are able to submit the required data on behalf of nursing homes. However, the nursing homes must still report in accordance with regulation.[223]

By not requiring nursing homes to submit data from the first 4 months of 2020 and by not distinguishing in the data which homes opted to report during this time, HHS is limiting the usefulness of the data. For example, this limits HHS’s and others’ ability to determine how many total nursing homes were affected by COVID-19, the extent of morbidity and mortality, and whether the incidence of COVID-19 in nursing homes has changed since the early months of the pandemic. As a result, HHS components—specifically CMS and CDC—are limited in their ability to monitor trends in infection rates, identify which nursing homes have already experienced an outbreak, and oversee whether nursing homes have appropriately and effectively taken steps to prevent and mitigate the spread of COVID-19 to protect residents. Further, without data from early in the pandemic, the public and policymakers also have an incomplete picture of the toll of COVID-19 in nursing homes.

GAO Recommendation Related to Nursing Home Data

The Secretary of Health and Human Services, in consultation with the Centers for Medicare & Medicaid Services and Centers for Disease Control and Prevention, should develop a strategy to capture more complete data on confirmed COVID-19 cases and deaths in nursing homes retroactively back to January 1, 2020, and to clarify the extent to which nursing homes have reported data before May 8, 2020. To the extent feasible, this strategy to capture more complete data should incorporate information nursing homes previously reported to the Centers for Disease Control and Prevention or to state or local public health offices. (Recommendation 15)
Source: GAO. | GAO-20-701

Nationwide COVID-19 Data System

The COVID-19 pandemic highlights the need for federal, state, and local public health officials to access real-time information about the virus to help them effectively allocate resources and make timely, responsive decisions related to public health and safety. In our June 2020 report, we highlighted our 2017 recommendation that HHS make progress toward implementing information technology enhancements needed to establish a near real-time electronic nationwide public health situational awareness capability.[224] Since 2006, HHS has been required to establish and improve upon such a capability, in collaboration with state, local, and tribal public health officials, to enhance early detection, rapid response to, and management of potentially catastrophic infectious disease outbreaks.[225] Additionally, a public health expert we spoke to highlighted the need for a uniform and centralized system of collecting and interpreting public health data to effectively respond to the pandemic, particularly at the state and local levels.

In response to the need to quickly and securely collect and access HHS and other data for the COVID-19 pandemic, HHS launched a new data platform—HHS Protect—in April 2020. According to information from the former HHS Chief Information Officer and our review of the HHS Protect website, HHS Protect is a secure data ecosystem aimed at collecting, sharing, and analyzing near real-time COVID-19 data.[226] It is designed to provide a holistic view of the U.S. health care system to guide action for the COVID-19 response. Specifically, the former HHS Chief Information Officer said that HHS is using the platform to help identify pandemic hotspots in the United States and increase supplies to those areas most affected.

According to the former HHS Chief Information Officer, HHS Protect contains over 4 billion data elements, and HHS has sought to expand the platform’s data collection and reporting. HHS Protect integrates information from more than 200 datasets from federal, state, and local government and commercial sources. These datasets include data collected by CDC, CMS, and the Health Resources and Services Administration (HRSA); commercial laboratory data on COVID-19; and data on ventilators, hospitalizations, and nursing homes, among other data.[227] According to the former HHS Chief Information Officer, HHS Protect obtains information from all 50 states and territories from about 2,100 direct data streams, and his office has worked with states and territories to improve the reporting of their information to the platform. For example, officials from the HHS Office of the Chief Information Officer (OCIO) worked with one state to identify and correct a discrepancy in the state’s data on HHS Protect by reviewing logs of when the state’s health department uploaded its data to the platform. In addition to these datasets, HHS Protect has mapping technology to view data by ZIP code and supervised machine learning capability to aid with modeling for the pandemic response.

During a demonstration of HHS Protect, we observed COVID-19 testing, case, and hospitalization data by selected states and counties, which are customized based on a user’s access to certain data sets. For example, HHS OCIO officials told us that users from a specific state are granted access to nonpublic data from that state in HHS Protect. During the demonstration, we also observed several visual analysis tools, including dashboards, graphs, and a link chart. Users are also able to generate reports and queries and save them to their profile on the platform, according to OCIO officials.

To obtain more hospital data for HHS Protect, HHS revised its guidance for hospitals to report COVID-19 capacity and utilization data directly to HHS through TeleTracking, or states may submit these data on behalf of hospitals to HHS as of July 15, 2020. According to the former HHS Chief Information Officer, the number of hospitals reporting data has increased since this change.[228] He said that as of July 24, 2020, HHS Protect receives data from between 4,200 and 5,800 hospitals daily. Additionally, the HHS OCIO created a new public dashboard, the HHS Protect Public Data Hub, to provide daily hospital utilization data to replace CDC’s National Healthcare Safety Network dashboard, which had previously published these data.[229] According to the former HHS Chief Information Officer, the HHS Protect Public Data Hub provides more information from a larger number of hospitals than the National Healthcare Safety Network dashboard. According to data published on July 30, 2020, about 92 percent of hospitals nationally reported at least one data element within the past 7 days on the HHS Protect Public Data Hub.[230]

The transition of COVID-19 hospital data to HHS Protect prompted some public health and state government organizations to raise questions about the reporting process and accessibility of the data. For example, the American Public Health Association, in a letter signed by over 100 public health and medical organizations, recommended that the new hospital reporting requirements be reversed to maintain the integrity of COVID-19 data, keep public health data accessible to the public, and better ensure the availability of hospital data for state and local responses to the pandemic.

Others have also expressed concern about the transition of data collection to HHS Protect. The National Governors Association requested a 30-day delay in the implementation of these new requirements so that hospitals would have time to learn the new system, and recommended that HHS make the hospitalization data publicly available.[231] A health expert affiliated with Johns Hopkins University School of Medicine that we spoke with also expressed concerns about the effectiveness and transparency of HHS Protect and the availability of the data being reported under the system to the public. However, according to information from the CDC Director and former HHS Chief Information Officer, the transition of hospital data to HHS Protect is intended to help streamline and enhance data collection and reduce data duplication.

As part of their concerns, the American Public Health Association and public health experts we spoke with noted the key role and expertise that CDC has in collecting and analyzing public health data to inform the nation’s response to the pandemic. Specifically, in its letter, the American Public Health Association expressed concern that placing the collection of medical data, including hospital data, outside of CDC would put the quality and integrity of the data at risk, and could undermine the pandemic response. On July 31, 2020, the CDC Director testified at a congressional hearing that he was not involved in the decision to report COVID-19 hospital data through HHS Protect, and that he learned about the decision only after it had been made. HHS OCIO officials told us that they work with CDC to help validate hospital data in HHS Protect, and that they considered CDC an “equal partner” in the development of HHS Protect.

Since the launch of HHS Protect in April 2020, HHS has worked to expand access to the platform to a variety of federal, state, local, and commercial entities, according to the former HHS Chief Information Officer. Initially, HHS focused on granting access to partners who provided data to HHS Protect. It did not bring on all users at the outset because of costs associated with scaling up the help desk capabilities of the OCIO and uncertainty about the volume and quality of data available on the platform.

The former HHS Chief Information Officer said that, as HHS Protect added new datasets over time, HHS broadened its outreach to states, congressional staff, ASPR and FEMA regional and state contacts, and professional associations, such as hospital associations, in an effort to expand access to the platform.[232] To gain access to HHS Protect, individuals must be sponsored and approved by a federal or state entity. Once access is authorized, users are able to view all publicly available datasets in HHS Protect, but must request and be granted access to non-publicly available datasets by the data owner. During the HHS Protect demonstration, we observed a data catalog that users may view to identify and request access to non-publicly available data.

As HHS further develops the HHS Protect platform, it will be important to consider prior challenges the agency has faced in developing and implementing information technology systems and data-sharing networks among federal, state, and local public health entities. For example, since 2003, we have described challenges related to sharing data among public health entities, including the lack of an overall strategy to guide the establishment of interoperability among related systems.[233] We also described state and local public health officials’ concerns regarding the cost and effort associated with providing data to federal entities to be integrated and shared on a nationwide basis, and whether those integrated data enhanced public health officials’ ability to prepare for and respond to emergencies. In 2017, we identified weaknesses in HHS’s planning efforts to establish an electronic nationwide public health situational awareness network.

Given the role that HHS Protect is playing in public health surveillance for the ongoing pandemic, we plan to evaluate HHS’s implementation of the platform, including the quality and reliability of the data and the extent to which the data are made available and are transparent. As HHS further develops HHS Protect, we also plan to review CDC’s role in its development and the collection of data in the platform.

Lesson: Establish Transparency and Accountability Mechanisms

COVID-19 Testing Payments

HHS has an important oversight role to ensure that federal COVID-19 funds distributed by its agencies do not result in duplicate payments for health care services. Two HHS agencies—HRSA and CMS—pay for COVID-19 testing for uninsured individuals. Initial spending on testing for these two programs is just beginning, and continued monitoring and oversight will be critical to ensure that payments do not duplicate each other and that providers are paid appropriately based on the individuals they serve.

HRSA administers a $2 billion program for COVID-19 testing for the uninsured. CMS has the authority to approve state Medicaid programs’ requests to pay providers for COVID-19 testing of uninsured individuals, with the federal government responsible for 100 percent of the payment costs. The Congressional Budget Office estimates that the Medicaid payments for testing uninsured individuals will total approximately $2 billion in 2020 and 2021.

As of July 30, 2020, HRSA had paid $137 million for COVID-19 testing of uninsured individuals. Of this $137 million, about $29 million was paid to providers in the 16 states and one of the three U.S. territories where CMS has approved Medicaid payments for the same purpose. While state reporting of Medicaid payments is incomplete—for example, one state reported $51 in payments as of July 31, 2020—it is unclear if the controls in place can effectively ensure that payments by HRSA and states’ Medicaid programs do not duplicate each other.

Providers’ understanding of the new—and optional—Medicaid benefit as a source of coverage for the uninsured is an important control to ensure correct billing for their services and prevent potential duplicate or erroneous payments. While CMS has issued guidance to states, and HRSA has provided guidance and communication to providers, the new coverage may be less known and understood by providers, in part because of inconsistent communication across the states.

Our review of the 16 states implementing this optional Medicaid benefit for testing of the uninsured found some examples of inconsistent information and in one case inaccurate communication to providers on states’ websites. For example:
  • Two states offer clear and accurate instructions that providers should bill the state Medicaid program first and that HRSA is the payer of last resort.
  • One state provides opposite, and inaccurate guidance, directing providers to bill HRSA until HRSA’s funds are exhausted, at which point providers can bill Medicaid. The state’s website also provides a link for providers to access the HRSA payment website.
  • Some other state websites we reviewed had more limited information on Medicaid’s optional coverage or HRSA’s provider payment program and how providers should bill the programs.

Providers submitting claims to HRSA are required to attest that they have confirmed that the individuals they tested are uninsured and have no other source of health insurance coverage through an individual or employer-sponsored plan, a federal health care program, or the Federal Employees Health Benefits. HRSA’s program administrator implemented a prospective payment control on June 1, 2020 to check for insurance coverage for individuals on COVID-19 testing claims submitted to HRSA for payment. Further, HRSA officials reported that its program administrator is developing additional payment controls. On September 9, 2020, HRSA reported that retrospective payment controls began on August 31, 2020 that will recoup any improper payments identified, and additional prospective payment controls to help identify and deny claims for those with coverage under Medicaid’s new COVID-19 testing benefit will begin by the end of September 2020.

Given the amount of funds paid to date, the controls are relatively untested; thus we continue to have concerns about the potential for duplicate payments and will review developments regarding CMS’s and HRSA’s programs.

Lesson: Need to Guard against Cyber Threats

COVID-19 has highlighted the need for the government’s continued attention to cyber threats that pose a serious challenge to national security, economic well-being, and public health and safety. Since March 2020, malicious cyber actors have exploited COVID-19 to target organizations that make up the health care and public health critical infrastructure sector, including government entities, such as HHS, and nongovernmental health care organizations.

For example, the former HHS Chief Information Officer stated that the department has been the target of sophisticated daily cyberattacks for the last several months. Recent alerts issued by DHS’s Cybersecurity and Infrastructure Security Agency and other government entities have also described significant attacks on numerous other health care organizations, such as pharmacies, academic institutions, and medical research organizations. The malicious actors were targeting patient information, intellectual property, public health data, and intelligence.

Safeguarding federal information systems and those supporting our nation’s critical infrastructure, such as health care, has been a longstanding GAO concern.[234] We first designated cybersecurity as a government-wide high-risk area in 1997, and expanded the area to include safeguarding the systems supporting our nation’s critical infrastructure in 2003.[235] Our March 2019 high-risk update continued to identify these areas as high-risk.[236]

Over the last 6 years, we have identified numerous cybersecurity weaknesses at multiple HHS component agencies, including CMS, FDA, and CDC.[237] These agencies rely extensively on information systems to collect, process, and maintain highly sensitive information used to deliver services to citizens, including approving drugs for market, providing health insurance benefits, monitoring pandemics and disease outbreaks, and conducting medical research. We identified weaknesses in key safeguards to limit, prevent, and detect inappropriate access to computer resources and maintain secure configurations of software and hardware. Our related reports included 434 technical and information security program recommendations to address these weaknesses at HHS component agencies.

As of July 2020, CMS, FDA, and CDC had made significant progress in resolving many of the security deficiencies by implementing 350 (about 81 percent) of the 434 recommendations.[238] However, we are currently evaluating the effectiveness of information security controls at NIH and have identified numerous similar technical and information security program deficiencies. These weaknesses continue to place sensitive health care information at an increased risk of compromise from cyber-based attacks.

As the lead federal agency for coordinating security and resilience activities in the health care sector, HHS has taken steps to strengthen cybersecurity, but additional action is needed. In February 2018, we reported that although HHS had taken steps to encourage use of the National Institute of Standards and Technology cybersecurity framework within the health care sector, HHS had not developed a method to determine the level and type of framework adoption within the sector.[239] Additionally, in February 2020, we reported that HHS had not collected or reported improvements resulting from the cybersecurity framework’s use.[240] We made recommendations to address these issues—specifically, in February 2018 we recommended that HHS measure the level and type of framework adoption, and in February 2020 we recommended that HHS collect and report on sector-wide improvements. While HHS agreed with the recommendations, as of July 2020, it had not implemented them.[241]

We will continue to review HHS’s efforts to address its cybersecurity responsibilities, including as they relate to its COVID-19 response efforts.

GAO Recommendation Related to Department of Health and Human Services Cyber Threats

Based on the imminent cybersecurity threats, the Secretary of Health and Human Services should expedite implementation of our prior recommendations regarding cybersecurity weaknesses at its component agencies. (Recommendation 16)
Source: GAO. | GAO-20-701

Continued Congressional Attention Needed in Several Areas

In our June 2020 report, we recommended that Congress take action in three areas to improve the federal government’s response and recovery; to date, these recommendations have not been implemented.[242] We again call attention to these important issues.

Aviation preparedness. In our June 2020 report, we urged Congress to take legislative action to require the Secretary of Transportation to work with relevant agencies and stakeholders, such as HHS, DHS, members of the aviation and public health sectors, and international organizations, to develop a national aviation-preparedness plan to limit the spread of communicable disease threats and minimize travel and trade impacts. We originally made this recommendation to the Department of Transportation (DOT) in December 2015.[243] As of August 2020, no aviation-preparedness plan had been developed.

Although DOT supports the inclusion of aviation in a comprehensive pandemic preparedness plan, it maintains that other federal agencies should lead such planning efforts. DOT has reiterated that because HHS and DHS are responsible for communicable disease response and preparedness planning, respectively, these departments should lead any efforts to address planning for communicable disease outbreaks, including for transportation.[244]

However, in May 2020, DHS stated that it had reviewed its existing national, sector, and modal plans for pandemic preparedness and response activities and determined that it is not best situated to develop a national aviation preparedness plan. It noted that DOT, along with HHS and DHS, would be the appropriate lead. In June 2020, HHS stated that it is not in a position to develop a national aviation preparedness plan because it does not have primary jurisdiction over the entire aviation sector or the relevant transportation expertise. Also, the National Response Framework—a guide to how the nation responds to all types of disasters and emergencies—identifies DOT as the lead federal agency for coordinating the management of transportation systems and infrastructure during domestic threats or in response to actual or potential incidents.[245]

Several recent developments indicate progress to respond to this recommendation. For example, in May 2020, the House of Representatives passed H.R. 6800, referred to as the HEROES Act, which would require DOT, in coordination with HHS, DHS, and other appropriate federal departments and agencies, to develop a national aviation preparedness plan. The legislation directs that the plan incorporate all elements referenced in the recommendation from our December 2015 report. The plan would also be required to provide for an adaptable and scalable framework to help align individual airport and airline plans, as well as to improve coordination among appropriate federal, state, and local governments.

In addition, in August 2020, the Senate Committee on Commerce, Science, and Transportation favorably reported S. 3681, Ensuring Health Safety in the Skies Act of 2020. This bill would require HHS, DHS, and DOT to form a joint task force on air travel during and after the COVID-19 public health emergency, and it includes a provision for the task force to develop operating procedures to manage future anticipated public health crises affecting air travel. The task force would be focused on COVID-19 and the immediate aftermath of the pandemic, not future communicable disease threats.

In early July 2020, DOT, HHS, and DHS issued guidance to airports and airlines for implementing measures to mitigate the public health risks associated with COVID-19.[246] Among other things, the document establishes the principles for implementing public health measures in the aviation sector and identifies risk mitigation measures that should be applied for the entire passenger journey in the air transportation system, such as social distancing and contact tracing. While this guidance is a positive step, DOT has not taken action to develop an aviation preparedness plan for future communicable disease threats that incorporates all of the elements referenced in our 2015 report, such as protocols for responding to the threat and coordination among stakeholders. Without such a plan, the United States will not be as prepared to minimize and quickly respond to future communicable disease events.

Full access to death data. In our June 2020 report, we urged Congress to amend the Social Security Act to explicitly allow SSA to share its full death data with Treasury for data matching to prevent payments to ineligible individuals.

In June 2020, the Senate passed S.4104, referred to as the Stopping Improper Payments to Deceased People Act. If enacted, the bill would allow SSA to share these data with Treasury’s Bureau of the Fiscal Service to help prevent paying improper payments to deceased individuals.

Fiscal assistance through Medicaid. In our June 2020 report, we urged Congress to Assistance Percentage (FMAP) formula for any future changes to the FMAP—the statutory formula according to which the federal government matches states’ spending for Medicaid services—during the current or any future economic downturn. Our past work has found that during economic downturns—when Medicaid enrollment can rise and state economies weaken—the FMAP formula, which is based on each state’s per capita income, does not reflect current state economic conditions. In addition, past efforts to provide states with temporary increases in the FMAP were not as timely or responsive as they could have been. No congressional action has been taken to date.

Conclusions  


In their ongoing response to the COVID-19 pandemic, federal agencies have continued to take action on multiple fronts to address unprecedented challenges that have contributed to catastrophic loss of life and profound economic disruption. These actions have helped direct much-needed federal assistance to support many aspects of public life, including local public health systems and private-sector businesses. Attention to the lessons we have identified—including the need for adequate and reliable data to drive decision-making, transparency and accountability mechanisms, and protection against cyber threats, among other things—can help to make these efforts as effective as possible.

Even amidst ongoing federal efforts, the nation faces continued public health risks and economic difficulties for the foreseeable future. The public health system, already strained from months of responding to COVID-19 cases, will face the additional task of managing the upcoming flu season. At the same time, many of the federal, state, and local agencies responsible for responding to the ongoing public health emergency will also be called on to prepare for and respond to the current hurricane season. This will occur as Americans spend more time indoors as the weather turns colder in most parts of the country—creating the potential for an increase in the spread of COVID-19. These are foreseeable, near-term risks, and preparing for them must be an urgent priority for the federal government.

Our recommendations identify a number of opportunities to help the federal government prepare for the months ahead while improving the ongoing federal response. Specifically, they aim to help federal agencies to prepare for, respond to, and recover from the challenges that lie ahead and to manage federal funds efficiently and responsibly. Timely and concerted federal leadership will be a critical component of an effective, agile response, and government leaders must be ready to move quickly to address both known challenges and unexpected events. We will continue to provide ongoing oversight of the federal response to COVID-19 and to identify opportunities for improvement.

Agency Comments and Our Evaluation 


We shared a draft of this report with multiple agencies for review and comment.[247] Agency comments specific to the enclosures in appendix I are included in each enclosure. In addition, agencies provided the following comments:

Department of Defense. In its comments, reproduced in appendix V, DOD partially agreed with our recommendation to establish a time frame for documenting and sharing a national plan for distributing and administering a COVID-19 vaccine, and did not agree with our recommendation to revise the criteria in its 2019 National Interest Action (NIA) code memorandum of agreement between itself, DHS, and GSA. Specifically:
  • DOD partially concurred with our recommendation to establish a time frame for documenting and sharing a national plan for distributing and administering COVID-19 vaccine. In commenting on the draft report, DOD clarified that it is supporting HHS in developing plans for nationwide distribution and administration of vaccine to counter COVID-19. We revised the recommendation to reflect DOD’s supporting role in developing these plans.
  • DOD stated that it disagreed with the recommendation to revise the criteria in its 2019 NIA code memorandum of agreement. DOD indicated that revising the agreement to address the second and third part of the recommendation would limit the government's flexibilities.

    We maintain that adding some clarity and specificity to the criteria is important, as it would better ensure consistent application of the criteria over time, as well as enhance visibility for agencies, Congress, and the public regarding decisions to extend or close the NIA code. For example, establishing time frames for evaluating the need to extend a NIA code will help ensure interested parties have sufficient notice as to whether a code will be extended, thus allowing sufficient time to for these entities to provide input regarding the need to extend the code.

    Furthermore, we believe additional specificity could be added to the criteria without being unduly restrictive. For example, providing clarification in the memorandum of agreement as to what is considered “routine” could better ensure consistent application of criteria over time, increase transparency regarding when a code is close to closing, and yet still allow for professional judgment to be applied. Such clarification could perhaps be based on historical analysis of different types of similar events (e.g., hurricanes, public health emergencies, or contingency operations).
  • Regarding the first part of the recommendation on obtaining input from other federal agencies, DOD noted that the memorandum of agreement already includes a description of the communication methods used with other federal agencies. However, as we note in our report, the agreement does not identify any processes or steps DHS and DOD could or should take to coordinate with the various agencies involved in emergency acquisitions to determine that they will consider requests from agencies for extensions based on the criteria in the agreement and their discretion. Given the stated intent of the NIA code in the agreement for federal agencies to identify contracts awarded in response to high visibility disasters, emergencies, and contingency operations with significant multi-agency federal procurement impact, proactively obtaining input from other agencies involved in the response is necessary to ensure the successful tracking of government-wide procurements for these high-visibility events.
  • Finally, DOD stated that it and DHS are committed to annually reviewing the memorandum of agreement for necessary updates, including communication with other federal agencies over NIA codes. We encourage DOD, DHS, and GSA—the third signatory to the agreement responsible for managing the code in the Federal Procurement Data System-Next Generation—to use this annual review to implement this recommendation so as to better ensure consistent application of the criteria and increased transparency regarding the process for extending and closing NIA codes.
  • In the draft product we provided DOD and DHS for comment, we included an additional recommendation for DHS and DOD to extend the NIA code beyond September 30, 2020. In its comments, DHS and DOD concurred with this recommendation and extended the NIA code until March 31, 2021, while the report was with the agencies for comment. Because DOD and DHS’s actions addressed our draft recommendation, we have withdrawn that recommendation from our final report.

DOD also provided technical comments that we incorporated as appropriate.

Department of Education. In its comments, reproduced in appendix VI, Education stated that it continues to be proud of the department’s accomplishments in meeting the timeline set forth under the CARES Act and in awarding funds efficiently to states. Education noted that the agency worked in consultation and collaboration with CDC on school reopening resources, has updated Education’s COVID-19 web page, and is always working to improve it. Education provided technical comments, which we incorporated as appropriate.

Department of Health and Human Services. In its comments, reproduced in appendix VII, HHS highlighted actions it has taken with respect to the medical supply chain, vaccine manufacturing, collection of data on race and ethnicity, and its guidance for schools. HHS stated that it agreed with five of our 10 recommendations. HHS’s comments on the remaining five recommendations are summarized below:
  • HHS did not agree with the three recommendations in the draft report related to the medical supply chain. First, HHS did not concur with the recommendation related to developing roles and responsibilities for the supply management functions that are transitioning to HHS. In response to our second recommendation, HHS commented that it is in the process of producing documented responsibilities. However, HHS did not address any of the issues in our report regarding the transition of responsibilities. As such, we stand behind the evidence presented and this recommendation.

    For our other two recommendations regarding the medical supply chain, HHS commented that our report prioritizes “anonymous anecdotes” to develop our recommendations and objected that we did not disclose to HHS the names and titles of the officials with whom we spoke. Our findings are based on evidence from numerous sources and are an evaluation of the sum of the evidence to identify themes and challenges that reoccurred frequently. These include August 2020 federal reports on medical supply availability, interviews with federal officials, and interviews with senior state officials in multiple departments who were in appropriate positions to discuss state actions, supply availability, and the federal response. Consistent with generally accepted government auditing standards, we sought out officials with direct knowledge of the issues we studied and further confirmed that knowledge during the course of the interview. Specifically, we interviewed senior officials from departments of health and emergency preparedness from eight select states. Consistent with GAO practices, we selected the states we interviewed using robust methodological standards. We described the selection criteria and disclosed the eight selected states in the report’s objectives, scope, and methodology section, as well as the two states that provided additional evidence during a call with a national association (a total of 10 states for the findings about state, territorial, and tribal supply issues).

    As noted in the report, generally we reported those issues that arose in a majority of state interviews. These same concerns also arose in a number of the interviews we conducted with national associations and with FEMA regional offices. These were not isolated, singular opinions expressed by state officials removed from the response. HHS also stated that without knowing the title or name of the individuals who described challenges with the federal distribution of medical supplies, it cannot take corrective actions. We disagree. Our recommendations are not that HHS should individually follow up with each of the officials we interviewed to adjudicate individual issues that have already occurred. The intent of the recommendations is that HHS and FEMA, as leads for this pandemic response, seek to better understand the problems we identified and devise solutions to help ensure the federal government can mitigate remaining medical supply gaps, and assist states, tribes, and territories in serving their citizens effectively.

    In addition, in response to a draft of the second recommendation, which directed the department to further develop and communicate a comprehensive supply management plan in coordination with FEMA, HHS emphasized the work that had been done to manage the medical supply chain and increase supply availability. We agree that HHS, FEMA, and their federal partners have taken numerous actions to respond to the unprecedented need for medical supplies and our report describes many of these efforts. However, we found that certain supply constraints continue without plans outlining the specific actions the federal government will take to address them. We also report on differing perspectives about the extent of the medical supply gaps that remain. Further, HHS stated that our draft recommendation suggested that the federal government should federalize all supply procurement and distribution. This is not the intent of the recommendation. Rather, we believe that HHS, in coordination with FEMA, should further develop and communicate to stakeholders any plans outlining specific actions the federal government will take to address remaining medical supply gaps. This is an important step to help ensure federal response efforts align with demand. Further, it would provide needed clarity to federal partners and nonfederal entities on priority needs and ongoing efforts to address those needs. We maintain our recommendation is warranted and have modified it to clarify our intent.

    For our recommendations that HHS and FEMA work with relevant federal, state, territorial, and tribal stakeholders to devise interim solutions to the supply challenges they face for the remainder of the response—visibility, tracking, and budgeting—HHS also described efforts that it already undertakes, with the implication that these are sufficient to address any challenges described in the narrative supporting this recommendation. We commend HHS for these actions, and at the same time, note that nonfederal officials continued to report the kind of challenges we described irrespective of these efforts. We note that perhaps these venues are one good starting point to conduct the kind of outreach and listening sessions necessary to begin to help states, tribes, and territories address the challenges they are still facing, particularly as conditions may worsen as we move into fall and winter months.
  • While HHS officials neither agreed nor disagreed with our recommendation to establish a time frame for documenting and sharing a national plan for distributing and administering COVID-19 vaccine, in its comments, HHS noted that several factors complicate the publication of a firm vaccine distribution timeline and affect the administration and distribution of a vaccine. Such factors include the number of doses that may need to be administered and vaccine storage requirements; these factors depend on which vaccine candidate or candidates are identified and on clinical trial results. HHS further commented that it will soon send a report to Congress outlining a distribution plan that takes into consideration these issues as well as the frameworks HHS is developing with input from CDC’s Advisory Committee on Immunization Practices and the National Academies of Sciences, Engineering, and Medicine.

    We agree these are critical steps, along with the planning documents CDC sent to state and local jurisdictions, and we are encouraged that HHS intends to outline a distribution plan soon. Yet we continue to believe the Secretary of Health and Human Services, with support from the Secretary of Defense, should establish a specific time frame for documenting and sharing its national plan. This will allow all relevant stakeholders to be best positioned to also begin planning for administering a vaccine, and will help ensure a well-coordinated response involving any licensed or authorized vaccine.
  • HHS partially agreed with our recommendation that HHS, in consultation with CMS and CDC, develop a strategy to capture more complete data on confirmed COVID-19 cases and deaths in nursing homes back to January 1, 2020, and to clarify the extent to which nursing homes have reported data before May 8, 2020. Specifically, HHS agreed that collecting more complete data would be useful for determining the total number of nursing homes affected, the extent of morbidity and mortality, and changes in incidence over time. Further, HHS noted that having complete data would be useful in the review of policies and practices put in place during the pandemic.

    However, HHS said, because retroactively collecting the data “may be overly burdensome on health care providers,” it does not believe devoting substantial agency or health care provider resources during the pandemic “would be prudent.” We maintain the importance of developing a strategy to collect data from this critical time period of early COVID-19 spread in nursing homes and maintain that the agency could begin by incorporating data previously reported to CDC or to state or local public health offices, which would ease the burden on nursing homes.

HHS also provided technical comments that we incorporated as appropriate.

Department of Homeland Security: In its comments, reproduced in appendix VIII, DHS did not concur with the recommendations in the draft report related to the medical supply chain. DHS echoed many of the same concerns as HHS including the claim that we prioritize anonymous anecdotes in developing our recommendations. As we stated in our response to HHS, our findings are based on evidence from numerous sources and are an evaluation of the sum of the evidence to identify only themes and challenges that reoccurred frequently. These include August 2020 federal reports on medical supply availability, interviews with federal officials, and interviews with senior state officials in multiple departments who were in appropriate positions to discuss state actions, supply availability, and the federal response.

Importantly, we had multiple discussions about these recommendations with FEMA officials and provided several opportunities for them to provide feedback and discuss concerns. For example, while the draft was being reviewed by DHS, we met with FEMA headquarters officials to discuss, and ultimately revise, the language of the first two recommendations to better characterize FEMA’s supporting role. At the time of those discussions, FEMA indicated it concurred with these first two recommendations given the modifications. Additionally, we discussed the third recommendation in detail with FEMA headquarters officials with direct knowledge of the agency’s response functions. Those officials described that requests for and distribution of medical supplies were handled through multiple systems across agencies. These officials also said they were aware of good practices being used by states that would be valuable to share with their nonfederal partners and indicated they agreed with the recommendation.

Regarding our first supply chain recommendation related to developing roles and responsibilities for the supply management functions that are transitioning to HHS, DHS commented that DHS, FEMA, and HHS have articulated roles and responsibilities and that FEMA continues to collaborate on plans regarding supply chain management and stabilization through working groups and lines of effort. However, given the amount of responsibility, increase in needed expertise, and continued support that HHS will need moving forward, we believe that written plans documenting roles and responsibilities are critical for this transition. As such, we continue to believe this recommendation is important.

DHS also did not concur with the second supply chain recommendation in our draft report that it coordinate with HHS to develop and communicate a comprehensive supply management plan. DHS noted that FEMA has been successful in identifying supply gaps and taking swift action to ensure those needs are met, and we commend the department for these actions taken. Similar to HHS, DHS questioned the intent of our recommendation. As we stated in our response to HHS, the intent of the recommendation is not to federalize all supply procurement and distribution but to further develop and communicate to stakeholders any plans outlining specific actions to address remaining medical supply gaps. We maintain our recommendation is warranted and have modified it to clarify our intent.

For our recommendations that HHS and FEMA work with relevant federal, state, territorial, and tribal stakeholders to devise interim solutions to the supply challenges they face for the remainder of the response—visibility, tracking, and budgeting—DHS described FEMA’s close coordination with nonfederal partners and efforts to provide guidance to assist with navigating the pandemic response. DHS commented that FEMA’s role in providing assistance through the Stafford Act authorities is “nothing new” for FEMA’s nonfederal partners who recurrently interact with FEMA on disaster response and said it issued supplemental guidance to help those less familiar with this process.

However, DHS also stated that the unprecedented challenges caused by the pandemic led HHS and FEMA and their partners to execute an unprecedentedly comprehensive effort to obtain medical supplies necessary to respond to the pandemic. We commend DHS for its outreach and guidance that it provides to nonfederal partners, yet also recognize that a response as vast and complex as this pandemic response may also reveal challenges as well as successes. We stand by our recommendations that HHS and FEMA continue to engage their nonfederal partners to identify best practices within the states and disseminate guidance that addresses continued challenges.

Further, in its comments, DHS did not agree with the recommendation to revise the criteria in its 2019 NIA code memorandum of agreement, noting that it cannot establish timelines for evaluating the need to extend a NIA code or establish criteria for opening or closing a code without agreement from the other signatory agencies—DOD and GSA. DHS stated its Office of the Chief Procurement Officer will, however, discuss revisions with DOD and GSA that would clarify the process, criteria, and timelines for establishing, extending, or closing the NIA code, including communication with other agencies. We maintain that adding some clarity and specificity to the criteria is important, as it would better ensure consistent application of the criteria over time, as well as enhance visibility for agencies, the Congress, and the public regarding decisions to extend or close the NIA code. We encourage DHS, DOD, and GSA to use this annual review to implement this recommendation so as to better ensure consistent application of the criteria and increased transparency regarding the process for extending and closing NIA codes.

DHS also stated in its response that NIA codes are not meant to track “long term” actions. However, historically, NIA codes can and have been used to track contract actions long term. For example, contingency operations in Iraq and Syria and to counter terrorism through Operation Freedom’s Sentinel have had open NIA codes since 2014 and 2015; Hurricane Sandy had an open NIA code from 2012 to 2017; and the Gulf Oil Spill had an open NIA code from 2010 through 2013.

DHS also stated in its response that the appropriate mechanism for tracking expenditure funds used to respond to and recover from national emergencies and disasters is USASpending.gov. However, the tracking of appropriated funds is different from tracking contract actions and their associated obligations using the NIA code. Specifically, while efforts have been made to track and report COVID-19 relief funds on USAspending.gov (including funding related to contracts as well as, for example, grants and loans) based on a disaster emergency fund code, this code is used to track obligations associated with COVID-19 appropriations, such as CARES Act funding, whereas the NIA code tracks contracts for COVID-19 regardless of the source of funds. According to USASpending.gov, not all contract awards coded with the NIA code are tied to COVID-19 supplemental appropriations—meaning they may not be included in what is reported on USASpending.gov.

According to OMB, as the implementation of the disaster emergency fund code proceeds, OMB will continue to monitor the two sets of data to assess overlap. Furthermore, efforts to track COVID-19 spending through the code on USASpending.gov are relatively new, with agencies having just certified their obligations from April, May, and June 2020 as of August 14, 2020. As a result, these efforts do not currently provide a complete picture of contracts awarded in response to COVID-19 and coded with the NIA code that are not funded through COVID-19 appropriations. As we note in our report, as of September 4, 2020, USASpending.gov identified $11.3 billion in contract obligations, less than half of the amount we identified as associated with COVID-19 contract actions based on the NIA code as of July 31, 2020. As a result, the NIA code remains an important and necessary tool for tracking procurement data, including associated obligations, in the Federal Procurement Data System-Next Generation.

In the draft report we provided DHS and DOD for comment, we included an additional recommendation for DHS and DOD to extend the NIA code beyond September 30, 2020. In its comments, DHS and DOD concurred with this recommendation and extended the NIA code until March 31, 2021, while the report was with the agencies for comment. Because DHS and DOD’s actions addressed our draft recommendation, we have withdrawn that recommendation from our final report.

DHS also provided technical comments, which we incorporated as appropriate.

Department of Housing and Urban Development. In its comments, reproduced in appendix IX, HUD noted its efforts to inform renters, landlords, and other stakeholders of the CARES Act protections available to them, for example through a consumer call center and website developed jointly with the Consumer Financial Protection Bureau and the Federal Housing Finance Agency.

Department of the Treasury. In its comments, reproduced in appendix X, Treasury described the role it has played implementing the CARES Act, including EIP, Federal Reserve lending facilities, assistance to the aviation industry, the CRF, and PPP.

Treasury neither agreed nor disagreed with our recommendations. The letter states that Treasury supports the goal of our recommendations and describes actions it intends to take in coordination with IRS in concert with our recommendations to target outreach to individuals who may be eligible for an EIP.

Specifically, Treasury stated that it is working with IRS to examine tax information returns from 2018 and 2019 to identify potentially eligible recipients who have not yet received an EIP. The letter states that Treasury and IRS plan to send a notice to around 9 million individuals identified through this process on how to claim an EIP. Treasury and IRS also plan to continue to coordinate with EIP outreach partners including Volunteer Income Tax Assistance, Tax Counseling for the Elderly, Low Income Taxpayer Clinics, and other community organizations.

We acknowledge Treasury and IRS’s commitment to reaching as many EIP eligible recipients as possible and their efforts to use available data to do so. However, we continue to emphasize the need for Treasury and IRS to update and refine the estimate of eligible recipients who have yet to receive an EIP. We believe that an updated estimate will help Treasury, IRS, and Congress better understand the magnitude of the eligible population that has not received an EIP. This information can also inform and support outreach efforts.

Gaps in information return data also could impede Treasury and IRS’s ability to identify some eligible recipients. For example, we reported in May 2020 that IRS may be missing many individuals working in the platform economy due to reporting threshold rules.[248] We recommended that IRS work with Treasury to amend the rules, but IRS stated that it could not agree to do that due to higher priority guidance projects.

The lack of an estimate of eligible recipients who have not received an EIP limits Treasury and IRS’s, as well as their outreach partners’, ability to appropriately scale and target outreach and communication efforts to reach potentially eligible individuals.

Treasury also provided technical comments, which we incorporated as appropriate.

Department of Veterans Affairs. In its comments, reproduced in appendix XI, VA stated that it has continued to provide care for veterans with COVID-19. Among the topics covered, VA noted its efforts to increase staffing.

Internal Revenue Service. In its comments, reproduced in appendix XII, IRS highlighted the role it played to issue more than 160 million EIPs. IRS deferred to Treasury to respond to our two recommendations. Although IRS neither agreed nor disagreed with the recommendations, the response states that IRS will continue to work to identify recipients who are eligible for EIPs and encourage them to use the Non-Filers tool before the October 15 filing deadline. Further, IRS will continue to prioritize and dedicate resources to ensuring eligible recipients receive their full payments. IRS also provided technical comments, which we incorporated as appropriate.

Office of the United States Trade Representative (USTR). USTR provided comments, reproduced in appendix XIII, cautioning about overestimating the amount of trade for COVID-19-related products due to data limitations. We clarified that we present the values of imports in categories containing such products as an indicator of import trends. USTR also supplied technical comments, which we incorporated as appropriate.

Small Business Administration. SBA provided technical comments that we incorporated as appropriate. Some of these comments were more than technical in nature, as summarized below:
  • SBA stated it is not accurate to suggest that SBA is not responding to our June 2020 recommendation that SBA develop and implement plans to identify and respond to risks in PPP to ensure program integrity, achieve program effectiveness, and address potential fraud, including in loans of $2 million or less. In particular, SBA noted that it has briefed us on its efforts in multiple interviews and has committed to continuing to update us as the plans are finalized.

    In the report, we acknowledge that SBA has begun developing its oversight plans. For example, we noted that according to SBA officials, SBA is currently working with Treasury and contractors to finalize plans for loan reviews and loan forgiveness reviews. However, we cannot consider the recommendation implemented until SBA provides documentation outlining the review procedures and showing that reviews have been completed.
  • SBA also said that our statement that there are questions about the completeness and accuracy of the PPP data on jobs retained was inconsistent with our statement in the scope and methodology that we determined that the PPP data we used were sufficiently reliable. We assessed the reliability of each data variable we used individually. In the scope and methodology, we stated that we found the data sufficiently reliable to describe the geographic distribution of PPP funds, changes in PPP loan size over time, PPP loans by business size and type, and the extent of canceled loans. We did not report data on jobs retained because borrowers were not asked to include this information on their loan applications, none of the guidance on SBA’s website includes instructions to help lenders calculate jobs retained, and these data were either not reported or indicated zero jobs retained for 18 percent of loans.

U.S. Agency for International Development. In its comments, reproduced in appendix XIV, USAID highlighted its efforts to respond to COVID-19 abroad, including additional total obligations of supplemental funding, as of August 24, 2020. USAID also provided technical comments, which we incorporated as appropriate.

Technical comments. In addition to those listed above, the following agencies also provided technical comments, which we incorporated as appropriate: Departments of Agriculture, Labor, and State; Federal Housing Finance Agency (including Fannie Mae and Freddie Mac); and the Office of Management and Budget.

We are sending copies of this report to the appropriate congressional committees, the Director of the Office of Management and Budget, White House Coronavirus Task Force, and other relevant agencies. In addition, the report is available at no charge on the GAO website at https://www.gao.gov.

If you or your staff have any questions about this report, please contact me at (202) 512-5500 or dodarog@gao.gov. Questions can also be directed to Kate Siggerud, Chief Operating Officer, at (202) 512-5600, A. Nicole Clowers, Managing Director, Health Care, at (202) 512-7114 or clowersa@gao.gov or Orice Williams Brown, Managing Director, Congressional Relations, at (202) 512-4400 or williamso@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report.

Gene L. Dodaro

Comptroller General of the United States

Congressional Addressees

The Honorable Richard C. Shelby
Chairman
The Honorable Patrick J. Leahy
Vice Chairman
Committee on Appropriations
United States Senate

The Honorable Lamar Alexander
Chairman
The Honorable Patty Murray
Ranking Member
Committee on Health, Education, Labor, and Pensions
United States Senate

The Honorable Ron Johnson
Chairman
The Honorable Gary C. Peters
Ranking Member
Committee on Homeland Security and Governmental Affairs
United States Senate

The Honorable Nita M. Lowey
Chairwoman
The Honorable Kay Granger
Ranking Member
Committee on Appropriations
House of Representatives

The Honorable Frank Pallone, Jr.
Chairman
The Honorable Greg Walden
Republican Leader
Committee on Energy and Commerce
House of Representatives

The Honorable Bennie Thompson
Chairman
The Honorable Mike D. Rogers
Ranking Member
Committee on Homeland Security
House of Representatives

The Honorable Carolyn B. Maloney
Chairwoman
The Honorable James R. Comer
Ranking Member
Committee on Oversight and Reform
House of Representatives

Appendixes 

IN THIS SECTION


Appendix I: Report Enclosures

Relief for Health Care Providers

The Department of Health and Human Services continues to disburse the $175 billion appropriated for the Provider Relief Fund to financially support health care providers and finance care for COVID-19 patients and underserved populations. As of July 31, 2020, $129.7 billion had been allocated and about $92.4 billion had been disbursed to providers.

Entities involved: Department of Health and Human Services, including its Health Resources and Services Administration

Key Considerations and Future GAO Work

As the Department of Health and Human Services (HHS) works to get funds to eligible providers, it will continue to be important that robust internal controls are in place to help ensure funds are appropriately disbursed and used, notwithstanding the imperative of a quick federal response to the COVID-19 crisis. For example, it is important that funds not be provided to ineligible providers, such as hospitals that have closed. We plan to conduct additional work to examine HHS’s efforts to provide assistance to providers.

Background

The scale of the nationwide COVID-19 pandemic requires a “whole-of-government” approach to respond, including engaging multiple federal agencies to support the public health and medical response. HHS is designated as the lead agency for responding to a public health emergency, including a pandemic.[249] The COVID-19 pandemic has severely strained health care resources in some areas and reduced revenue that hospitals and other health care providers generate from the provision of non-urgent health services.

To respond to these crises, $175 billion was appropriated to reimburse eligible providers for health care-related expenses or lost revenues attributable to COVID-19, known as the Provider Relief Fund. Specifically, the CARES Act appropriated $100 billion and the Paycheck Protection Program and Health Care Enhancement Act appropriated an additional $75 billion for the fund.[250] The Health Resources and Services Administration (HRSA), within HHS, administers payments from the Provider Relief Fund.

Overview of Key Issues

Provider Relief Fund. As of July 31, 2020, HHS had allocated about $129.7 billion from the Provider Relief Fund, with $45.3 billion not yet allocated. Of the total allocated, about $92 billion has been disbursed and about $38 billion is yet to be disbursed. HHS allocated about $50 billion for general relief for health care providers and $70.1 billion for seven targeted areas.[251] Additionally, HHS told us that it allocated $10 billion for the treatment of uninsured COVID-19 patients.[252] See table below for a summary of Provider Relief Fund allocations and disbursements.
Summary of the Provider Relief Fund ($175 billion) Allocations and Disbursements, as of July 31, 2020

Description

Allocation
($ billions)

Dates and amounts of initial disbursement
($ billions)

Disbursement
($ billions)

General relief to health

care providersa

49.5

April 10, 2020: 30

April 24, 2020: 20

41.7

Rural health care facilitiesb

11.3

May 6, 2020

11.2

High-impact hospitalsc

22.0

May 7, 2020: 12

week of July 20, 2020: 10

20.2

Uninsured treatmentd

10.0

May 15, 2020

0.379

Skilled nursing facilitiese

5.0

May 22, 2020

4.8

Indian health care providersf

0.5

May 29, 2020

0.489

Safety net hospitalsg

13.3

June 12, 2020

13.1

Medicaid and Children’s Health Insurance Program (CHIP) providersh

15.0

July 3, 2020

0.505

Dental providersi

3.0

July 28, 2020

0.008

Administration

0.128

N/A

0.008

Unallocated funds

45.3

N/A

Total

175.0

92.4
Source: Summary of Department of Health and Human Services (HHS) funding data. | GAO-20-701

aHHS allocated about $50 billion from the Provider Relief Fund for general disbursement to facilities and providers that participate in Medicare fee-for-service based proportionally on eligible providers’ share of 2019 net patient revenue from the Medicare fee-for-service program. For both the $30 billion and $20 billion disbursements, providers must have had active Medicare billing privileges and have treated patients after January 31, 2020, among other terms and conditions.
bHHS initially allocated $10 billion to rural hospitals, including rural acute care general hospitals and Critical Access Hospitals, Rural Health Clinics, and Community Health Centers located in rural areas. On July 10, 2020, HHS announced an additional allocation of about $1 billion for specialty rural hospitals, urban hospitals with certain rural Medicare designations, and hospitals in small metropolitan areas.
cHHS initially allocated $12 billion for hospitals with high COVID-19 admissions, with $2 billion of these payments going to hospitals based on their Medicare Disproportionate Share funding. On July 17, 2020, HHS announced an additional allocation of $10 billion to hospitals based on the number of COVID-19 inpatient admissions.
dHHS told us that it allocated $10 billion for providers who submit claims for reimbursement for care or treatment related to positive diagnoses of COVID-19 provided to individuals who do not have any health care coverage at the time the services were provided. The Office of Management and Budget (OMB) told us on September 3, 2020, that the amount of this allocation is not final.
eHHS allocated about $5 billion to eligible skilled nursing facilities (SNF). Eligible SNFs for this disbursement are those that are certified with six or more certified beds.
fHHS allocated $500 million for the Indian Health Service, including tribal hospitals, clinics, and urban health centers.
gHHS initially allocated $10 billion for safety net hospitals that serve a disproportionate number of Medicaid patients or provide large amounts of uncompensated care, and operate on thin margins. On July 10, 2020, HHS allocated an additional $3 billion for certain safety net hospitals, expanding the criteria for payment qualifications to meet a revised profitability threshold.
hHHS allocated $15 billion for providers who did not receive funds from the $50 billion general relief disbursement, billed the Medicaid/CHIP programs or Medicaid managed care plans for health care-related services from January 1, 2018, to December 31, 2019, and provided patient care after January 31, 2020.
iHHS told us that it allocated $3 billion for dental providers. OMB told us on September 3, 2020, that the amount of this allocation is not final.

Summary of fund disbursements. As of July 31, 2020, $92.4 billion from the $129.7 billion allocated had been disbursed to providers. The amount disbursed is less than the amount allocated because some of the disbursements are in progress and providers have declined about $3.3 billion so far from previous disbursements; those funds are available for subsequent allocations. Over the past 3 months, funds started being allocated to areas particularly impacted by the COVID-19 outbreak.

Funds from the first general relief disbursement. HHS quickly disbursed the initial $30 billion from the general relief allocation based proportionally on eligible providers’ share of 2019 net patient revenue from the Medicare fee-for-service program, and those disbursements began on April 10, 2020, and are now complete.[253] Disbursements to individual providers ranged from less than $1 to about $139.7 million.

Among other things, providers who wished to keep these funds were required to attest to receipt of the funds and to agree to the program terms and conditions within 90 days of receipt. HHS regarded any provider not returning a payment within 90 days of receipt as accepting its terms and conditions. Recipients will be required to submit documents to substantiate that funds were used for increased health care-related expenses or lost revenue attributable to COVID-19 and were not otherwise reimbursed. HRSA officials told us that guidance concerning the required documentation will be issued shortly and that providers will need to submit the documents in early 2021.

According to our analysis of information provided by HRSA, as of July 15, 2020, there were 322,854 recipients of the initial disbursement of $30 billion and 312,614 recipients kept payments totaling about $28.9 billion. Among providers keeping the funds, 223,516 (72 percent) attested to their eligibility, while the other 28 percent did not respond to the attestation request. About 10,240 recipients returned payments totaling about $1.3 billion to HRSA.[254]

Our preliminary analysis found four closed hospitals that initially received funds from the first general relief disbursement. These four hospitals received a total of $558,000. However, the funds to the closed hospitals we identified were declined or returned and no funding remained with them. HRSA officials stated that they have program integrity strategies to help with recovering funds from closed hospitals. HRSA officials also told us that they had frequent communication in advance with providers to help ensure the eligibility of fund recipients.

GAO Methodology and Agency Comments

To conduct our work, we examined publicly released HHS documents and obtained information from HRSA. To determine if allocated funds went to any closed hospitals, we compared a dataset of hospitals receiving funds provided by HRSA to federal and academic datasets of closed hospitals. Our review of the data sources we used provides reasonable assurance of the data’s reliability. We provided HHS and the Office of Management and Budget (OMB) with a draft of this enclosure. OMB provided technical comments on this enclosure, which we incorporated as appropriate. HHS did not provide comments on this enclosure.

Contact information: James Cosgrove, (202) 512-7114, cosgrovej@gao.gov

Nursing Homes

COVID-19 challenges for our nation’s nursing homes remain, including challenges related to personal protective equipment, testing, and staffing shortages.

Entities involved: Centers for Disease Control and Prevention and Centers for Medicare & Medicaid Services, both within the Department of Health and Human Services.

Key Considerations and Future GAO Work

COVID-19 is a continuing, pressing concern for our nation’s nursing homes. New data, which could be improved, indicate nursing home residents have been disproportionately affected by COVID-19.

To address gaps in the new reporting requirements on COVID-19 cases and deaths in nursing homes, we recommend that the Secretary of Health and Human Services—in consultation with the Centers for Medicare & Medicaid Services (CMS) and the Centers for Disease Control and Prevention (CDC)—develop a strategy to capture more complete data on confirmed COVID-19 cases and deaths in nursing homes retroactively to January 1, 2020.

Since June 2020, we have identified concerns related to personal protective equipment (PPE), testing, and staffing shortages in nursing homes that we will continue to examine in future reports. We also have ongoing work on oversight of infection prevention and control and emergency preparedness in nursing homes.

Background

The health and safety of the 1.4 million elderly or disabled residents in the nation’s more than 15,000 Medicare and Medicaid certified nursing homes—who are often in frail health and living in close proximity to one another—has been a particular concern during the COVID-19 pandemic.[255] CMS, an agency within the Department of Health and Human Services (HHS), is responsible for ensuring that nursing homes meet federal quality standards to participate in the Medicare and Medicaid programs. To monitor compliance with these standards, CMS enters into agreements with state survey agencies in each state government to conduct (1) recurring comprehensive standard surveys and (2) as-needed investigations. In response to the pandemic, HHS, primarily through CMS and CDC, has taken a range of actions to address infection prevention and control in nursing homes, on which we reported in our June 2020 report, including providing guidance and technical assistance to nursing homes to improve infection control practices, shifting to targeted infection control surveys of nursing homes, and modifying reporting requirements for nursing homes. In addition, in June 2020, CMS announced the establishment of the 25-member Coronavirus Commission on Safety and Quality in Nursing Homes, which was tasked with conducting a comprehensive assessment of the response to the COVID-19 pandemic in nursing homes and deliver a report to CMS in early fall 2020.[256]

Congress specifically appropriated $100 million in the CARES Act for this oversight program, and it directed the agency to prioritize the use of funds for nursing home facilities in localities with community transmission of COVID-19.[257] According to CMS, of this amount, the agency plans to provide state survey agencies approximately $81 million through September 30, 2023. In addition, HHS announced in May that it would contribute $4.9 billion from the CARES Act to assist nursing homes with responding to COVID-19 and announced in July that it would provide an additional $5 billion.

Overview of Key Issues

Initial results of self-reported COVID-19 cases and deaths. Since May 2020, CMS has required nursing homes to self-report COVID-19 data on the number of suspected and confirmed cases and deaths to CDC.[258] Specifically, as of July 26, 2020, 68 percent of all nursing homes had reported to CDC at least one confirmed resident or staff case, and 29 percent had reported at least one resident or staff COVID-19 death. (See figure).

Nursing Home Staff and Resident Confirmed COVID-19 Cases and Deaths, as Reported to CDC, May 8, 2020 through July 26, 2020

Note: Totals may not add to 100 due to rounding. In comparison, according to CDC, there were about 4.2 million total COVID-19 cases and 145,982 total deaths across the United States, as of July 26, 2020. It is likely that both the nursing home and total U.S. cases and deaths are underreported. Approximately 95 percent of nursing homes had reported the required data from May 8 through July 26, 2020, to CDC. In addition, some nursing homes opted to report cases back to January 1, 2020, but it is unclear how many homes chose to do so.

These data reveal nursing home residents have accounted for at least one-quarter of all reported U.S. COVID-19 deaths—an estimate that is likely underreported, as CMS does not require nursing homes to report data prior to May 8, 2020.[259] As a result, the data do not provide HHS with a complete picture of the extent of the pandemic and its effect on nursing homes. For example, the Life Care Center in Kirkland, Washington—the site of one of the first major COVID-19 outbreaks reported in a U.S. nursing home in February 2020—submitted data to CDC, but, with reporting prior to May 8 optional, reported zero total confirmed resident and staff cases and zero total deaths in the CDC data from May 8 through June 21. According to a CDC review, the February 2020 outbreak at this nursing home led to 81 resident cases and 34 staff cases, as well as 23 deaths.[260] These cases may have been reported to the state or local health department, but they were not reported to CDC.

Status of required targeted infection control surveys. Since March 2020, state survey agencies have been conducting targeted infection control surveys and high priority complaint investigations in nursing homes rather than traditional comprehensive standard surveys and lower priority complaint investigations.[261] States had until July 31, 2020, to complete the targeted infection surveys in all nursing homes or be subject to a corrective action plan and then they had an additional 30 days to complete their surveys to avoid a reduction of their CARES Act supplemental funding.[262] According to CMS, as of July 31, 2020, 15,158 nursing homes (98.5 percent) nationwide had received a targeted infection survey or high priority complaint investigation. Twenty-four state survey agencies had not completed targeted infection surveys in all nursing homes in their state by July 31. Most of these state survey agencies had surveyed 90 percent or more of the nursing homes in their states. Two states—Maryland and Alaska—had surveyed 80 percent or fewer. According to CMS officials, state survey agencies conducting high priority complaint investigations of nursing homes integrated the targeted infection control survey into their evaluation of a home.

Results from targeted infection control surveys. We found that about 3 percent of the nursing homes (342 out of 10,183 homes) receiving targeted infection control surveys or high priority complaint investigations from March 4 through June 28, 2020 had infection control deficiencies.[263] This is substantially lower than the trends in infection control deficiencies cited in nursing homes in the years prior to the COVID-19 pandemic. Specifically, our May 2020 report found that approximately 40 percent of surveyed nursing homes had infection control deficiencies in each year from 2013 through 2019.[264] According to CMS officials, there are differences between the administration and structure of the targeted infection control survey and the comprehensive standard survey that may contribute to this trend. For example, according to CMS, a standard survey is usually conducted over 3 to 5 days with a larger team of surveyors, allowing for more time for surveyors to potentially observe deficient practices. In contrast, according to CMS, the targeted infection control survey is a quick spot-check on compliance to ensure the nursing homes have the correct processes and procedures in place, with limited ability for the surveyors to observe and document deficient practices. About 93 percent of the infection control deficiencies from the targeted infection control surveys were classified by surveyors as not severe, meaning the surveyor determined that residents were not harmed. Examples of the infection control deficiencies cited included lack of or incorrect use of PPE, challenges related to identifying and isolating residents diagnosed with COVID-19, and staffing shortages.

PPE challenges. In March 2020, CDC released guidance recommending that nursing home staff wear surgical masks at all times in the home and, when caring for a resident with known or suspected COVID-19, staff should wear an N95 or higher level respirator, eye protection, gloves, and a gown.[265] However, CMS noted that it was aware of a scarcity of PPE in certain areas of the country.[266] From May through August 4, 2020, the Federal Emergency Management Agency (FEMA) coordinated a two-shipment initiative to send a 14-day supply of PPE to all Medicare- and Medicaid-certified nursing homes. In a hearing before the Health Subcommittee of the House Ways and Means Committee on June 25, 2020, an expert witness said that there had been reports from some nursing homes that the PPE received from FEMA was unusable. Further, the witness stated that nursing homes are continuing to face a shortage of PPE, leading them to reuse supplies between residents.[267] FEMA officials acknowledged some issues with the initial round of supplies sent to nursing homes and said that adjustments were made in subsequent rounds.

Concerns about the quality of the FEMA supplies and shortages of supplies were echoed by representatives of national associations representing nursing homes, residents, and their families. According to data nursing homes self-reported to CDC, as of July 26, 2020, about 22 percent of nursing homes reported they did not have a one-week supply of at least one or more of the following: N95 respirators, surgical masks, gloves, eye protection, or gowns.[268] Of these, N95 respirators were the most needed, with 17 percent of nursing homes reporting they did not have a one-week supply according to data self-reported to CDC as of July 26, 2020, followed by surgical gowns (12 percent of nursing homes). On August 25, HHS announced the release of 1.5 million N95 respirators from the Strategic National Stockpile for distribution to more than 3,000 nursing homes across the United States.

Testing challenges. As part of its May 2020 reopening guidance for nursing homes, CMS recommended that (1) all staff be regularly screened for symptoms and tested weekly, and (2) all residents be regularly screened and tested if a symptomatic resident is identified or a staff member is diagnosed with COVID-19.[269] Testing plans should also include an arrangement with laboratories to process these tests quickly. There have been reports of nursing homes having difficulty meeting HHS testing recommendations due to challenges obtaining testing supplies and delays receiving results in a timely manner. Because of this, homes have struggled to identify infected residents and staff and isolate them from one another. This is particularly true of identifying asymptomatic carriers of the disease, who may show no symptoms; therefore, screening for symptoms alone without the use of a diagnostic test would fail to identify them.

On July 14, 2020, HHS announced plans to distribute antigen diagnostic tests and associated point-of-care testing instruments to nursing homes in COVID-19 hotspots across the country to help identify and prevent the spread of COVID-19 through rapid, on-site testing.[270] After the initial distribution of these antigen diagnostic tests and instruments, nursing homes are responsible for procuring additional tests directly from the manufacturer. CMS notes that, while positive results from an antigen test confirm the presence of a SARS-CoV-2 infection, negative results from these antigen tests should be treated as presumptive, do not rule out SARS-CoV-2, and these negative results should not be used as the sole basis for treatment or patient management decisions, including infection control decisions.[271] In addition, CMS recommends that negative results should be confirmed with an alternate form of testing, such as a molecular diagnostic viral test.[272] According to HHS, as of September 3, 2020, 9,894 nursing homes had received 2,952,850 tests and 10,637 testing instruments.

On August 25, 2020, HHS, through CMS, released an interim final rule revising its regulations to require that nursing homes test all staff and residents for COVID-19 as part of their requirements for the Medicare and Medicaid programs.[273] CMS later released guidance on these testing requirements, noting that nursing homes should prioritize testing staff and residents with symptoms of COVID-19 first, followed by performing testing of all staff and residents in the case of an outbreak. The CMS guidance also requires routine staff testing based on the degree of community spread, ranging from testing staff once a month in counties with low community spread to twice a week in counties with high community spread.[274] CMS does not require residents to be routinely tested—including asymptomatic residents; however, the nursing home must test residents if they display symptoms or in the event of a COVID-19 outbreak in the nursing home.[275]

Staffing challenges. Research has established that higher nurse staffing levels are typically linked with higher quality nursing home care. However, staffing shortages in nursing homes have become exacerbated by the spread of COVID-19. For example, a nursing home cited for deficiencies in its targeted infection control survey had 24 staff who became sick and were unable to work. These concerns were echoed by representatives of national associations representing nursing homes, residents, and their families, noting that nursing homes are struggling to find enough staff to replace those who are out sick or do not have child care. According to representatives from a national association, some nursing homes are using alternative staffing models, such as hiring temporary employees to work as nurse aides and care for residents.[276] According to data nursing homes self-reported to CDC, as of July 26, 2020, 18 percent of nursing homes reported a shortage of aides, about 16 percent reported a shortage of nursing staff, 9 percent reported a shortage of other staff, and 2 percent reported a shortage of clinical staff.

GAO Methodology and Agency Comments

To conduct this work, we reviewed CMS and CDC data, agency guidance, and other relevant information on HHS’s response to the COVID-19 pandemic. We also spoke to CMS and CDC officials, as well as representatives from national organizations representing nursing homes, residents, and their families, and researchers with experience in nursing home infection control. In addition, we analyzed CMS data on targeted infection control surveys and complaint investigations conducted in nursing homes, which included data from March 4, 2020, through June 28, 2020, and CDC data on COVID-19 reported by nursing homes for the week ending July 26, 2020.[277] We analyzed the CDC data as they were reported by nursing homes to CDC. We did not otherwise independently verify the accuracy of the information with these nursing homes. We assessed the reliability of the datasets used in our analyses by checking for missing values and obvious errors and reviewing relevant CMS and CDC documents. We determined the data were sufficiently reliable for the purposes of our reporting objective.

We provided HHS and the Office of Management and Budget (OMB) with a draft of this enclosure. HHS provided technical comments, which we incorporated as appropriate. OMB did not have comments on this enclosure.

Contact information: John E. Dicken, (202) 512-7114, dickenj@gao.gov

Related GAO Products

Infection Control Deficiencies Were Widespread and Persistent in Nursing Homes Prior to COVID-19 Pandemic. GAO-20-576R. Washington, D.C.: May 20, 2020. [278]

Medical Supply Chain

The lack of domestic medical supplies combined with a supply chain that was overwhelmed by the demands of the global pandemic prompted numerous federal and state actions to stabilize the supply chain and increase inventories; however, there continue to be ongoing constraints around certain types of personal protective equipment and continued testing supply shortages.

Entities involved: Department of Defense; Department of Health and Human Services including its Office of the Assistant Secretary for Preparedness and Response; Federal Emergency Management Agency

Key Considerations and Future GAO Work

In response to the unprecedented national crisis caused by COVID-19, numerous federal actions were taken to improve the availability of critical medical supplies needed to protect the health and well-being of Americans. These actions included expediting critical medical supplies from overseas, enhancing visibility over the commercial medical supply chain, leveraging interagency acquisition partnerships, and using authorities, such as the Defense Production Act (DPA), to increase domestic supply production.[279]

Nevertheless, supply of some types of personal protective equipment (PPE) remain constrained and shortages of testing supplies, including substances needed to process COVID-19 tests—known as reagents—persist. Although the federal government continues to provide PPE and testing supplies to state, local, tribal, and territorial governments, as well as to health care facilities, we found that the Department of Health and Human Services (HHS) and Federal Emergency Management Agency (FEMA) have not developed and communicated plans to address remaining medical supply gaps, including through the use of DPA authorities. As such, we are recommending that HHS, in coordination with FEMA, further develop and communicate to stakeholders plans outlining specific actions the federal government will take to help mitigate remaining medical supply gaps necessary to respond to the remainder of the pandemic, including through the use of Defense Production Act authorities.

We also found that many medical supply management responsibilities that have been shared between multiple agencies are now transitioning to HHS. Although HHS has been a partner in many of these efforts, this level of responsibility may require continued support from HHS’s federal partners to sustain the progress made to date for the duration of the pandemic. Transition planning efforts are underway, but have not yet culminated in a written plan. As such, we are recommending that HHS and FEMA immediately document roles and responsibilities for supply chain management functions transitioning to HHS, including continued support from other federal partners.

We reported in June 2020 about concerns related to the distribution, acquisition, and adequacy of supplies during the COVID-19 response, including from the Strategic National Stockpile (SNS), as well as the use of the DPA for the purpose of increasing the availability of medical supplies. We are conducting a comprehensive body of work on the SNS, including efforts to modernize it, in response to the Pandemic and All-Hazards Preparedness and Advancing Innovation Act of 2019 and the CARES Act.[280]

We also have ongoing work related to federal agencies’ use of DPA authorities as a tool to obtain needed medical supplies and expand domestic production of these items. Additionally, we are examining overseas manufacturing of critical pharmaceutical products purchased by federal agencies and the extent to which federal efforts exist to overcome barriers to domestic drug manufacturing. Finally, we will continue to conduct work examining HHS and its agencies’ ongoing roles with regard to COVID testing.

Background

The nationwide need for critical supplies to respond to COVID-19 quickly exceeded the quantity contained in the SNS, which is managed by the Office of the Assistant Secretary for Preparedness and Response (ASPR), within HHS. To help address the shortages of supplies and manage the multiple dimensions of the supply chain, FEMA and the Department of Defense (DOD) established the Supply Chain Advisory Group (Advisory Group) and Joint Acquisition Task Force (JATF), respectively.[281] Both were created days after FEMA assumed responsibility for the federal response on March 19, 2020.
  • The Advisory Group was tasked with maximizing the nationwide availability of PPE, ventilators, and other material. In response, Advisory Group officials said they focused on four key supply activities: helping preserve existing supplies; accelerating the delivery of supplies; expanding the availability of supplies; and gathering data to help allocate scarce supplies.
  • The JATF was established to support the acquisition needs of federal agencies in their public health response activities and provide access to DOD’s acquisition capabilities, tools, and skill sets. For example, the JATF provided acquisition specialists that conducted market research for specific PPE, such as N95 respirators, and provided recommendations to HHS on acquisition strategies.

The four relief laws enacted to assist the COVID-19 response as of September 1, 2020, appropriated funding for HHS activities that could include, but were not limited to, the SNS.[282] As of July 31, 2020, HHS reported it obligated almost $8.4 billion of the $10.7 billion it planned to use for the SNS to purchase PPE and ventilators for immediate use as well as to replenish SNS inventory, among other purposes, and had expended $1.8 billion.[283]

Overview of Key Issues

In the face of shortages of critical supplies, health care systems in some U.S. communities were put under severe strain and required assistance from the federal government to stabilize the medical supply chain. Several federal actions were implemented to immediately attempt to re-supply the U.S. health care system with needed PPE and critical supplies.

As the response has progressed, the key federal agencies involved—FEMA, HHS, and DOD—have begun to focus on intermediate goals, such as increasing domestic manufacturing capacity and rebuilding the SNS to better position the U.S. to respond to continuing COVID-19 outbreaks and future emergencies. In addition to federal efforts to stabilize the supply chain, states also have been building their own stockpiles of critical supplies; however, concerns regarding certain supply shortages remain.

Responding to immediate needs. In March 2020, the Advisory Group established a public-private partnership with the commercial medical supply sector to address the nation’s immediate need for critical supplies, according to an Advisory Group official. As we reported in June 2020, one of the Advisory Group’s first efforts was to expedite critical supplies from overseas manufacturers to the United States through Project Air Bridge in collaboration with six large U.S medical supply distributors. This program continued through June 2020 and, according to FEMA, will be restarted if needed. In June 2020, the head of the Advisory Group testified that the prioritization scheme for supplies was public hospitals, Department of Veterans Affairs’ facilities, private hospitals, and nursing homes.

In addition, as of August 15, 2020, HHS and FEMA used DPA Title I authorities to place priority ratings on at least 18 contracts from March through May 2020 to acquire ventilators, N95 respirators, and other face coverings. Most types of items were scheduled to be delivered by August 31, 2020. DPA Title I authorities require the contractor (and the contractor’s supply chain) to provide preferential treatment to fulfill the delivery requirements of the rated contract or order.

As of September 1, 2020, the federal response had provided approximately 92.4 million N95 respirators, 28.1 million non-surgical gowns, 79.7 million gloves, 228.4 million face masks, as well as other PPE to state, tribal, and territorial entities according to federal data provided in a COVID-19 senior leadership brief. In addition, according to HHS’s Daily Communications Report dated September 10, 2020, the federal government had distributed over 95 million swabs and 76 million units of test tubes and transport media (solution for transporting viral material to keep samples viable for testing) to states.

Expanding domestic supply. DOD officials testified in June 2020 that understanding the demand for PPE and critical supplies is a critical component for adding domestic manufacturing capacity as demand projections provide an incentive for manufacturers to begin or ramp up production.[284] The head of the Advisory Group testified in June 2020 that he was working to aggregate overall demand by gathering information from a variety of sources, including interagency partners and states.

Advisory Group and JATF officials testified in June 2020 that the United States would soon be producing certain supplies domestically at quantities sufficient to meet demand. For example, according to a JATF official, in 2021, the United States would produce in excess of one billion N95 respirators a year. However, the head of the Advisory Group testified that other supplies—such as nitrile gloves—will take longer to produce domestically due to a limited U.S. manufacturing base.

The Advisory Group and others have continued efforts to increase the domestic production of supplies. For example, as of August 15, 2020, DOD has used DPA Title III authorities and other funds to award about $627 million on 17 projects to expand domestic production of medical (including testing) supplies, such as N95 respirators, testing kits, and swabs.[285]

Rebuilding federal and state stockpiles. Overall responsibility for rebuilding the SNS belongs to ASPR. In a May 2020 information request to solicit industry feedback on restructuring the SNS, HHS asked for information on managing inventory, maintaining adequate reserves, and enhancing domestic manufacturing, among other things.[286]

Interagency work plans from June 2020 also note that HHS will be developing a comprehensive SNS strategy as well as working to replenish the SNS. ASPR officials told us that by September 2020 they will have preliminary recommendations for modernizing the SNS, to include defining the optimal strategy related to pandemic preparedness and response. ASPR officials have also commented that they intend to build a 90-day supply of N95 respirators, gloves, ventilators and other equipment in the SNS.

ASPR officials told us in late July 2020 that they deferred delivery of supplies to the SNS to ensure they were commercially available. As a result, the SNS has only recently begun accumulating some supplies. The speed at which ASPR will be able to build a 90-day supply of PPE will depend on demand, such as whether there is another surge in COVID-19 cases.

Although ASPR officials said that the delivery of supplies to the SNS will soon increase, they noted that they are trying to reach the 90-day supply levels without exacerbating a constrained supply chain. As of July 30, 2020, the SNS was still in the process of replenishing its inventory, according to ASPR officials. See table below for a comparison of SNS inventory against planned inventory levels.[287]
Strategic National Stockpile Inventory of Certain Supplies

Supply

Planned 90-day inventory

Inventory on hand

as of July 15, 2020

Personal protective equipment

Gloves

4.5 billion

1 million

N95 respirators

300 million

38 million

Surgical or procedural masks

400 million

8 million

Gowns or coveralls

265 million

1.2 million

Eye protection or face shields

18 million

1.2 million
Source: Department of Health and Human Services (HHS). | GAO-20-701

Note: Planned 90-day inventory of personal protective equipment (PPE) are from HHS officials. Assistant Secretary for Preparedness and Response officials told us they based the PPE inventory targets on peak usage rates of PPE since the start of the COVID-19 response.

In addition to federal efforts to stabilize the supply chain, states have also been building their own stockpiles of critical supplies. The head of the Advisory Group told us in August 2020 that most states have at least a 60 day supply of PPE in their state health warehouses. Officials in all eight states we spoke with noted plans for a state stockpile of supplies; however, these stockpiles were in various stages of completion (see table below).

Officials in two states noted that they have to balance the effort of building a stockpile against other factors, such as the immediate need for supplies across the state or the ability to find sufficient warehouse space to store that quantity of supplies. Additionally, several states noted that building state stockpiles is complicated by not knowing what they can expect from the SNS in the future. One state official noted that there needs to be a realistic conversation with the SNS about what is expected of states, especially if the SNS is stockpiling huge quantities of inventory.
Selected State Inventories of Personal Protective Equipment

State

Approximate Inventory Target

Progress

State A

Planned but target not determined

State B

30-day or less

State C

30-day

State D

30 to 90 day

State E

90-day

State F

90-day

State G

90-day

State H

180-day

Legend:
⬤ State officials noted an existing stockpile that was at target for planned inventory amounts for most personal protective equipment (PPE).
◒ State officials noted an existing stockpile that still needed several items of PPE to get to the target planned inventory amounts.
⭘ State officials are planning a stockpile but are facing challenges with implementation such as acquiring PPE, finding space, or providing PPE to communities.
Source: State officials as of July and August 2020. | GAO-20-701

States, providers, and other stakeholder groups have identified ongoing constraints around certain types of PPE.
  • Seven of eight state officials we interviewed in July and August 2020 noted that the situation related to PPE had improved since earlier in the response, but they noted continuing challenges in obtaining some types of PPE. For example, officials from one of the eight states we interviewed told us they are unable to fulfill local entities’ requests for N95 respirators and nitrile gloves, but have sufficient supply of other items, such as face shields. Another state noted that they have a good inventory of most PPE but continue to wait on commercial orders for gloves, which they expect to start receiving soon. Additionally, two states’ officials expressed concern about the uncertain path of the virus and the impact of a fall surge on supply availability.
  • Although FEMA coordinated the delivery to nursing homes of a 14-day supply of gloves, surgical masks, gowns, and eye protection from May through July 2020, some nursing homes reported low inventories of supplies in July 2020. Specifically, according to data nursing homes self-reported to the Centers for Disease Control and Prevention (CDC), as of July 26, 2020, about 22 percent of nursing homes did not have a one-week supply of at least one or more of the following: N95 respirators, surgical masks, gloves, eye protection, or gowns.
  • The American Nurses Association surveyed both members and non-members in late July and early August about their PPE experiences over the prior two weeks. Their results found that 88 percent of the over 14,000 responding nurses reported being required or encouraged to reuse single-use N95 respirators. For those who reported reusing N95 respirators, 62 percent expressed concerns about their safety as a result.
  • Additionally, the biggest obstacle to physicians reopening their practices is “ongoing shortages of PPE, especially N95 respirators and gowns,” according to a June 30, 2020, American Medical Association letter to the Vice President.

Testing supply shortages persist, according to state officials we interviewed. Officials at seven of eight states we spoke with in July and August 2020 identified ongoing shortages of testing supplies. For example, officials in one state noted that while they are currently well positioned to meet the demand for PPE, testing supplies continue to be in short supply, noting particular challenges in obtaining reagents.

Officials in several states identified difficulty with acquiring reagents or test kits from the commercial market, and one state noted that challenges in obtaining testing supplies have grown with the increase in testing demand across the country. In a July 13, 2020, letter to the Vice President, who leads the White House Coronavirus Task Force, members of the Arkansas Congressional delegation said hospitals in their state have had to limit their COVID-19 testing to 10 percent of full capacity due to a shortage of reagents.. Additionally, officials from the Association of Public Health Laboratories we interviewed noted that their members generally do not have enough supplies on hand—such as transport media—to absorb rapid surges in testing demands.

Federal officials acknowledged certain, ongoing supply challenges, but also provided their own perspectives on the issue. For example, ASPR officials noted that “shortages” are subjective and depend upon numerous factors, including the amount and target number of days of supplies a state or hospital has determined to stockpile. Additionally, FEMA and ASPR officials noted that state, local, tribal, and territorial governments have overestimated their needs for supplies, which may lead to the impression that the federal government is not being responsive to open requests. FEMA officials noted that resource requests are an ongoing discussion to determine what is really needed and what can be supplied.

HHS and FEMA continue to announce activities that may help alleviate supply chain challenges faced by state, local, tribal, and territorial governments, as well as to health care facilities—such as renegotiating federal PPE contracts so that supplies would be available commercially or for direct shipment of point-of-care testing devices and kits to nursing homes. However, until HHS and FEMA develop and communicate to stakeholders plans outlining specific actions the federal government will take to help mitigate remaining medical supply gaps, uncertainty will persist regarding whether the federal response will align with needs. It will be especially important to develop and communicate plans before the fall, when the United States will move into flu season and a possible uptick in COVID-19 cases, both of which could further disrupt supply availability. Additionally, it is critically important that HHS and FEMA work with their federal partners to define roles and responsibilities for managing the medical supply chain to sustain supply chain progress. Until HHS and FEMA work with their federal partners to immediately document roles and responsibilities for supply chain management functions transitioning to HHS, they risk losing the momentum and expertise developed up to this point in the response. Additionally, without clearly defined roles and responsibilities, the federal response structure may be unable to respond to new supply chain challenges that could emerge.

GAO Methodology and Agency Comments

To understand the federal efforts to stabilize the medical supply chain, we reviewed information contained in interagency senior leadership briefs as well as both the oral and written congressional testimony of key federal officials. The information in this enclosure highlights examples of distribution and acquisition actions that these entities took; it is not an exhaustive list.

We also analyzed data on nursing home PPE levels from CDC data on COVID-19 reported by nursing homes for the week ending July 26, 2020. We did not otherwise independently verify the accuracy of the information with these individual nursing homes. We assessed the reliability of the datasets used in our analyses by checking for missing values and obvious errors and reviewing relevant CDC documents. We determined the data were sufficiently reliable for the purposes of our reporting objective.

We also selected eight states—California, Colorado, Idaho, Massachusetts, Nebraska, New Jersey, New Mexico, and South Carolina—to interview in July and August 2020 based on a variety of criteria including a range of COVID-19 case counts per capita, regional diversity, and participation in Crimson Contagion, a recent large-scale influenza exercise, among other things. In each of these states, we spoke with, or received written responses from, senior officials in the departments of health, emergency management, or both. In addition, we obtained written responses and interviewed officials from HHS, FEMA, DOD, and the Advisory Group—due to their significant role in federal supply acquisition and distribution efforts—about agency actions to increase supply, including contracting decisions, and how they made distribution decisions.

We provided HHS, Department of Homeland Security (DHS), DOD, and the Office of Management and Budget (OMB) with a draft of this enclosure. There were no comments on the enclosure. HHS and DHS provided general comments which are summarized in the Agency Comments and Our Evaluation section of this report.

Contact information: Mary Denigan-Macauley, (202) 512-7114, deniganmacauleym@gao.gov, William Russell, (202) 512-4841, russellw@gao.gov.

COVID-19 Testing Data

On June 4, 2020, the Department of Health and Human Services required laboratories to begin reporting data on each COVID-19 test by August 1, 2020. Since this requirement was issued, the department’s agencies have taken steps to improve testing data, but they acknowledged ongoing challenges to collecting complete and consistent data.

Entities involved: Centers for Disease Control and Prevention, Centers for Medicare & Medicaid Services, Food and Drug Administration, Office of the Assistant Secretary for Health, and National Institutes of Health, all within the Department of Health and Human Services.

Key Considerations and Future GAO Work

Department of Health and Human Services (HHS) agencies have taken steps to improve COVID-19 testing data that laboratories are required to report, but laboratories have faced challenges meeting the deadline to report these data. On June 4, 2020, HHS published guidance that required laboratories to begin reporting detailed testing data to the Centers for Disease Control and Prevention (CDC) through state or local health departments by August 1, 2020. However, not all states had fully developed the capability to report these data to CDC as of August 24, 2020, and CDC officials acknowledged that not all laboratories were able to fully develop information systems to report testing data by the deadline to begin reporting.

CDC reported that as of August 24, 2020, 40 of 56 states and territories had fully developed the capability to relay these detailed testing data to CDC. HHS’s Office of the Assistant Secretary for Health (OASH) confirmed that laboratories and other stakeholders—such as health care providers who order tests—required additional guidance and technical assistance to help ensure complete and consistent testing data are collected and reported. HHS and CDC have taken some steps to address certain challenges identified by stakeholders by publishing implementation specifications and conducting outreach. As we reported in June 2020, the absence of complete and consistent COVID-19 testing data has made it more difficult to track the infection rate, mitigate the effect of infections, and inform decisions on reopening communities.

We will continue to conduct work examining HHS and its agencies’ ongoing roles with regard to testing data. This will include an examination of activities and challenges to collect complete and consistent testing data. In addition, we are recommending actions CDC should take to help ensure the complete and consistent collection of data on race and ethnicity under its COVID-19 Response Health Equity Strategy, which addresses testing and other data.

Background

COVID-19 testing can detect the presence of the virus that causes COVID-19 (known as viral tests) or antibodies produced in the bodies of patients who have had COVID-19, even if they did not show symptoms (known as antibody tests). Federal guidelines recommend that communities use testing data, particularly the total number of viral tests performed for COVID-19 and the percentage of viral tests with positive results, to make decisions about reopening communities. The CDC—the official federal source for reporting testing data—has received testing data provided by state and jurisdictional health departments, which, in turn, received these data from laboratories.

The CARES Act included a provision requiring laboratories to submit the result of each COVID-19 test to the Secretary of Health and Human Services in a manner specified by the Secretary.[288] As previously reported, HHS issued guidance, pursuant this authority, on June 4, 2020, requiring laboratories performing COVID-19 tests to submit detailed testing data that go beyond what HHS had previously requested. The laboratories must include data on the specific type of test used and patient demographics, such as race and ethnicity.

Overview of Key Issues

Since HHS published its June 4, 2020, guidance requiring laboratories to report COVID-19 testing data, HHS agencies have taken steps to address challenges that we have identified to help ensure these data are complete and consistent. HHS directed laboratories to report testing data through existing channels to state and jurisdictional health departments, which provide these data to CDC. CDC has worked with these health departments to obtain data on each individual test that is reported by laboratories, including information about the patient, type of test, and test result.

As of August 24, 2020, 40 of 56 state and territorial jurisdictions—which account for approximately 75 percent of testing nationwide—have developed the capability to report this detailed information for individual tests to CDC, and the remaining 16 jurisdictions had begun working with CDC to do so, according to CDC. These 16 jurisdictions include both small and large states, states located across geographic regions, and states with large populations of racial or ethnic groups that have been disproportionately affected by COVID-19, such as California and Oklahoma.[289] Obtaining this detailed information on each test from states and territories can help CDC differentiate viral and antibody testing data, which we previously identified as an inconsistency in CDC’s reporting of testing data.[290] It also can help CDC determine the extent to which laboratories include all required information in the testing data they report.

Laboratory stakeholders identified additional challenges to reporting complete and consistent COVID-19 testing data. CDC officials acknowledged that not all laboratories were able to fully develop information systems to report testing data by the August 1, 2020, deadline, but HHS agencies have taken steps to address certain challenges. Laboratory and health care provider associations we contacted identified the following key challenges that laboratories faced in meeting the August 1, 2020, deadline for compliance.
  • Adopting standard definitions of testing data. Laboratory stakeholders sought to clarify with HHS the standard definitions for testing data to help ensure laboratories collected and reported consistent testing data. CDC has collaborated with stakeholders to publish standard definitions for newly requested information, such as codes that identify the specific COVID-19 tests that have been authorized. On July 14, 2020, CDC and OASH acknowledged that additional guidance to clarify standard definitions for required testing data will be needed and provided evidence of CDC’s and the Food and Drug Administration’s (FDA) work with stakeholders to develop and implement this guidance. On July 31, 2020 – one day before the August 1, 2020, deadline for laboratories to begin reporting testing data – HHS published implementation specifications with standard definitions for all the information that should be included in testing data. [291]
  • Modifying information systems to collect and report testing data as required. According to one laboratory association we spoke with, some laboratories have made changes to their information system's infrastructure to meet the requirement to provide testing data. However, others struggled to meet the requirement’s August 1, 2020, deadline. Laboratories may exchange testing data with numerous health care providers and state public health agencies, which can require multiple updates to multiple data systems to meet the new requirements. For example, a laboratory association we contacted explained that one laboratory performs tests for more than 200 separate clinics, and each clinic orders tests through a unique electronic health records system.

    Some laboratories have developed the technical capability to report testing data electronically, including the 50 state public health laboratories, according to a laboratory association we spoke with. However, laboratory associations told us that some laboratories are new to reporting public health data and may make additional changes to information systems after the August 1, 2020, deadline to fully comply with reporting requirements, according to laboratory associations.
  • Obtaining required testing data from health care providers who order tests. In addition to laboratories, health care providers play key roles in collecting and reporting complete and consistent testing data. Health care providers collect testing samples from patients and collect data that accompany the testing orders they send to laboratories, such as patients’ race, ethnicity, age, and zip code. However, if health care providers do not obtain this information, the information will remain missing from testing data unless it can be obtained through additional communication with these providers or from other sources, such as state or regional health information exchanges.

    Laboratory associations we contacted emphasized the importance of educating health care providers to collect required data from patients when collecting testing samples in order to comply with reporting requirements. However, representatives from provider groups told us that updating electronic health records to capture the newly requested data when ordering COVID-19 tests will be challenging because these data systems require significant effort to update. CDC has conducted outreach to provider organizations such as the American Medical Association to offer education and assistance on collecting testing data, and OASH confirmed on July 14, 2020, that ongoing support for health care providers will be needed to help ensure complete and consistent collection and reporting of testing data.

To improve consistency and uniformity in the reporting of testing data, on September 2, 2020, the Centers for Medicare & Medicaid Services (CMS) published an interim final rule that provides sanctions for laboratories that fail to report COVID-19 testing data consistent with the form and manner specified by HHS. In the preamble to this rulemaking, CMS acknowledged that it did not know the complete universe of laboratories conducting COVID-19 tests. However, the rule required accrediting organizations and states that evaluate laboratories to notify CMS within 10 days after identifying a laboratory that fails to report COVID-19 test results as required, and this may help to identify laboratories that have conducted COVID-19 tests but not reported results. Further, the interim final rule imposes sanctions on laboratories that fail to comply, which may include civil monetary penalties.[292]

Looking forward, HHS agencies have identified challenges collecting testing data that may arise as testing technology evolves, and they reported steps to address these challenges. Specifically, the CARES Act requirement for laboratories to submit data would not apply to any tests entirely performed in non-laboratory settings such as at home, according to OASH, because laboratories would not be involved. The FDA has not authorized any of these non-laboratory COVID-19 tests as of September 1, 2020, but the National Institutes of Health (NIH) and FDA are working to facilitate the development and authorization this technology.[293] FDA has asked developers of non-laboratory tests to indicate in their applications for emergency use authorization whether test results will be shared with CDC. The NIH’s Rapid Acceleration of Diagnostics Tech initiative, which aims to accelerate the availability of tests in non-laboratory settings and other tests, is evaluating options to transmit data from these tests to HHS, according to OASH.

GAO Methodology and Agency Comments

To conduct this work, we obtained information from CDC, FDA, and OASH officials on steps taken to collect and improve the quality of testing data since we last reported in June 2020, and we reviewed HHS agency guidance related to states’ and laboratories’ submission of testing data. Further, we interviewed or obtained written responses from laboratory and health care provider associations whose members have a primary responsibility for collecting testing data to obtain their perspectives on agency actions and challenges with regard to testing. These groups included the American Clinical Laboratory Association, Association of Public Health Laboratories, National Independent Laboratory Association, American Medical Association, American College of Emergency Physicians, and the American Hospital Association. We selected these groups because they represent specialty and non-specialty front-line health care workers, and commercial, clinical, and public health laboratories that, collectively, have performed tens of millions of COVID-19 tests. We provided HHS and the Office of Management and Budget (OMB) with a draft of this enclosure. HHS provided technical comments on this enclosure, which we incorporated as appropriate. HHS also provided general comments, which are summarized in the Agency Comments and Our Evaluation section of this report. OMB did not provide comments on this enclosure.

Contact information: Mary Denigan-Macauley, (202) 512-7114, deniganmacauleym@gao.gov

Vaccines and Therapeutics

Many challenges associated with efforts to develop and manufacture COVID-19 vaccines and therapeutics need to be overcome. It is also of paramount importance to have clarity on planning for their distribution and administration, as well as timely, clear, and consistent communication to states and the public about their availability, efficacy, and safety.

Entities involved: Department of Defense; Department of Health and Human Services, including its Biomedical Advanced Research and Development Authority, Centers for Disease Control and Prevention, Food and Drug Administration, and National Institutes of Health; and the Department of Veterans Affairs

Key Considerations and Future GAO Work

Since June 2020, we have identified the critical importance of planning for the development, distribution, and administration of COVID-19 vaccine(s), as well as timely, clear, and consistent communication to states and local health officials, stakeholders, and the public about vaccine availability, efficacy, and safety. This includes identifying and defining the roles and responsibilities of federal agencies (including the Department of Health and Human Services (HHS) and the Department of Defense (DOD)); private sector industry (such as distributors); state and local public health officials; and health care providers (such as pharmacists).

The federal government has taken some steps to begin determining how vaccine—when available—may be distributed, including which groups may have priority and how it might be allocated and administered. For example, the Centers for Disease Control and Prevention’s (CDC) Advisory Committee on Immunization Practices has convened a COVID-19 work group and is expected to make recommendations on groups for vaccine prioritization to CDC and HHS leadership. Through Operation Warp Speed—a partnership between DOD and HHS, including HHS’s Biomedical Advanced Research and Development Authority (BARDA), CDC and the National Institutes of Health (NIH)—DOD is supporting HHS in developing plans for nationwide distribution and administration of any licensed or authorized vaccine. However, as of September 4, 2020, HHS had not documented or shared its distribution and administration plans, being developed with support from DOD, with relevant stakeholders or the public.

To facilitate distribution and administration of any licensed or authorized COVID-19 vaccine, we recommend the Secretary of Health and Human Services, with support from the Secretary of Defense, establish a time frame for documenting and sharing a national plan for distributing and administering COVID-19 vaccine. We recommend they ensure that such a plan is consistent with best practices for project planning and scheduling and outlines an approach for how efforts will be coordinated across federal agencies and nonfederal entities. On September 16, 2020, HHS and DOD released two documents outlining a strategy for any COVID-19 vaccine. GAO will evaluate these documents and report on them in future work.

Representatives of state, local, and territorial health officials, immunization managers, and health care providers we interviewed emphasized the need for the federal government to develop and share plans for the distribution and administration of vaccine before one becomes available, so they have sufficient lead-time to prepare to vaccinate their communities. They noted advanced planning will be needed to develop and disseminate clear public health messaging to help ensure public acceptance and uptake of the vaccine. It will be important to address vaccine hesitancy for people concerned about the safety or effectiveness of the vaccine and to manage expectations about vaccine availability, according to representatives of state, local, and territorial health officials, and immunization managers. These representatives and we have previously noted that experience with the 2009 H1N1 pandemic taught that announcements about when vaccine might be available need to include careful phrasing to manage public expectations and take into account likely delays or changes in expected availability.

We will continue to conduct work related to vaccines and therapeutics, including examining federal efforts to accelerate the development, manufacturing, and distribution of COVID-19 vaccine(s) and therapeutics through Operation Warp Speed. We also plan to continue work examining the federal government’s plans for the distribution and administration of any licensed or authorized vaccine and for public messaging to states and the public about vaccine availability, efficacy, and safety.

Background

Vaccination is critical for reducing infection rates and severity of disease and mortality due to COVID-19, but as of September 2020, there are no COVID-19 vaccines licensed by the Food and Drug Administration (FDA), and developing a vaccine takes time. Therapeutics to treat COVID-19 are also essential, particularly until a vaccine becomes available; however, no drug has been proven to be safe and effective and approved by FDA for treating COVID-19 at this time. As of August 2020, two therapeutics to treat COVID-19—the investigational drug, remdesivir, and COVID-19 convalescent plasma—had been granted emergency use authorization by FDA to treat hospitalized patients.[294]

The time frame for developing and distributing an effective vaccine or therapeutics is uncertain. State and local health officials, health care providers, and vaccine experts have predicted that wide-scale distribution of a vaccine may be months after a vaccine becomes available, and initial distribution may be limited (e.g., to health care providers or first responders) until sufficient doses are manufactured. In addition, a vaccine or vaccines may be initially made available under an emergency use authorization.

As part of a broader strategy to accelerate the development, manufacturing, and distribution of COVID-19 vaccines and therapeutics, among other things, Operation Warp Speed aims to deliver up to 300 million doses of a safe and effective COVID-19 vaccine in early 2021. Operation Warp Speed also engages with private firms and other federal agencies, such as the Department of Veterans Affairs (VA).

The CARES Act and the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, appropriated funding for HHS activities to support the development of vaccines and therapeutics for COVID-19. This included appropriations to FDA, NIH, and the Public Health and Social Services Emergency Fund (PHSSEF).[295] For example, the CARES Act appropriated about $27 billion to the PHSSEF for activities that include, but are not limited to, developing countermeasures and vaccines and purchasing vaccines and therapeutics; of this amount, not less than $3.5 billion is provided to BARDA for manufacturing, producing, and purchasing vaccines and therapeutics, among other things.[296]

Overview of Key Issues

Numerous federal agencies are facilitating the development of multiple candidates for vaccines and therapeutics to prevent and treat COVID-19. As of August 5, 2020, there were at least 26 federally funded clinical trials related to COVID-19 vaccines and therapeutics at various stages, according to NIH’s ClinicalTrials.gov.[297] Of these, at least three were trials of vaccine candidates and at least 23 were trials related to therapeutics, including convalescent plasma and remdesivir.

As of July 31, 2020, HHS reported it had obligated about $12.995 billion and expended about $100 million for vaccines, and it obligated about $2.065 billion and expended about $71 million for therapeutics.

We reported examples of federal agencies’ activities related to vaccines and therapeutics in our June 2020 report. Additional activities include the following:
  • Operation Warp Speed announced awards totaling about $12.6 billion to accelerate the development, manufacturing, and distribution of COVID-19 vaccines and therapeutics, as of September 1, 2020.[298] For example, in June 2020, it announced adding about $628 million to an existing contract to secure domestic manufacturing capacity for potential COVID-19 vaccines and therapeutics, including capabilities to fill vaccine vials and finish packaging vaccine.
  • BARDA awarded about $10.8 billion for seven vaccine candidates and about $1 billion for nine awards for therapeutic development, as of August 18, 2020. According to HHS, six of the seven vaccine candidates are part of Operation Warp Speed, and as such, part of these award funds are included in the Operation Warp Speed amounts above.
  • CDC’s Advisory Committee on Immunization Practices established a COVID-19 Vaccine Work Group to collect, analyze, and prepare information related to COVID-19 vaccines for presentation, discussion, deliberation, and vote by the advisory committee. CDC provides technical and administrative support and contributes to the evidence that informs the advisory committee’s recommendations, including for use of future COVID-19 vaccines.
  • FDA issued guidance for industry on the development and licensure of vaccines to prevent COVID-19 in June 2020. According to the agency, FDA would expect that a COVID-19 vaccine would be at least 50 percent more effective than placebo in preventing COVID-19 or SARS-CoV-2 infection among the clinical trial participants. FDA’s guidance also encourages the enrollment of populations most affected by COVID-19 in clinical trials, specifically racial and ethnic minorities.

    Under its Coronavirus Treatment Acceleration Program, FDA reported it had reviewed more than 270 trials of potential therapies for COVID-19 and that another 570 or more development programs for therapeutic agents were in the planning stages as of July 31, 2020. FDA also issued guidance for industry on developing drugs and biological products for the treatment or prevention of COVID-19, as well as on the administration and study of one investigational treatment being explored for COVID-19—convalescent plasma collected from individuals who have recovered from COVID-19.
  • NIH’s National Institute of Allergy and Infectious Diseases established a new clinical trials network that aims to enroll thousands of volunteers in large-scale clinical trials to test a variety of investigational vaccines and monoclonal antibodies intended to protect people from COVID-19. [299] The NIH Director testified that each of the vaccine trials will aim to enroll 30,000 participants, half of whom will get the vaccine, half of whom will get a placebo. [300]

    According to NIH, the first phase 3 clinical trial that the clinical trial network was expected to conduct involves testing the investigational vaccine developed by scientists from NIH’s National Institute of Allergy and Infectious Diseases and their collaborators at the biotechnology company, Moderna, Inc. [301] According to NIH, this phase 3 trial began on July 27, 2020. In addition, NIH, along with CDC, requested a committee of experts develop a framework to assist policymakers in planning for allocation of COVID-19 vaccine. [302]
  • DOD is actively participating in Operation Warp Speed and collaborating with HHS to make awards. DOD is also conducting research on candidates for vaccines and therapeutics. For example, DOD is working to adapt DNA technology to rapidly manufacture and deliver a vaccine for use by DOD personnel. According to DOD, the new DNA vaccine approach offers vaccine stability and ease of large-scale production. In addition, DOD is supporting a study on the investigational drug remdesivir.
  • VA is partnering with Operation Warp Speed and others as part of nationally coordinated efforts for new vaccines and therapies. According to VA, those efforts were in the early stages and officials hoped to start the first clinical trial in late July.

GAO Methodology and Agency Comments

To conduct this work, we reviewed the most recent HHS and DOD information available on vaccine and therapeutic development, manufacturing, and distribution efforts as of August and September 2020, including clinical trial information from NIH’s clinical trial website, ClinicalTrials.gov (accessed Aug. 5, 2020), and vaccine and therapeutic development and manufacturing awards under Operation Warp Speed from HHS and from BARDA’s medicalcountermeasures.gov website (accessed Aug. 18, 2020). We also reviewed VA information on its activities related to vaccines and therapeutics.

We also reviewed relevant federal laws and agency and agency-related documents (e.g., FDA guidance for clinical trials, presentation materials by CDC’s Advisory Committee on Immunization Practices’ workgroup, documents related to NIH’s new clinical trial network, HHS’s and DOD’s Operation Warp Speed Fact Sheets), and interviewed HHS and DOD officials. In addition, we reviewed documents and interviewed officials representing associations of state, local, and territorial health officials and immunization managers. We also reviewed information from manufacturers that had received federal funding to develop therapeutics. The information in this enclosure highlights examples of the types of development and manufacturing activities conducted or supported by these agencies, it is not an exhaustive list.

We provided a draft of this report to HHS, DOD, VA, and the Office of Management and Budget (OMB) for review and comment. HHS and DOD provided general comments, which are summarized in the Agency Comments and Our Evaluation section of this report. In addition, HHS, DOD, and VA provided technical comments on this enclosure, which we incorporated as appropriate. OMB did not provide comments on this enclosure.

Contact information: Alyssa M. Hundrup, (202) 512-7114, hundrupa@gao.gov

Related GAO Products

Investigational Drugs: FDA and Drug Manufacturers Have Ongoing Efforts to Facilitate Access for Some Patients. GAO-19-630. Washington, D.C.: September 9, 2019.

National Institutes of Health: Better Oversight Needed to Help Ensure Continued Progress Including Women in Research. GAO-16-13. Washington, D.C.: October 22, 2015.

Influenza Pandemic: Lessons from the H1N1 Pandemic Should Be Incorporated into Future Planning. GAO-11-632. Washington, D.C.: June 27, 2011.

Influenza Pandemic: HHS Needs to Continue Its Actions and Finalize Guidance for Pharmaceutical Interventions, GAO-08-671. Washington, D.C.: September 30, 2008.

Medicaid Spending

The potential exists for two Department of Health and Human Services agencies to issue duplicative or erroneous payments to providers, and challenges in public reporting of Medicaid COVID-19 spending continue to pose risks to transparency and oversight.

Entities involved: Centers for Medicare & Medicaid Services and the Health Resources and Services Administration, within the Department of Health and Human Services; and the Office of Management and Budget.

Key Considerations and Future GAO Work

We found the potential for duplicate or erroneous payments for COVID-19 testing of uninsured individuals by the Health Resources and Services Administration (HRSA) and the Centers for Medicare & Medicaid Services (CMS). Despite controls implemented by HRSA and CMS, we continue to have concerns about the potential for duplicate payments and will continue to monitor these issues going forward.

In our June 2020 report, we highlighted concerns that CMS’s separate reporting of COVID-19 Medicaid spending, rather than reporting on USAspending.gov, might diminish the usefulness of this information for Congress and the public. We also highlighted concerns about the potential effects of state flexibilities to respond to COVID-19, including improper Medicaid payments and the complexity of calculating the various Medicaid matching rates. We continue to have these concerns and will monitor and report our findings on these issues going forward.

Background

Medicaid is one of the nation’s largest sources of funding for health care services for low-income and medically needy individuals, covering an estimated 76 million people and spending approximately $667 billion in fiscal year 2019. States and territories administer their Medicaid programs within broad federal rules and according to state plans approved by CMS, which oversees Medicaid at the federal level. The federal government matches states’ spending for Medicaid services according to a statutory formula known as the Federal Medical Assistance Percentage (FMAP).[303]

The Families First Coronavirus Response Act (FFCRA) provides a temporary increase in the FMAP for all qualifying states and territories.[304] FFCRA also created an option for states to provide Medicaid coverage of COVID-19 diagnostic testing and related services to uninsured individuals.[305] The FFCRA and the Paycheck Protection Program and Health Care Enhancement Act each appropriated $1 billion to reimburse providers for conducting COVID-19 testing of uninsured individuals.[306] HRSA is responsible for administering these funds and paying providers that submit claims for COVID-19 testing.

Overview of Key Issues

Potential duplicate or erroneous payments for COVID-19 testing. HRSA administers a $2 billion program to pay for COVID-19 testing of uninsured individuals. In addition, CMS has approved 16 states and three territories to make Medicaid payments to providers for COVID-19 testing of uninsured individuals, with the federal government responsible for 100 percent of the cost. The Congressional Budget Office estimates that the Medicaid payments for testing of uninsured individuals will total approximately $2 billion in 2020 and 2021.

As of July 30, 2020, HRSA has paid $137.2 million for COVID-19 testing of uninsured individuals, with a total of $28.9 million in payments made to providers in the 16 states and one of three territories approved to use 100 percent federal Medicaid funds to pay for testing of uninsured individuals. While state reporting of Medicaid payments for COVID-19 testing is incomplete—a total of $51 in Medicaid payments for COVID-19 testing for uninsured individuals have been reported as of July 31, 2020—CMS officials expect payments to increase in the future.

Providers’ understanding of the new and optional Medicaid benefit as a source of coverage for testing the uninsured is an important control to ensure correct billing for their services and prevent potential duplicate or erroneous payments. Both CMS and HRSA have taken some steps to provide guidance and communicate this new benefit to states and providers.
  • CMS provided guidance to states regarding when Medicaid should be billed first for COVID-19 testing. States choosing to use the optional benefit for testing the uninsured have communicated with providers regarding billing. Our review of the 16 state websites, however, found some examples of inconsistent information and in one case inaccurate communication to providers. For more information, refer to the Medicaid COVID-19 testing for uninsured individuals section of the body of this report.
  • HRSA requires providers submitting claims to attest that they have confirmed individuals are uninsured, and HRSA’s program administrator implemented a prospective payment control on June 1, 2020 to check for insurance coverage for individuals on COVID-19 testing claims submitted to HRSA for payment. Further, HRSA officials reported that its program administrator is developing additional payment controls. On September 9, 2020, HRSA reported that retrospective payment controls that will recoup any identified improper payments began on August 31, 2020. HRSA expects that additional prospective payment controls to help identify and deny claims for those with coverage under Medicaid’s new COVID-19 testing benefit will begin by the end of September 2020.

We continue to have concerns about the potential for duplicate or erroneous payments and plan to monitor the results of these prospective and retrospective payment controls to assess their effectiveness.

Public reporting of COVID-19 Medicaid spending. The CARES Act requires each agency administering COVID-19 funds to report monthly to the Office of Management and Budget (OMB) and others on the use of those funds. OMB guidance generally directs agencies to meet this requirement through public reporting to USAspending.gov.[307] Agencies reporting their COVID-19 relief spending in USAspending.gov were required to report their June 2020 spending by July 30, 2020, and will report monthly thereafter.

According to CMS officials, CMS reported spending for June 2020 to USASpending.gov for all Medicaid spending and will report all Medicaid spending monthly, but cannot separately report the COVID-19 components of Medicaid payments through USAspending.gov. According to CMS officials, CMS plans to report each state’s federal COVID-19 Medicaid expenditures to OMB, and publish the data on Medicaid.gov, rather than USAspending.gov, and on a quarterly basis, rather than monthly. In accordance with regular Medicaid expenditure reporting practices, states and territories report quarterly their Medicaid expenditures to CMS, and this reporting includes identifying some expenses related to the COVID-19 relief laws. According to CMS, each quarter’s data will be finalized 6 months after the end of each quarter, and once it is finalized, CMS expects to publish it within 30 days. For example, CMS plans to publish federal COVID-19 Medicaid expenditure data for the quarter ending June 30, 2020, by January 30, 2021. In our June 2020 report, we raised concerns that separate reporting might diminish the usefulness of this information for Congress and the public. We continue to have these concerns and will monitor and report our findings on this issue.

Oversight of state Medicaid flexibilities. In our June 2020 report, we raised concerns about the potential effects of state flexibilities, including improper Medicaid payments, the complexity of calculating the various Medicaid matching rates, and risk of incorrect payments caused by numerous sources of federal funds flowing to the same or similar entities. CMS issued guidance to states in June 2020, regarding several Medicaid program changes made in response to the COVID-19 pandemic, including guidance on reporting expenditures eligible for an increased matching rate, data states should collect and report on claims for COVID-19 testing for the uninsured, and provider attestation requirements for providers receiving retainer payments. We continue to have concerns about those issues and will continue to monitor and report on our findings going forward.

Medicaid spending. As of July 31, 2020, COVID-19-related federal Medicaid expenditures totaled approximately $13 billion, or 7 percent of total federal spending on Medicaid services for this time period.[308] According to CMS officials, 16 states and three territories have elected and were approved to implement 100 percent coverage of COVID-19 diagnostic testing and related services to uninsured individuals under their Medicaid plans. As of July 31, 2020, very few expenditures have been reported for this testing.[309]
Federal Medicaid COVID-19 and Total Expenditures, by State and Territory, as of July 31, 2020

State or territory

COVID-19-related federal Medicaid expenditures from the 6.2 percentage point increased FMAP

Total federal Medicaid services expenditures in 2020

Dollars in millions

Alabama

198

2,526

Alaskaa

17

377

Arizona

303

5,957

Arkansas

156

2,758

California

1,626

33,217

Colorado

236

2,943

Connecticutab

102

1,267

Delawarea

90

1,229

District of Columbiaa

41

611

Florida

877

9,384

Georgia

351

4,203

Hawaii

54

810

Idaho

69

1,017

Illinoisa

336

4,275

Indiana

387

5,923

Iowa

138

1,963

Kansas

122

1,284

Kentucky

248

5,048

Louisiana

283

5,030

Maineab

45

571

Marylanda

139

1,871

Massachusettsab

241

2,877

Michigana

280

5,152

Minnesotaab

206

2,236

Mississippia

126

1,712

Missouri

319

3,890

Montanaab

15

323

Nebraska

71

738

Nevada

42

714

New Hampshire

62

783

New Jerseya

406

5,306

New Mexico

137

2,731

New York

1,806

22,915

North Carolinaab

180

2,111

North Dakota

33

420

Ohioa

610

9,053

Oklahoma

147

1,829

Oregona

4

2,653

Pennsylvaniaab

400

4,609

Rhode Island

31

450

South Carolina

213

2,631

South Dakota

28

324

Tennessee

311

3,577

Texas

1,337

15,129

Utahc

77

1,217

Vermont

45

552

Virginia

0

3

Washingtonab

9

1,787

West Virginiaab

51

865

Wisconsina

301

2,355

Wyominga

17

181

States totald

13,320

191,389

American Samoa

1

21

Guam

2

66

Northern Mariana Islands

2

25

Puerto Rico

45

1,143

Virgin Islandsab

1

17

Territories totald

51

1,272
Source: GAO analysis of data from the Centers for Medicare & Medicaid Services. | GAO-20-701.

Note: Federal Medicaid payments were available for the second and third quarters of fiscal year 2020—January 1, 2020, through June 30, 2020—and do not include expenses for program administration.
aTwenty-one states and one territory reported uncertified third quarter expenditures. Certified state expenditures have been reviewed by states and are certified as being Medicaid allowable expenditures. Both certified and uncertified state expenditures are preliminary, as they are subject to further review and are likely to be updated as states continue to report their expenditures and receive federal matching funds. States can report payments and adjustments to payments up to 2 years after a quarter ends.
bNine states and one territory had not yet reported any third quarter expenditures as of July 31, 2020.
cUtah was the only state that reported expenditures for COVID-19 testing for the uninsured, and total reported expenditures were $51.
dTotals may not sum exactly due to rounding.

GAO Methodology and Agency Comments

To conduct this work, we reviewed federal laws, CMS and HRSA data, CMS Medicaid guidance, HRSA guidance, Congressional Budget Office spending estimates, OMB guidance, and our prior work related to Medicaid. We discussed HRSA’s efforts to prevent duplicate or erroneous payments with HRSA officials. We also discussed CMS’s guidance to states and its Medicaid expenditure reporting system with CMS officials and conducted data reliability checks on state-reported expenditure data.

We provided a draft of this report to HHS and OMB for review and comment. We received technical comments from both, which were incorporated as appropriate. HHS also provided general comments which are summarized in the Agency Comments and Our Evaluation section of this report.

Contact information: Jeff Arkin, (202) 512-6806, arkinj@gao.gov; Carolyn L. Yocom, (202) 512-7114, yocomc@gao.gov

Related GAO Products

Medicaid: CMS Needs to Better Target Risks to Improve Oversight of Expenditures. GAO-18-564. Washington, D.C.: August 6, 2018.

Veterans Health Care

The Veterans Health Administration hired thousands of physicians and nurses to strengthen its capacity to respond to the pandemic.

Entities involved: Department of Veterans Affairs, including its Veterans Health Administration

Key Considerations and Future GAO Work

We have previously reported shortcomings in staffing capacities and human capital management at the Department of Veterans Affairs (VA) and highlighted these concerns in our June 2020 report. As COVID-19 cases have risen over the summer, and as VA begins to implement its phased reopening, we continue to monitor the extent to which the Veterans Health Administration (VHA) has the capacity to both respond to the evolving medical needs of veterans and to carry out its “Fourth Mission,” its statutory obligation to support the civilian public health response during times of national public health emergency.

VA began expanding services in May 2020 as part of its phased reopening plan and as of July 2, 2020, has reinstated in-person services at more than 100 medical facilities. As of August 2020, VA reports sufficient staffing at most facilities, but continued monitoring will be important in light of VA’s multiple missions as the pandemic continues and potentially worsens.

Ensuring well-qualified providers is critical, particularly given VA’s efforts to onboard thousands of physicians and nurses in response to the pandemic. We previously reported concerns regarding VA medical centers’ reviews and responses to issues raised about and actions taken against its privileged providers—those approved to independently perform specific services.[310] For example, in November 2017, we recommended that VHA require its medical centers to document reviews of providers, develop timeliness requirements for conducting those reviews, and report providers to state licensing boards when there are serious concerns about their clinical practice and other relevant organizations in a timely manner. VA agreed with these recommendations and, as of July 2020, told us they are in the process revising their policies for these recommendations.

Our work examining VA’s response to the COVID-19 pandemic is ongoing. We plan to examine or have work already underway for future reports on a number of issues, including VA’s prioritization of access to care during COVID-19; VA’s “Fourth Mission” to support the civilian public health response to COVID-19; VA’s use and oversight of the supplemental funds for COVID-19 response; infectious disease prevention in VA’s long-term care programs; and VA’s management and expenditure of COVID-19 emergency funds to procure necessary, time-critical medical supplies, such as personal protective equipment (PPE).

Background

VA administers one of the largest health care systems in the United States and is charged, through VHA, with providing health care services to the nation’s eligible veterans and beneficiaries. VHA employs more than 320,000 employees, including 26,779 physicians and 75,475 registered nurses, and provides health care to more than 9 million veterans through VA medical centers, community-based outpatient clinics, and community living centers.[311]

VA received approximately $20 billion in supplemental funding to support its efforts to address COVID-19.[312] VHA plans to use these supplemental funds, along with existing funds, to deliver care for veterans in response to COVID-19, including hiring of additional employees.

According to VA documents, as of August 28, 2020, VHA reported:
  • 44,305 cumulative veteran cases of COVID-19, including 3,013 active cases, 38,684 convalescent cases, and 2,608 deaths;[313] and
  • 1,495 self-reported employee cases of COVID-19, 49 employee deaths, and 1,757 staff that were unable to work due to COVID-19.[314]

Overview of Key Issues

In response to COVID-19, VHA officials told us they used various strategies to hire and onboard staff quickly. In addition, VHA continues to reinstate in-person services at its medical facilities, although VHA officials told us some facilities in localities with recent COVID-19 surges have temporarily paused reinstating or reduced in-person services.

Staffing. VHA officials stated the agency has hired new staff, redistributed staff across the system, and maximized competencies of current staff during the COVID-19 pandemic. According to VHA, as of July 7, 2020, the majority of its facilities reported no significant problems with staffing needed to provide both COVID-19 and non-COVID-19 care in its facilities.

VHA officials stated it has recruited both permanent employees and short-term (up to 120 day) temporary appointments. Officials also stated that VHA’s overall turnover rate was 1.7 percent and it netted 5,522 additional staff from April 1, 2020 to June 30, 2020.[315]

In June 2020, we reported that VHA officials told us they used various strategies to recruit and retain employees in response to COVID-19, such as using special hiring authorities for temporary, non-competitive appointments. In response to the pandemic, VHA officials said they have also
  • accelerated onboarding processes, reducing the time it takes to hire new staff from 94 days before the COVID-19 pandemic to an average of 10 to 12 days during the COVID-19 hiring surge, with some hires taking only 3 days. VHA has done this by using temporary and expedited credentialing processes, which can be completed faster than the standard credentialing process (1 day for temporary credentialing and 3 days for expedited credentialing, instead of 30 days). VHA told us full credentialing is still required subsequently to the temporary credentialing process and any provider with a history of licensure actions or significant malpractice history is not eligible for it.[316] The expedited credentialing and privileging process waives the required contacts and verifications, which are completed at a later date. Given our past findings about the timeliness and documentation of VHA’s reviews of provider quality, it is critical that VHA complete the full credentialing and privileging processes in a timely manner.
  • restructured its onboarding processes for new employees, allowing them to begin work more quickly. For example, VHA told us they implemented a VHA-wide mandatory training moratorium to defer non-COVID related training by 120 days for VHA clinicians and staff.

GAO Methodology and Agency Comments

To conduct this work, we reviewed VHA documents, federal laws, and VHA written responses to GAO questions. We provided VA and the Office of Management and Budget (OMB) with a draft of this enclosure. VA provided general comments which are summarized in the Agency Comments and Our Evaluation section of this report. In its comments, VA stated that it has continued to provide care for veterans with COVID-19 and noted its efforts to increase staffing. VA did not have technical comments on this enclosure. OMB provided comments on the report and other enclosures, but did not have technical comments on this enclosure.

Contact information: Debra A. Draper, (202) 512-7114, draperd@gao.gov; Sharon Silas, (202) 512-7114, silass@gao.gov

Related GAO Products

Veterans Health Administration: Steps Taken to Improve Physician Staffing, Recruitment, and Retention, but Challenges Remain, GAO-18-623T (Washington, D.C.: June 21, 2018)

VA Health Care: Improved Policies and Oversight Needed for Reviewing and Reporting Providers for Quality and Safety Concerns, GAO-18-63 (Washington, D.C.: November 15, 2017)

Veterans Health Administration: Better Data and Evaluation Could Help Improve Physician Staffing, Recruitment, and Retention Strategies, GAO-18-124. (Washington, D.C.: October 19, 2017).

Military Health

The Department of Defense’s plan for potential surges in COVID-19 cases among department personnel focuses on accelerating screening and surveillance testing, and the department has identified CARES Act funding in excess of current Defense Health Program requirements, resulting in a redirection of funds.

Entities involved: Defense Health Agency, within the Department of Defense

Key Considerations and Future GAO Work

We plan to continue to monitor the Department of Defense’s (DOD) testing efforts, spend plan, and budget execution as part of the response to and recovery from the COVID-19 pandemic.

Background

In 2019, DOD operated 475 military Medical Treatment Facilities (MTF) to deliver care to the approximately 9.6 million individuals eligible for DOD health care services, including active-duty and retired servicemembers and their dependents.[317] Since 2017, DOD has been reforming the military health system, including consolidating the administration of the MTFs under the Defense Health Agency (DHA). DOD paused the consolidation in April 2020 to prioritize its response to COVID-19. In July 2020, the DHA announced that the pause on its consolidation efforts will continue until leaders determine the appropriate time to resume such activities. DOD received $3.8 billion for the Defense Health Program, to prevent, prepare for, and respond to coronavirus, domestically or internationally.[318] DOD’s CARES Act spend plan fully funds the most immediate, critical COVID-19 response requirements in accordance with the department’s mission priorities and, more specifically, its top two priorities: (1) protecting military and civilian personnel and their families and (2) safeguarding national security capabilities.[319]

Overview of Key Issues

As of September 9, 2020, DOD reported 58,058 cumulative, confirmed cases of COVID-19 including servicemembers, dependents, civilians, and contractors, an increase of 487 percent since June 1, 2020. According to DOD officials, the department is focused on accelerating screening and surveillance testing of its personnel, among other things. Concurrently, DOD has allocated CARES Act amounts appropriated for Defense Health Program activities to specific initiatives, including expanding intensive care unit bed capacity at MTFs, which are no longer needed. As a result, DOD has reprogrammed the funds for other DHA purposes or transferred funds to other DOD accounts for other COVID-19 costs.[320]

Testing. DOD is currently conducting three types of COVID-19 testing: screening, surveillance, and diagnostic. In June 2020, DOD accelerated both its screening testing and surveillance testing for select groups of asymptomatic servicemembers, in addition to its ongoing diagnostic testing of servicemembers with symptoms of (or exposure to) COVID-19. The goal of testing is to break the chain of disease transmission to reduce risk to the force and to the department’s missions.[321]

Based on the availability of tests, DOD conducts screening testing in a tiered priority structure prior to servicemembers’ deployment or the start of training.[322] DOD also plans to conduct surveillance testing on select populations, such as health care personnel, who are at increased risk for infection and transmission. Testing will occur every 14 days on 10 percent of its health care personnel, 10 percent of selected servicemembers living in congregate settings—such as ships, and eventually 1 percent of all other servicemembers, as resources permit.

Each military service is responsible for identifying its testing requirements—that is, the number of servicemembers that health care personnel and commanders deem appropriate for screening testing, and the number of servicemembers that military public health officials designate for surveillance testing. According to DOD officials, this testing approach will help position DOD for a possible second wave of COVID-19 later in 2020. However, in the event of a second wave of COVID-19 cases, DOD officials explained that an increase in demand for testing supplies would constrain the department’s capacity to continue surveillance testing.

According to DOD, the department is currently meeting its initial testing projections of 50,000 to 65,000 tests per week in Tier 0 through Tier 4. Officials further stated that, as DOD's testing strategy has matured, additional requirements have been added, and DOD's new projections anticipate testing at 75,000 to 110,000 per week as DOD expands diagnostic, screening, and surveillance testing (dependent upon testing supply availability). According to DOD officials, from February 24, 2020, through July 31, 2020, the department tested 270,150 out of approximately 1.3 million active-duty servicemembers for COVID-19. During that time period, DOD conducted a total of 381,278 tests, which includes servicemembers tested more than once.

CARES Act Spending Plan. DOD’s Defense Health Program received $3.8 billion to prevent, prepare for, and respond to COVID-19, domestically or internationally as shown in the table below.[323] As reported on USAspending.gov, as of July 31, 2020, the Defense Health Program had obligated approximately $974.2 million and expended approximately $157.6 million.[324]
Defense Health Program CARES Act COVID-19 Appropriations

Cost Category

Description/Types of Requirements

Amount

($ millions)

Medical care

Increased health care for eligible military members, dependents, and retirees

Procurement of medical equipment

1,407.0

Diagnostics and medical research

Development of vaccines and anti-virals

24/7 laboratory operations

Procurement of diagnostic tests and research

1,351.9

Medical countermeasures

Procurement of vaccines and anti-virals

Public health surveillance

Medical personal protective equipment

570.0

Cleaning contracts and non-medical supplies and equipment

Increased cleaning contracts and biohazard mitigation

15.0

Military health system direct care capacity

Restoration/modification of military treatment facilities to support increased screening and treatment packages

150.0

DOD operations

Increased operations and deployment schedules

Costs to support social distancing, quarantine requirements, etc.

60.2

Transfer or reprogramming

Funds redirected to other COVID-19 response costs

252.0

Total

3,806.1
Source: GAO analysis of Department of Defense “CARES Act” Spend Plans and guidance. I GAO-20-701.

Congress provided DOD with specific transfer authority in section 13001 of the CARES Act. Section 13001 authorizes the transfer of funds appropriated to specific DOD accounts to other applicable DOD appropriation accounts for expenses incurred in support of preventing, preparing for, or responding to COVID-19, including expenses incurred in support of other Federal Departments and agencies, and state, local, and Indian tribal governments.

DOD’s May 2020 spend plan identified $252 million of the $3.8 billion appropriated for the Defense Health Program as available for reprogramming or transfer to fund other COVID-19 response efforts, such as COVID-19 vaccine development and other COVID-19 research and development efforts.[325] These funds were made available primarily due to reduced requirements for expansion of medical facilities, including MTF bed expansion and procurement of expeditionary hospital packages. Specifically, $113 million was transferred from the Defense Health Program appropriation account to the Research, Development, Test and Evaluation, Defense-Wide appropriation account to identify approved drugs that might be effective for COVID-19 treatment, and test methods for diagnosing COVID-19, among other things. The spend plan also identified an additional $139 million of CARES Act funding transferred to various appropriation accounts for other DOD COVID-19 priorities.

According to officials, DOD continues to monitor its spending and plan for adjustments. For example, DOD officials stated they are evaluating options for transferring or reprogramming funds initially designated to purchase a vaccine, since it is unlikely a vaccine will be available for purchase prior to the end of fiscal year 2020 when the CARES Act funding expires. Army officials also stated they are considering reprogramming funds for deployable medical capabilities that need additional equipment, such as ventilators.

GAO Methodology and Agency Comments

To conduct this work, we reviewed DOD guidance and documentation and the most recent DOD data available as of July 31, 2020. We also interviewed DOD officials knowledgeable about COVID-19 response efforts and reviewed publicly available DOD media reports, statements, and documents. We provided a draft of this enclosure to DOD and the Office of Management and Budget (OMB) for review and comment. DOD provided technical comments on this enclosure, which we incorporated as appropriate. DOD also provided general comments which are summarized in the Agency Comments and Our Evaluation section of this report. OMB did not provide comments on this enclosure.

Contact information: Brenda S. Farrell, (202) 512-3604, farrellb@gao.gov

Defense Support of Civil Authorities

The Department of Defense continues to support civil authorities by providing personnel and supplies in response to requests for assistance from other federal agencies on a fully reimbursable basis.

Entities involved: Department of Defense, including its active duty, reserve, and National Guard forces, the U.S. Army Corps of Engineers, and the Defense Logistics Agency

Key Considerations and Future GAO Work

We continue to examine the support the Department of Defense (DOD) provides to civil authorities as part of the response to and recovery from the COVID-19 pandemic and coordination among the federal agencies supporting the pandemic response.

Background

While DOD’s primary mission is to defend the nation, the department is often asked to play a prominent role supporting civil authorities and must be prepared to provide a rapid response when called upon during disasters and declared emergencies (natural or man-made). DOD provides such support through its Defense Support of Civil Authorities mission and is authorized to do so when requested by another federal agency and approved by the Secretary of Defense or when directed by the President.[326]

DOD received approximately $1.5 billion for National Guard personnel and operations expenses incurred in responding to COVID-19 through the CARES Act to prevent, prepare for, and respond to coronavirus, domestically or internationally.[327] Section 13001 of the CARES Act also provided DOD with the authority to transfer amounts appropriated to the department by the Act to other applicable DOD appropriations for expenses incurred in preventing, preparing for, or responding to COVID-19, including in support of other federal departments and agencies, and state, local, and tribal governments.[328]

However, in a memorandum dated April 1, 2020, the acting Undersecretary of Defense (Comptroller) clarified that transfers under section 13001 may be made only to meet the department’s requirements, stating that DOD does not receive appropriations for, and has no authority to provide National Guard support to, federal agencies, states, local, territorial or tribal governments on a non-reimbursable basis. Therefore, the transfer authority provided under section 13001 does not authorize DOD to use its appropriations to support other entities.[329]

Overview of Key Issues

DOD support efforts. According to DOD officials, the department’s response to the COVID-19 pandemic has evolved since the spring as more information has become known. DOD officials stated that the department will continue to support civil authorities by fulfilling validated mission assignments from Federal Emergency Management Agency (FEMA) to supplement states’ capabilities, for example, if state medical personnel become sick. According to officials, the department took specific measures in the spring—such as halting training activities and delaying accessions of new recruits—to help safeguard the department’s readiness and mission. These measures made available certain resources, such as medical personnel, to provide support to the civil response.

However, DOD officials also stated that the department recently resumed some temporarily paused activities, such as training and accessions, which reduced its medical capacity that could be used in support of civil authorities because that capacity was needed for the department’s internal safety and mitigation plans. For example, the Navy increased medical capacity on its ships at sea following an outbreak of COVID-19 on the U.S.S. Roosevelt that sickened approximately 1,000 sailors.

DOD officials also stated that COVID-19 hotspots have more recently shifted to locations such as Texas and Florida that have higher concentrations of DOD personnel, dependents, and retirees. As a result, the department is seeing increases in the number of cases among its own population and must ensure it maintains the capacity to treat its beneficiaries, while also providing support to civil authorities.

According to DOD officials, as of July 31, 2020, DOD had responded to over 200 FEMA mission assignments and other requests for assistance. Further, as of July 31, 2020, approximately 770 medical personnel were providing support to two states—California and Texas. Approximately 25,000 National Guard members also remained on orders to support the response to COVID-19.[330]

At the request of the Secretary of Defense, pursuant to 32 U.S.C. 502(f), governors have utilized Guard members to fulfill validated FEMA mission assignments on a fully reimbursable basis to support COVID-19 testing, infection control, and food distribution efforts, among other things.[331] DOD officials stated that COVID-19 contact tracing and mapping has emerged as a newer role for Guard members.[332] Other examples of civil support provided by June 2020:
  • Tennessee National Guard members assisted with COVID-19 testing of residents in long-term care facilities and correctional facilities, as well as state employees.
  • Georgia National Guard members conducted infection control in 2,311 facilities, including nursing homes, and trained non-DOD personnel in infection control.
  • National Guard members in Georgia, Kansas, North Carolina, Ohio, and Washington, among others, supported food distribution efforts. For example, Washington Guard members delivered 1.7 million meals and 23.8 million pounds of food.
  • Missouri National Guard members processed and transported decedents.

CARES Act funding for DOD support of civil authorities. Of the approximately $1.5 billion DOD received from the CARES Act for National Guard personnel and operations expenses incurred in responding to COVID-19, $746.6 million was for the Army National Guard Personnel and $482.1 million was for the Air National Guard Personnel. In addition, the Army and Air National Guards received $262.5 million for their operations and maintenance activities associated with the COVID-19 response. In a series of Presidential memoranda sent to the Secretaries of Defense and Homeland Security during March, April, May, and June, FEMA was directed to fund 100 percent of emergency assistance associated with COVID-19 response activities undertaken by state National Guards.[333] As reported on USAspending.gov, as of July 31, 2020 the National Guard had obligated more than $98.2 million and expended more than $36.1 million.[334]

DOD’s May 2020 CARES Act spend plan details the department’s review and prioritization process, and the resulting plan for utilizing the supplemental funding.[335] As detailed in the spend plan and shown in the table below, the department identified $777.7 million of the amount appropriated to the Army and Air National Guards’ Personnel account, and $141.7 million of the amount appropriated to the Army and Air National Guards’ Operations and Maintenance account to be transferred among various other appropriations.[336]
National Guard CARES Act Appropriations and Transfers

Appropriation

Enacted

($ thousands)

Funds available

for transfer

($ thousands)

Total

($ thousands)

National Guard Personnel, Army

746,591

(506,912)

239,679

National Guard Personnel, Air Force

482,125

(270,739)

211,386

Total

1,228,716

(777,651)

451,065a

Operations and Maintenance, Army National Guard

186,696

(107,533)

79,163

Operations and Maintenance, Air National Guard

75,754

(34,200)

41,554

Total

262,450

(141,733)

120,717
Source: GAO analysis of Department of Defense “CARES Act” Spend Plan. I GAO-20-701.

aAccording to officials, the Army National Guard plans to identify an additional $114 million and the Air National Guard plans to identify an additional $131 million from the personnel accounts to return for reprogramming in forthcoming updates to their spend plans.

According to National Guard officials, because National Guard support to the states for COVID-19 response is being reimbursed by FEMA, amounts appropriated in the CARES Act for similar activities are not needed and cannot be fully obligated before the end of the fiscal year on September 30, 2020, when the amounts will expire.[337] Consequently, the National Guard has identified amounts as available for transfer to other DOD accounts for COVID-19-related priority activities.

For example, of the $1.2 billion appropriated to National Guard personnel accounts, $506.9 million is available for transfer from the Army National Guard personnel account and $270.7 million is available from the Air National Guard personnel account. According to Army and Air National Guard officials, the remaining $451 million will be used for National Guard personnel to conduct additional screenings and tests for COVID-19 at National Guard locations and buildings, and for additional manpower to receive and issue PPE from a central warehouse for National Guard personnel who are not providing reimbursable support to FEMA.

GAO Methodology and Agency Comments

To conduct this work, we reviewed documentation and the most recent data available from DOD through July 31, 2020, and interviewed DOD officials. We provided a draft of this enclosure to DOD and the Office of Management and Budget (OMB) for review and comment. DOD provided technical comments on this enclosure, which we incorporated as appropriate. DOD also provided general comments which are summarized in the Agency Comments and Our Evaluation section of this report. OMB did not have comments on this enclosure.

Contact information: Diana Maurer, 202-512-9627, maurerd@gao.gov

HHS COVID-19 Funding

The COVID-19 relief laws appropriated more than $250 billion to the Department of Health and Human Services to address various aspects of the public health response to COVID-19, of which about $144 billion (about 58 percent) had been obligated and about $99 billion (about 40 percent) had been expended as of July 31, 2020, according to department officials. This represents an increase of 43 percent and 48 percent since May 31, 2020, when obligations and expenditures were $101 billion and $67 billion, respectively.

Entities involved: Department of Health and Human Services

Key Considerations and Future GAO Work

As part of our monitoring and oversight responsibilities in the CARES Act, we are conducting work examining the Department of Health and Human Services’s (HHS) use of appropriations contained in four relief laws enacted to help fund the COVID-19 response. Specifically, we will be examining the status of obligations and expenditures of these funds; the activities funded, including how those activities were determined; and efforts to monitor funding use and any related challenges.

Background

HHS received approximately $250.6 billion in supplemental appropriations from four relief laws enacted to assist the response to COVID-19.[338] The following table provides HHS appropriations by COVID-19 relief law.
Supplemental Appropriations to HHS for COVID-19 Response

Legislation

Appropriations

($ millions)

Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 (Pub. L. No. 116-123)

6,497.0

Families First Coronavirus Response Act (Pub. L. No. 116-127)

1,314.0

CARES Act (Pub. L. No. 116-136)

142,833.4

Paycheck Protection Program and Health Care Enhancement Act (Pub. L. No. 116-139)

100,000.0

Total

$250,644.4
Source: Department of Health and Human Services (HHS) data and GAO analysis of appropriation warrant information provided by the Department of the Treasury. | GAO-20-701

Note: HHS reported that of its total COVID-19 supplemental appropriations, the agency transferred $289 million to the Department of Homeland Security, and $300 million in appropriations are not available until future actions by HHS.

Overview of Key Issues

Of the $250.6 billion appropriated, HHS reported that it had obligated about $144 billion and expended about $99 billion, as of July 31, 2020—an increase of 43 percent and 48 percent respectively since May 31, 2020.

Supplemental Appropriations to HHS for COVID-19 Response and HHS’s Reported Obligations and Expenditures, by Law, as of July 31, 2020

HHS reported appropriations, obligations, and expenditures by agency. As of July 31, 2020, the Indian Health Service and Public Health and Social Services Emergency Fund (of which the Provider Relief Fund is the largest line item) had expended the largest portion of their supplemental appropriations (54 and 42 percent respectively). The Centers for Medicare & Medicaid Services, Food and Drug Administration, and the National Institutes of Health had each expended less than 5 percent of their supplemental appropriations. The following table provides HHS’s reported appropriations, obligations, and expenditures by HHS agency.
Department of Health and Human Services (HHS) Reported Appropriations, Obligations, and Expenditures for COVID-19 Response, by Agency, as of July 31, 2020

Agency or key fund

Appropriations

($ millions)

Obligations

($ millions)

Expenditures

($ millions)

Administration for Children and Families

6,274.0

6,072.1

1,208.7

Administration for Community Living

1,205.0

1,205.0

317.8

Agency for Toxic Substances and Disease Registry

12.5

2.2

1.1

Centers for Disease Control and Prevention

6,500.0

2,770.2

459.6

Centers for Medicare & Medicaid Servicesa

200.0

37.7

3.5

Food and Drug Administration

141.0

25.3

3.4

Health Resources and Services Administration

1,320.0

1,318.2

374.4

Indian Health Service

1,096.0

663.9

592.2

National Institutes of Health

1,781.4

521.7

52.4

Public Health and Social Services Emergency Fund (PHSSEF)b

231,689.5

131,244.7

96,132.8

Office of the Assistant Secretary for Preparedness and Responsec

12,501.9

9,810.4

2,557.0

Biomedical Advanced Research and Development Authorityc

17,497.0

14,997.7

177.0

Provider Relief Fundc

175,000.0

92,687.2

92,398.4

Testing for uninsured c

2,000.0

162.9

161.2

Other PHSSEFc

24,690.6

13,586.5

839.2

Substance Abuse and Mental Health Services Administration

425.0

423.4

4.1

Total

$250,644.4

$144,284.1

$99,150.0
Source: Department of Health and Human Service (HHS) data. | GAO-20-701

Note: The COVID-19 relief laws included provisions for HHS to transfer appropriated funds to various HHS agencies. HHS also reported that of its total COVID-19 appropriation, the agency transferred $289 million to the Department of Homeland Security, and $300 million in appropriations are not available until future actions by HHS.
aThese amounts do not reflect Medicaid and Medicare expenditures. As of July 31 2020, COVID-19 related federal Medicaid expenditures totaled approximately $13 billion, or 7 percent, of total spending on Medicaid services for this time period. In addition, the Congressional Budget Office estimated that some provisions of the CARES Act will increase Medicare payments to providers by $8 billion in 2020 and 2021.
bThe Public Health and Social Services Emergency Fund (PHSSEF) is an account though which funding is provided to certain HHS offices, such as the Office of the Assistant Secretary for Preparedness and Response. Amounts have been appropriated to this fund for the COVID-19 response to support certain HHS agencies and response activities. PHSSEF appropriations transferred to other HHS agencies or key funds not specifically listed are included under “Other PHSSEF.” For example, the Health Resources and Services Administration received $975 million in transfers from the PHSSEF, and this is represented in the table in “Other PHSSEF.”
cThe italicized amounts are subtotals of the PHSSEF and are not added in the total since they are included in the PHSSEF amount. Italicized amounts listed under the PHSSEF appropriations column are HHS allocations based on a combination of appropriations made in the relief laws, and approved allotment decisions made by HHS in coordination with OMB. The Provider Relief Fund reimburses eligible health care providers for health care related expenses or lost revenues that are attributable to COVID-19. The CARES Act and Paycheck Protection Program and Health Care Enhancement Act appropriated $175 billion for provider relief. In addition, the Families First Coronavirus Response Act and the Paycheck Protection Program and Health Care Enhancement Act designated up to $2 billion to reimburse providers for COVID-19 testing for uninsured individuals. Provider Relief Fund expenditures may also be referred to as disbursements.

HHS reported allocations, obligations and expenditures for a variety of COVID-19 response activities, including activities to support testing, the development of vaccines or therapeutics, and the acquisition of critical supplies. As of July 31, 2020, 53 percent of funds allocated to the Provider Relief Fund had been expended, compared with less than 5 percent of the funding each for telehealth, testing, vaccines, drug and therapeutics, and disease detection. The following table provides HHS’s reported allocations, obligations, and expenditures by selected key response activity.
Department of Health and Human Services (HHS) Reported Allocations, Obligations, and Expenditures for COVID-19 Response, by Selected Key Response Activity, as of July 31, 2020

Key activity

Total HHS allocations

($ in millions)

Total HHS obligations

($ in millions)

Total HHS expenditures ($ in millions)

Health centersa

2,020.0

2,017.9

494.4

Head Start

750.0

654.3

25.1

Provider Relief Fundb

175,000.0

92,687.2

92,398.4

Testing for uninsured

2,000.0

162.9

161.2

Support to state, local, territorial, and tribal organizations for preparedness

13,990.1

12,689.7

867.0

Strategic National Stockpile

10,710.0

8,380.6

1,839.8

Telehealth

159.5

37.3

0.6

Testing

2,821.1

1,496.4

136.9

Vaccines

14,022.3

12,955.3

99.5

Drugs and therapeutics

2,536.4

2,064.7

70.5

Global disease detection and emergency response

800.0

90.8

9.6

Other response activitiesc

25,835.1

11,047.2

3,047.1

Total

$250,644.4

$144,284.1

$99,150.0
Source: Department of Health and Human Service (HHS) data. | GAO-20-701

Note: HHS reported allocations, obligations, and expenditures for these activities based on the primary programmatic recipient organization of the funds, although some activities apply to multiple categories. For example, certain funds in the “support to state, local, territorial, and tribal organizations for preparedness” category were provided for testing but are not reflected in the “testing” category. According to HHS officials, the allocations reported for the key activities above are based on amounts appropriated for these activities in the relief laws and approved allotment decisions made by HHS in coordination with the Office of Management and Budget.
aHealth centers provide a comprehensive set of primary and preventative health care services to individuals regardless of their ability to pay. Approximately $17 million of this funding is for Health Center Program look-alikes, which are centers that do not receive Health Center Program funding but meet program requirements.
bThe Provider Relief Fund reimburses eligible health care providers for health care related expenses or lost revenues that are attributable to COVID-19. The CARES Act and Paycheck Protection Program and Health Care Enhancement Act appropriated $175 billion for provider relief. In addition, the Families First Coronavirus Response Act and the Paycheck Protection Program and Health Care Enhancement Act designated up to $2 billion to reimburse providers for COVID-19 testing for uninsured individuals. Provider Relief Fund expenditures may also be referred to as disbursements.
cAccording to HHS officials, other response activities includes Centers for Disease Control and Prevention wide activities and program support, healthcare preparedness and response activities, Biomedical Advanced Research and Development Authority diagnostics development, and various activities conducted by the National Institutes of Health.

GAO Methodology and Agency Comments

We requested, and HHS provided, data on appropriations, obligations, and expenditures by HHS agency and by key response activity, as of July 31, 2020. We also obtained and analyzed appropriation warrant information provided by the Department of the Treasury as of May 31, 2020. To assess the reliability of the data reported by HHS, we compared them with the federal spending database, USAspending.gov, as well as HHS’s spending database, taggs.hhs.gov, and HHS’s documentation on spending, and we determined that the data were sufficiently reliable for the purposes of our reporting objective.[339] We also reviewed the four relief laws enacted to assist the response to COVID-19. We provided HHS and the Office of Management and Budget (OMB) with a draft of this enclosure. HHS did not provide comments on this enclosure. OMB provided technical comments, which we incorporated as appropriate.

Contact information: Carolyn L. Yocom, (202) 512-7114, yocomc@gao.gov

Health Disparities

The Department of Health and Human Services plays a key role in collecting and making data available on indicators of COVID-19 burden, including cases, hospitalizations, and deaths. While race and ethnicity information is incomplete in these reported data, available data demonstrate racial and ethnic disparities in indicators of COVID-19 burden.

Entities involved: Department of Health and Human Services, including the Centers for Disease Control and Prevention, Centers for Medicare & Medicaid Services, Indian Health Service, and Office of Minority Health

Key Considerations and Future GAO Work

The Department of Health and Human Services (HHS), including the Centers for Disease Control and Prevention (CDC), collects and makes some data available on indicators of COVID-19 burden by race and ethnicity, but gaps exist in these data. For example:
  • Race and ethnicity information was missing for more than half (52.6 percent) of cases with case report forms received by CDC, or 63.8 percent of total cases reported as of July 31, 2020.[340]
  • CDC’s hospitalization data are limited to select counties in 14 states, and race and ethnicity information are not complete in the reported data.
  • Several states do not include race and ethnicity in their reporting of deaths to CDC through case reporting as of July 30, 2020, according to CDC. Race and ethnicity data were missing for 16.6 percent of deaths with case report forms received by CDC, or 35.4 percent of total deaths reported through case reporting, as of July 31, 2020.[341]

To help address these gaps, on July 22, 2020, CDC released a COVID-19 Response Health Equity Strategy to accelerate progress towards reducing disparities in indicators of COVID-19 burden, among other efforts to achieve health equity.[342] However, CDC’s strategy does not include an assessment of whether having the authority to require states and jurisdictions to report race and ethnicity data for cases, hospitalizations, and deaths is necessary to ensure CDC can collect more complete data, and if so, whether CDC should seek such authority from Congress. Moreover, CDC’s strategy does not specify how it will involve key stakeholders who participate in the collection of information on race and ethnicity—such as health care providers, laboratories, and state and jurisdictional health departments—to obtain complete information for indicators of COVID-19 burden. CDC’s strategy also does not specify how, if at all, CDC plans to assess the long-term health outcomes of individuals with COVID-19, including by race and ethnicity.

Without including these elements within its strategy, the agency risks continuing to collect incomplete and inconsistent information, and may not be able to effectively target its pandemic response efforts to racial and ethnic minority groups that may be disproportionately affected. As CDC implements its COVID-19 Response Health Equity Strategy, we recommend in this report that the Director of CDC 1) determine whether having the authority to require states and jurisdictions to report race and ethnicity information for COVID-19 cases, hospitalizations, and deaths is necessary for ensuring more complete data, and if so, seek such authority from Congress; 2) involve key stakeholders to help ensure the complete and consistent collection of demographic data; and 3) take steps to help ensure its ability to comprehensively assess the long-term health outcomes of persons with COVID-19, including by race and ethnicity.

We will continue to conduct work examining HHS, CDC, and other component agencies’ ongoing work regarding indicators of COVID-19 and disparities that exist for various populations.

Background

HHS and its agencies, including CDC, collect and make data available on various indicators of COVID-19, including testing, cases, hospitalizations, and deaths (see figure).[343] These data are collected from a variety of sources, such as health care providers, laboratories, funeral homes, and state and jurisdictional health departments.

Centers for Disease Control and Prevention (CDC)’s General Process for Collecting and Making Available Race and Ethnicity Data on Indicators of COVID-19

aHealth departments may conduct follow-up with patients, laboratories, providers, and obtain additional information from electronic health information systems to collect missing race and ethnicity data. Providers and laboratories may also conduct follow-up to collect these data.
bCDC’s COVID Data Tracker provides maps, charts, and data on COVID-19 (see https://www.cdc.gov/covid-data-tracker/index.html#demographics, accessed July 31, 2020).
cCDC’s COVID-19-Associated Hospitalization Surveillance Network (COVID-NET) is a surveillance system maintained by CDC that makes data available on COVID-19 hospitalizations that are confirmed by laboratories (see https://gis.cdc.gov/grasp/COVIDNet/COVID19_5.html, accessed August 7, 2020). Data are collected from select counties in 14 participating states. On July 13, 2020, HHS released guidance that requires hospitals to provide hospitalization data directly to HHS, rather than CDC; however, this guidance does not include a requirement for hospitals to include race and ethnicity information in their reporting to HHS and it does not affect data collected through COVID-NET.
dCDC’s National Center for Health Statistics (NCHS) maintains the National Vital Statistics System, which is the source of official statistics on deaths in the United States (see https://www.cdc.gov/nchs/nvss/vsrr/covid19/health_disparities.htm, accessed August 6, 2020). CDC also collects data on deaths through case reporting, which is not depicted in this graphic.
eFor purposes of this figure, “health department” includes both state and local health departments. Generally, data are first reported at the local level (i.e., county health departments) and then at the state level (i.e., state health departments). According to CDC, in some states or jurisdictions, officials who register cause of death and report this data to CDC may not be located within the health department.
fCOVID-NET data are collected by surveillance officers who are trained to obtain data in a standardized and uniform way.

Data collected and made available by CDC on indicators of COVID-19 by race and ethnicity is important for assessing potential disparities in these groups. CDC has reported that long-standing systemic health and social inequities have put persons in racial and ethnic minority groups at increased risk of acquiring and suffering worse outcomes from COVID-19. According to CDC, history shows that severe illness and death rates tend to be higher for racial and ethnic minority groups during public health emergencies. Race and ethnicity data on indicators of COVID-19 burden can help decision-makers understand the spread and severity of COVID-19 in different populations.

Overview of Key Issues

Though limited, available data from CDC and others demonstrate disparities in COVID-19 indicators by race and ethnicity, with racial and ethnic minorities bearing a disproportionate burden of COVID-19 cases, hospitalizations, and deaths.[344]
  • Cases. CDC race and ethnicity data on COVID-19 cases, while incomplete, demonstrate that racial and ethnic minority groups have been disproportionately affected. Among cases with known race and ethnicity reported to CDC as of July 31, 2020, 32 percent of cases were for persons who were Hispanic or Latino (compared to 18 percent of the U.S. population), 20 percent were non-Hispanic Black (compared to 13 percent of the U.S. population), and 1.3 percent were non-Hispanic American Indian/Alaska Native (compared to 0.7 percent of the U.S. population).[345] Though race and ethnicity data were missing for 53 percent of cases, these findings suggest that persons in these groups experience a disproportionately high burden of COVID-19 cases.[346]

    Additionally, a Centers for Medicare & Medicaid Services (CMS) preliminary analysis of Medicare fee-for-service claims data and Medicare Advantage encounter data for services from January 1 through June 20, 2020, received by July 17, 2020, found racial and ethnic disparities in COVID-19 case rates, with case rates highest for Black beneficiaries (1,658 cases per 100,000), Hispanic or Latino beneficiaries (1,230 cases per 100,000), and American Indian/Alaska Native beneficiaries (1,125 cases per 100,000) and lowest among White beneficiaries (712 cases per 100,000).[347]
  • Hospitalizations. CDC data indicate that racial and ethnic minority groups are disproportionately hospitalized with COVID-19 in select counties in 14 states included in CDC’s COVID-19-Associated Hospitalization Surveillance Network (COVID-NET). [348] According to CDC’s analysis of data from COVID-NET hospitalizations between March 1, 2020, and August 1, 2020, non-Hispanic American Indian/Alaska Native persons were hospitalized with COVID-19 at a rate 5.2 times that of non-Hispanic White persons, and non-Hispanic Black and Hispanic or Latino persons were hospitalized at a rate 4.7 times that of non-Hispanic White persons when adjusting for age (see figure).

    COVID-19 Hospitalization Rates from Select Counties in 14 States, Adjusted for Age, by Race and Ethnicity, March 1, 2020 through August 1, 2020

    Note: White, Black, American Indian/Alaska Native and Asian or Pacific Islander persons were non-Hispanic. Hispanic or Latino persons might be of any race. Hospitalization data are from Centers for Disease Control and Prevention’s Coronavirus Disease 2019 (COVID-19)-Associated Hospitalization Surveillance Network (COVID-NET), which provides data from select counties in 14 states, representing 10 percent of the U.S. population. Age-adjusted rates, which hold constant the age distributions between different population groups, allow researchers to focus analyses on other demographics, such as race and ethnicity, without being concerned about differences that are due to different age distributions of the racial and ethnic groups. These rates are particularly important to consider for indicators of COVID-19 because persons in older age groups are more likely to experience hospitalizations and deaths.

    Additionally, CMS found racial and ethnic disparities in COVID-19 hospitalization rates among Medicare beneficiaries, with hospitalization rates highest for Black beneficiaries (670 hospitalizations per 100,000), American Indian/Alaska Native beneficiaries (505 hospitalizations per 100,000), and Hispanic or Latino beneficiaries (401 hospitalizations per 100,000) and lowest among White beneficiaries (175 hospitalizations per 100,000) as of June 20, 2020.[349]
  • Deaths. A CDC analysis of National Center for Health Statistics (NCHS) death certificate data indicated a disproportionate number of deaths among non-Hispanic Black persons, who represent approximately one in four COVID-19 deaths in the United States. [350] As of August 12, 2020, NCHS data show that non-Hispanic Black persons died of COVID-19 at a rate 2 times higher than non-Hispanic White persons (see figure). [351]

    COVID-19 Death Rates, by Race and Ethnicity, through August 12, 2020

    Note: Data are from Department of Health and Human Services, Centers for Disease Control and Prevention, Report to Congress on Paycheck Protection Program and Health Care Enhancement Act Disaggregated Data on U.S. Coronavirus Disease 2019 (COVID-19) Testing, 3rd 30-Day Update (August 2020). White, Black, American Indian/Alaska Native, Asian, and Native Hawaiian or Other Pacific Islander persons were non-Hispanic. Hispanic or Latino persons might be of any race. Death rates include deaths reported by the 50 states and the District of Columbia, and are reported by CDC/NCHS from its National Vital Statistics System (NVSS), which is the source of official statistics on deaths in the United States. CDC noted that death certificate data are provisional, and may not include all deaths through August 12, 2020. CDC stated that 99 percent of deaths in NVSS have race and ethnicity information.

    Additional disparities may be observed within age groups. In particular, racial and ethnic minority populations comprise a larger proportion of COVID-19 deaths at younger ages (see figure).[352] CDC also reported that as of August 12, 2020, non-Hispanic Black persons older than age 75 had the highest death rate (824.7 per 100,000), followed by Hispanic or Latino persons older than age 75 (656.0 per 100,000) and non-Hispanic American Indian/Alaskan Native persons older than age 75 (428.3 per 100,000).[353] In addition, we found that non-Hispanic Black and Hispanic or Latino persons accounted for the largest proportion of COVID-19 deaths in younger age groups, such as age 35-44 and 45-54 (see figure).

Distribution of COVID-19 Deaths, by Race and Ethnicity and Age Group, through August 5, 2020

Note: White, Black, American Indian/Alaska Native, Asian, and Native Hawaiian or Other Pacific Islander persons were non-Hispanic. Hispanic or Latino persons might be of any race. Deaths data includes deaths reported by the 50 states and the District of Columbia, and is from the National Center for Health Statistics’ (NCHS) National Vital Statistics System (NVSS), which is the source of official statistics on deaths in the United States. NCHS noted that death certificate data are provisional, and may not include all deaths through August 5, 2020. NVSS also provides data on individuals younger than age 35 and on individuals of more than one race and of unknown race, which were not included in this figure.

HHS’s Office of Minority Health, CDC, the Indian Health Service (IHS), and researchers noted various social and health-related factors that may contribute to disparities by race and ethnicity in COVID-19 disease burden, including the following:[354]
  • higher rates of employment in essential industries, such as service, health care, and agriculture;
  • limited or no paid sick leave or ability to work from home;
  • lower earnings, lower educational attainment, and higher rates of joblessness;
  • higher rates of uninsurance and other barriers to accessing care, such as mistrust of the health care system, language barriers, and cost of missing work;
  • higher population density and overcrowded, multigenerational, or multi-family homes;
  • greater reliance on public transportation;
  • overrepresentation in jails, prisons, homeless shelters, and detention centers;
  • limited plumbing and access to clean water;
  • higher rates of underlying health conditions, such as chronic lung disease, asthma, and obesity; and
  • experiences of racism, stigma, and systemic inequities.

According to HHS and CDC, these factors may make it more difficult for persons in racial and ethnic minority groups to quarantine, practice social distancing, and follow sanitation guidelines. They may also contribute to greater prevalence of, or increase the risk of worse health outcomes from, COVID-19.

As we previously noted, gaps exist in the data HHS collects on race and ethnicity for COVID-19 testing, cases, hospitalizations, and deaths. While CDC has developed a strategy to help address these gaps, this strategy does not include several elements that are critical to the collection of complete and consistent data, such as involving key stakeholders. Without including these elements, the agency risks continuing to collect incomplete and inconsistent information, and may not be able to effectively target its pandemic response efforts to racial and ethnic minority groups that may be disproportionately affected.

GAO’s Methodology and Agency Comments

To conduct this work, we reviewed the most recent agency data on indicators of COVID-19 reported by CDC and CMS as of August 5, 2020; reviewed federal laws, agency guidance and documentation; and interviewed or obtained written responses from HHS officials, including those from its Office of Minority Health, CDC, and IHS. We also conducted interviews and reviewed written responses provided by organizations that represent entities involved in the collection of data on indicators of COVID-19, referred to as stakeholders, to obtain their perspectives on agency actions and challenges.[355] We provided HHS, the Office of Management and Budget (OMB), CDC, and CMS with a draft of this enclosure. HHS and CMS provided technical comments on this enclosure, which we incorporated as appropriate. HHS provided general comments which are summarized in the Agency Comments and Our Evaluation section of this report.

Contact Information: Alyssa M. Hundrup, (202) 512-7114, hundrupa@gao.gov

Related GAO Product

COVID-19 Data Quality and Considerations for Modeling and Analysis. GAO-20-635SP. Washington, D.C.; July 30, 2020.

Child Nutrition

Almost 400 million fewer meals for children were provided in March and April 2020 than in March and April 2019, and school districts and other providers reported ongoing and potential challenges to providing meals during the pandemic.

Entities involved: Food and Nutrition Service within the Department of Agriculture.

Key Considerations and Future GAO Work

We will continue to monitor challenges faced by school districts and other entities in providing meals to children during the pandemic, as well as the Food and Nutrition Service’s use of CARES Act funding and its efforts to provide flexibilities to states and school districts to support these efforts. In addition, we plan to examine the rollout of the newly established Pandemic EBT program—which provides additional benefits to households with children who would have received free or reduced-price school meals if not for school closures due to COVID-19—including program costs, participation, and challenges providing benefits to households.

Background

Child nutrition programs administered by the Department of Agriculture’s (USDA) Food and Nutrition Service (FNS) provide cash reimbursements for meals and snacks provided to eligible children in schools, or at other locations when schools are closed.[356] In fiscal year 2019, the National School Lunch Program (NSLP), the School Breakfast Program (SBP), Summer Food Service Program (SFSP), and other child nutrition programs received $23.1 billion in federal funds. The largest program, NSLP, had an average daily participation of almost 30 million students in 2019, with over 94,000 participating schools. Eligibility and target populations vary across programs; however, in general, the largest subsidies are provided for free or reduced-price meals and snacks served to children from low-income households.[357]

The CARES Act provided $8.8 billion in supplemental funds to support child nutrition programs during the COVID-19 pandemic, and as of July 31, 2020, FNS had obligated most of these funds ($7 billion) for reimbursement of meals, and disbursed $4.1 billion to states and other providers. Meal reimbursement costs include the provision of free meals to more children, under waivers described below, as well as weekend meal service, according to FNS.

FNS was also apportioned $9.7 billion for a new program, Pandemic EBT (Electronic Benefits Transfer), for fiscal year 2020, and, as of July 31, 2020, had disbursed an estimated $5 billion to states for this program.[358] Authorized under the Families First Coronavirus Response Act, this program provides additional benefits to households with children who would have received free or reduced-price school meals if not for school closures due to COVID-19. Eligible households receive benefits on an EBT card, similar to how benefits are provided for the Supplemental Nutrition Assistance Program (SNAP). The law authorized benefits to be provided through September 30, 2020. All states and the District of Columbia have been approved to operate a Pandemic EBT program, and states estimated that this program would serve 29 million children, according to FNS.

Overview of Key Issues

The most recent available data from FNS show that the number of meals served through the four largest child nutrition programs in March and April 2020 dropped by almost 400 million meals, or 21 percent, compared to March and April in 2019 (see figure). Although there was a large increase in meals provided through SFSP, this increase did not offset reductions in other programs, such as NSLP and SBP. SFSP typically operates from May through September for children on school vacation. It may also operate during unanticipated school closures, which FNS determined applied to the pandemic-prompted closures in the spring of 2020. To facilitate meal distribution, FNS waived the requirement that in order to provide free meals to all children, summer meal sites must be located in areas in which at least half the children are from low-income households, which contributed to the increase in SFSP meals in 2020. This waiver also applied to schools that continued to operate NSLP programs after schools closed through an option called the Seamless Summer Option.[359]

Total Meals Served Per Month in Key Child Nutrition Programs, March and April 2019 and 2020

Note: National School Lunch Program (NSLP) and School Breakfast Program (SBP) numbers include meals served through Seamless Summer Option program, which allows school food authorities operating NSLP and SBP to continue the same meal service rules and claiming procedures used during the regular school year throughout summer and during unanticipated school closures. Also, according to Food and Nutrition Service, the number of meals reported for any given month is subject to marginal revisions over time for a variety of reasons, including late claims and changes that come as a result of routine monitoring activity.

Reported challenges in providing meals: As we reported in June, FNS granted various waivers, as authorized by the Families First Coronavirus Response Act, in response to the pandemic that allowed school districts and other meal providers to provide meals in ways not typically allowed. School districts provided meals in a variety of ways, such as using grab-and-go models, delivering meals directly to students’ homes, and using bus routes to distribute meals.[360]

School districts reported various challenges operating meal programs during the pandemic, according to interviews and information gathered by national organizations representing school meal programs and summer meal sites. For instance, schools and other providers faced challenges obtaining pre-packaged or shelf-stable foods; additional food packaging and equipment, such as containers and equipment to store and keep meals cool during delivery; as well as personal protective equipment for staff. Further, according to officials from the School Nutrition Association (SNA), some food service staff did not work because they were at high risk for COVID-19 or needed to care for their children. [361]

Lack of funds to meet increased cost of providing meals is another reported challenge, according to organizations interviewed. For instance, covering the costs of additional supplies was more difficult because school meal programs had to forego revenue they would typically earn selling full-price meals and a la carte items, according to information from SNA. In March and April 2020, school districts served about 185 million fewer full-price meals through NSLP and SBP than in March and April 2019, based on the most recent available FNS data. [362] Further, given the decrease in total meals served in March and April, school districts received less in federal cash reimbursements. Officials from multiple national nutrition-focused organizations expressed concern that the $8.8 billion in supplemental funds provided by the CARES Act were only available for meal reimbursement and not for other expenses related to the increased costs associated with providing meals during the pandemic.

Potential challenges for the upcoming school year: As of July 31, 2020, FNS extended four key waivers implemented in the pandemic through the entire 2020-2021 school year for NSLP, SBP, and Child and Adult Care Food Program (CACFP), but not for summer meal programs (SFSP and the Seamless Summer Option). These waivers allow meals to be served in non-congregate settings, enable parent and guardian meal pickup, and provide flexibility in foods served and meal times. Additionally, as of July 31, 2020, FNS had not extended the area eligibility waiver specific to summer meals that allows sites to serve meals to all children regardless of the economic conditions in the local area.[363]

Over the summer, various entities raised concerns about added administrative challenges due to expiring waiver flexibilities and changing methods of meal delivery.[364] Specifically, if area eligibility waivers for summer meals expire and schools are expected to revert to serving meals under NSLP and SBP, schools will need to track each meal served by fee category (free, reduced-price, and full-price) and charge students accordingly in order to obtain federal reimbursement.[365] However, if schools do not deliver and track meals through a traditional cafeteria line, school districts would need to design new ways to track and collect payment, when appropriate, while also following protocols for social distancing to ensure the safety of children and school staff. School districts may also struggle with quickly enrolling children who are newly eligible for free or reduced-priced meals, as more households face financial hardships.

On August 31, 2020, USDA announced that, in response to stakeholder concerns about adequately serving children in need, it would extend waivers for summer meal programs through the end of the calendar year or until available funding ran out. USDA stated that based upon available data on meals served and analysis of remaining appropriated funds, it projected that it could offer this extension for the remaining months of 2020 rather than the entire school year. These waiver extensions allow schools and other organizations to provide meals with certain flexibilities that have been available since March, easing the administrative challenges of changing methods of meal delivery until waivers expire on December 31, 2020 or funding is exhausted.

Another challenge involves continued eligibility for Pandemic-EBT, which may be affected for some children in the upcoming school year. Specifically, the Families First Coronavirus Response Act requires that eligible children be from schools that are closed for at least 5 consecutive days in order for households to receive benefits, which may be problematic for students attending schools using hybrid models (e.g., in which students attend school some days and use virtual learning other days each week). According to FNS, the agency is currently reviewing the legal and policy considerations related to this and other issues that could affect Pandemic-EBT benefits through September of the upcoming school year.

GAO Methodology and Agency Comments

To conduct our work, we reviewed the most recent data available from FNS on meals served, which we determined were sufficiently reliable for our purposes. We also reviewed relevant federal laws, agency guidance and documents, and written responses from FNS to our questions. Additionally, we interviewed officials from two national organizations representing local providers of school, after school, and summer meals and snacks for children, SNA and the Boys and Girls Club of America, as well as officials from the Food Research and Action Center and No Kid Hungry. The information gathered from these interviews is not intended to be representative, but provides examples of challenges meal providers are facing during the COVID-19 pandemic. We also reviewed information collected in May 2020 by SNA from various member organizations. We provided a draft of this enclosure to FNS and the Office of Management and Budget (OMB) for review and comment. FNS did not provide comments. OMB sent technical comments, which we incorporated as appropriate.

Contact Information: Kathryn A. Larin, (202) 512-7215 or larink@gao.gov

Related GAO Products

Summer Meals: Actions Needed to Improve Participation Estimates and Address Program Challenges. GAO-18-369. Washington, D.C.: May 31, 2018.

Employer Tax Relief

Some information is available about how employers are claiming refundable tax credits, but the extent of claims for the first and second quarters of 2020 will remain unknown until the relevant forms have been filed and processed; the Internal Revenue Service and the Small Business Administration are collaborating on a data-sharing agreement to ensure the applicable tax credit recipients are not also receiving loans and are in compliance with law.

Entities involved: Department of the Treasury, including the Internal Revenue Service; and the Small Business Administration

Key Considerations and Future GAO Work

The federal government will start to know the extent of the use of employer tax credits for the first and second calendar quarters of 2020 once the Internal Revenue Service (IRS) processes the data after the July 31, 2020 filing deadline and catches up on paper returns received while they were shut down or working at reduced capacity.[366]

In June 2020, we reported that IRS and the Small Business Administration (SBA) had not finalized a data-sharing agreement that would allow IRS to use SBA data to help ensure that Paycheck Protection Program (PPP) loan recipients did not also inappropriately receive the Employee Retention Credit. Although SBA publicly released portions of the PPP data, more information, such as detailed identification information for loan recipients, is needed for IRS to ensure compliance with law. Officials at IRS said that finalizing the agreement is a priority.

We will continue to monitor each of these issues, and include updates in these reports as well as a longer-term report anticipated in 2021.

Background

As the COVID-19 pandemic contributed to a decline in the percentage of the U.S. population employed, Congress passed, and the President has signed into law, legislation intended to help employers support and retain affected employees.[367] Specifically, the enacted legislation generally allows employers to use tax credits to offset certain paid sick and family leave and wages paid to certain retained employees, and other employee-related expenses, as well as to delay payment of the employer share of social security tax. IRS is responsible for administering and ensuring compliance with the tax aspects of these provisions. IRS’s general capacity to implement new initiatives such as these is an ongoing challenge cited in our 2019 High Risk Report.

The Families First Coronavirus Response Act (FFCRA) and CARES Act provide tax credits to mitigate the cost of paid sick and family leave for smaller employers as well as an employee retention credit for all employers, among other tax relief. The Joint Committee on Taxation estimates that these provisions will lead to about $172 billion in foregone revenue for fiscal years 2020-2030.
  • Paid leave credits. Businesses and tax-exempt organizations with fewer than 500 employees, as well as self-employed individuals, are eligible for refundable FFCRA credits.[368] The credits are equal to qualified leave wages, plus the employer share of Medicare taxes paid with respect to qualified wages and allocable health plan expenses, from April 1 through December 31, 2020. Credit recipients who receive PPP loans cannot count the wages paid for by the credit as payroll costs toward loan forgiveness.[369]

    Payroll tax credits may be claimed on the employer’s employment tax return, typically Form 941, Employer’s Quarterly Federal Tax Return. To receive immediate relief, employers may reduce their semiweekly or monthly payroll tax deposits by the amount of their credit.[370] If an anticipated credit amount remains after reducing deposits, the employer may receive an advance refund by filing Form 7200, Advance Payment of Employer Credits Due to COVID-19. Form 7200 must be submitted using electronic fax (e-fax).
  • Employee Retention Credit. Under the CARES Act, employers of any size—including tax-exempt entities and self-employed individuals with employees—can receive the refundable Employee Retention Credit. The credit equals 50 percent of qualified wages (up to $10,000 per employee) paid from March 13 through December 31, 2020, including certain health care expenses.[371] Eligible employers are those who experience, in calendar year 2020, either (1) full or partial suspension of operations due to government orders limiting activity in response to COVID-19 during any calendar quarter, or (2) a decline in gross receipts of more than 50 percent, compared with the same quarter in 2019.

    PPP recipients are not eligible for the Employee Retention Credit, unless they repaid their PPP loans by May 18, 2020. Wages for which FFCRA credits are allowed are not included in wages for the Employee Retention Credit, among other exclusions from wages.[372] Employers can claim the credit on their employment tax returns and may reduce payroll tax deposits by the credit amounts, or file Form 7200 for advance refunds.
  • Deferred payroll tax payments for employer share of Social Security. The CARES Act granted all employers the option to defer deposits and payments of the employer share of Social Security tax that they would otherwise be required to make during the period beginning March 27 through December 31, 2020.[373] Self-employed individuals may defer half of their Social Security taxes due.[374] Deferred deposits are to be reported on Form 941.

In addition, on August 8, 2020, the President signed a memorandum that, in part, directed the Secretary of the Treasury to exercise his authority under section 7508A of the Internal Revenue Code to defer the withholding, deposit, and payment of certain employment taxes from September 1, 2020, to December 31, 2020 if an employee’s wages are below a certain amount.[375]

Overview of Key Issues

IRS continues to process Form 7200s for COVID-19-related tax credit advance refunds. As of July 31, 2020, IRS said employers have claimed $435.48 million in advance credits and IRS has distributed this amount (see table).[376] We are continuing to examine what factors are affecting the efficacy of these provisions in achieving their intended purpose.
Summary of IRS Processing Data for Form 7200
As of May 31, 2020As of July 31, 2020Change since May
E-fax submissionsa7,931b18,05410,123
Form 7200s reviewedc6,18918,98412,795
Refunds issued ($ millions)54.2 435.48381.28
Source: GAO analysis of Internal Revenue Service data. | GAO-20-701

aMultiple forms may be included in each e-fax submission. This may include duplicate submissions and aggregate submissions from the same employer. Per credit information is not available until employers file Form 941 for the second quarter.
bThis number differs from our June report when IRS officials said that the number of e-fax submissions was 8,754. In August, IRS officials said that number included the total number of Form 7200s received. They corrected this to 7,931, which is the total number of e-fax submissions received.
c “Form 7200s reviewed” figures include Forms 7200 and other submissions that might not include a Form 7200, such as blank cover sheets, PPP loan applications, and Forms SS-4. This number differs from our June report when IRS officials said that the number of Form 7200 reviewed was 7,185. In August, IRS officials clarified that number included cases pending assignment to a reviewer and cases where the review of the Form 7200 is still in progress. They corrected this to 6,189 to omit all cases actively in review, and only include completed reviews.

More information will be available, including the number of credit recipients and specific data by credit, after second quarter Form 941s, due July 31, 2020, are processed.[377] IRS officials said under normal circumstances both the paper and e-filed second quarter Form 941s would be processed by mid-September. However, because IRS facilities that process these forms were closed or not fully operational for months, IRS officials said they are experiencing a backlog and are unsure when the processing of paper Form 941s will be complete.[378]

IRS officials said they do not know yet if the pandemic is affecting employers’ filing methods. As of August 19, 2020, both of the campuses that process these returns are open with reduced staffing to allow for social distancing. When paper Form 941s are sorted, IRS officials said they will be grouped by date received. Forms with refunds are to be prioritized.

Two industry groups said their members are not receiving any updates from IRS after they have submitted Form 7200s. However, IRS has already published guidance for staff answering calls related to Form 7200 filings. IRS designated 8,393 of the 18,984 Form 7200s reviewed through July 31, 2020 as “rejected”—due to incomplete information or computational errors—and required that letters or notices to the employers be sent for any such rejected submissions. Since IRS started sending mail on June 19, 2020, it has mailed 6,720 letters to employers with rejected returns.

Since April, IRS continues to update guidance for the Employee Retention Credit in the form of Frequently Asked Questions (FAQs). Although tax-exempt organizations are eligible to receive the credits, one industry group told us that an initial lack of explicit IRS guidance on the definition of “gross receipts” for the Employee Retention Credit caused confusion for some organizations. Until IRS issued guidance in these FAQs on June 19, 2020, organizations were not confident enough to file for the credit, according to a group representing charitable organizations. IRS officials told us that employers could have filed for the credit before the definition was released using a definition applied in good faith, and noted that the FAQs are non-binding.

Given that PPP recipients are generally not eligible for the Employee Retention Credit, IRS is working to ensure employers are not taking advantage of both provisions. As of August 21, 2020 IRS and SBA are still working collaboratively to finalize a draft memorandum of understanding for SBA to provide data on PPP recipients to help ensure employers comply with requirements, according to IRS officials.[379] Both agencies anticipate finalizing the memorandum this summer.

IRS officials told us they are drafting a plan for the use of PPP data during Form 941 reviews and exploring opportunities to use this data to review Form 7200 filings before issuing advance credits. In July 2020, IRS issued proposed and temporary regulations regarding the recapture of erroneous refunds of the Employee Retention Credit and the leave credits.[380]

On August 28, 2020, IRS and Treasury issued guidance implementing the Presidential memorandum, which states employers can defer the withholding and payment of the employee portion of Social Security payroll tax or the railroad retirement tax equivalent for eligible employees for the period covered in the memorandum.[381] According to the guidance, the due date for employers to withhold and pay the tax is postponed until the period beginning January 1, 2021 and ending April 30, 2021.

GAO Methodology and Agency Comments

To conduct this work, we interviewed officials at professional associations for tax filers, employers, and agency officials. We also reviewed IRS data as of July 31, 2020, federal laws, and agency guidance and plans. We provided IRS, Treasury, the Small Business Administration (SBA), and the Office of Management and Budget with a copy of this enclosure. IRS and Treasury provided technical comments, which we integrated as appropriate. SBA and the Office of Management and Budget did not have any comments on this enclosure.

Contact information: Jessica Lucas-Judy, (202) 512-9110, lucasjudyj@gao.gov

Unemployment Insurance Programs

As the unemployment insurance system continues to face a high number of initial claims, the Department of Labor continues to monitor states’ implementation of the CARES Act unemployment insurance programs, has issued additional guidance, and has taken steps to address program integrity.

Entity involved: Department of Labor

Key Considerations and Future GAO Work

The unemployment insurance system continues to experience high numbers of initial claims in the wake of the COVID-19 pandemic. While enhanced benefits under the Federal Pandemic Unemployment Compensation program have helped workers and the economy, those benefits expired at the end of July 2020. According to recent research, expanded unemployment insurance likely helped stabilize spending, especially for low-income households—which in turn, has helped mitigate some of the negative effects of the pandemic on the U.S. economy.[382]

The Department of Labor (DOL) continues to monitor states’ implementation of the CARES Act unemployment insurance programs, has issued additional guidance, and has taken steps to address program integrity. Its Office of Inspector General has designated unemployment insurance as a high priority program for addressing program integrity issues. In fiscal year 2019, Department of Labor reported that 10.6 percent of unemployment insurance benefits were paid improperly, and the inspector general estimates that, if improper payments continue at the current rate, at least $26 billion of the funding for the CARES Act unemployment insurance programs could be lost through fraud and improper payments.

As we continue our examination of the unemployment insurance (UI) program, we will consider the economic implications for workers as CARES Act UI programs expire. We will also continue work that will examine, among other issues, states’ challenges in processing the record level of UI claims and addressing program integrity, as well as the Department of Labor’s (DOL) related assistance in these areas. Additionally, we will continue to examine the number of states that borrow funds from the federal government to pay UI benefits. From January 1, 2020 through August 11, 2020, 13 states—California, Colorado, Connecticut, Hawaii, Illinois, Kentucky, Massachusetts, Minnesota, New Jersey, New York, Ohio, Texas, and West Virginia, as well as the U.S. Virgin Islands—took out such loans, totaling about $26 billion.[383] According to DOL, the need for these loans was especially acute as the pandemic had exacerbated shortfalls in states’ funds that existed before the pandemic began, which were caused by many states not taking in enough funds to pay UI benefits according to the standard set in DOL regulations providing for interest-free loans to states.[384]

Background

The UI program is a federal-state partnership that provides temporary financial assistance to eligible workers who become unemployed through no fault of their own and helps stabilize the economy during recessions.[385] The regular UI program is funded primarily through federal and state taxes levied on employers. States design and administer their own UI programs within federal parameters, and DOL oversees states’ compliance with federal requirements, such as ensuring that states pay benefits when they are due. To be eligible for UI benefits, applicants generally must be able and available to work, and be actively seeking work.[386]

In addition to the regular UI program, the CARES Act created three new, federally funded temporary UI programs that expanded UI benefit eligibility and enhanced benefits:
  1. Pandemic Unemployment Assistance (PUA), available through December 2020, generally authorizes up to 39 weeks of UI benefits to individuals not otherwise eligible for UI benefits, such as the self-employed and certain gig economy workers, who are unable to work as a result of COVID-19; [387]
  2. Federal Pandemic Unemployment Compensation (FPUC) generally authorized an additional $600 benefit that augmented weekly UI benefits available under the regular UI program, as well as CARES Act UI programs, through July 2020; [388] and
  3. Pandemic Emergency Unemployment Compensation (PEUC), available through December 2020, authorizes an additional 13 weeks of UI benefits to those who exhaust their regular UI benefits. [389]

On August 8, 2020, the President signed a memorandum directing FEMA to provide up to $44 billion in lost wages assistance from the Disaster Relief Fund.[390] Pursuant to the presidential memorandum, upon receiving a FEMA grant, states and territories may provide eligible claimants $300 or $400 per week, which includes a $300 federal contribution.[391] As of September 9, 2020, FEMA had approved lost wages assistance grants to 48 states, the District of Columbia, and Guam.

Overview of Key Issues

Almost all states have implemented the three CARES Act UI programs and have received emergency administrative funding. According to DOL, as of July 1, 2020, all states, as well as the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, have signed agreements with DOL to implement the three CARES Act UI programs, and almost all were paying benefits under each of the programs.[392]

In addition to the CARES Act, the Families First Coronavirus Response Act (FFCRA) provided up to $1 billion in emergency grant funding to states in fiscal year 2020 for administrative purposes related to the regular UI program, according to DOL. The first half of the funding ($500 million), which was fully disbursed by DOL by April 23, 2020, was available to states that met requirements related to providing UI notifications and helping ensure claimants’ access to the application process. The second half of the funding ($500 million) was available to states that experienced at least a 10 percent increase in quarterly UI claims over the same quarter of the previous calendar year. Additionally, to qualify for the second round of funding, states had to meet certain requirements related to easing UI eligibility requirements, such as waiving work search requirements, among other things. As of July 31, 2020, DOL had disbursed $498 million of the second round of funding.[393]

States have used the FFCRA emergency administrative funds to support claims processing, according to representatives of the National Association of State Workforce Agencies. Additionally, states have used these funds to, for example, hire and train new staff, hire contractors, contract with call centers and consultants, and enhance their IT systems. In addition, some states, such as Massachusetts, New Hampshire, Washington and West Virginia, have deployed National Guard units to help with claims processing or staffing call centers, according to media reports.

Initial regular UI claims remain persistently high. With about 13 million regular UI claims submitted for continuing unemployment during the week ending August 22, 2020, regular UI claims remain at historic levels.[394] While the number of initial claims in the regular UI program has declined somewhat compared to the early weeks of the pandemic in late March and early April, the number of initial claims remains persistently high (see figure below). Overall, initial weekly regular UI claims declined from a peak of over 6.2 million for the week ending April 4, 2020, to 857,148 during the week ending September 5, 2020.[395] Despite this overall decline, the volume of initial claims remains high compared to pre-pandemic numbers. For example, the 857,148 initial regular UI claims for the week ending September 5, 2020, was more than five times the volume of claims submitted during the corresponding week in 2019 (160,342). Additionally, while the initial claims volume has declined nationally, some states have experienced increases. For example, the average weekly initial claims increased between June and July in some states, including Arkansas and Nevada.[396] Overall, states continue to face case processing workloads that can be as high as five to six times pre-pandemic workloads, according to DOL.

Unemployment Insurance Initial Regular Weekly Claims, March through early September 2020, Compared to March through early September 2019

Note: The weekly counts of regular unemployment insurance (UI) initial claims shown in the figure are not seasonally adjusted. Initial claims counts are reported weekly by the Department of Labor (DOL) and are subject to revision. We present non-seasonally adjusted data, a change from our prior reports, in part because DOL changed its methods for seasonally adjusting UI claims counts beginning with the initial claims for the week ending August 29, 2020.

Expiration of the enhanced weekly benefit will likely have adverse effects for workers and the economy. The expiration of the additional $600 weekly UI benefits under FPUC at the end of July 2020 will likely affect unemployed workers and the economy negatively.[397] According to DOL data, regular UI generally replaces up to 50 percent of a person’s income. However, with the $600 enhancement, some UI claimants received more in total UI benefits than they would have earned in their regular wages if they were still employed—while others received less.[398] In either case, individuals receiving enhanced benefits were better positioned to spend at pre-pandemic levels without accumulating debt or using retirement savings than they would have been without the enhanced benefit. According to a recent Census Bureau post, adults in lower-income and younger households who suffered job losses during the COVID-19 pandemic have less confidence than those in other households that they can pay next month’s rent or mortgage on time and will suffer more food insecurity.[399] However, one recent survey showed that—among individuals who had applied for UI benefits—those who had been receiving the benefits had higher consumer confidence and were less anxious about bills, including rent and medical bills.[400]

For low-wage workers in particular, loss of the additional $600 weekly benefit may put them at risk of not being able to afford basic needs. The CARES Act’s provisions providing temporary relief from evictions also expired at the end of July 2020.[401] With regard to nutrition assistance, generally, those who receive UI benefits may not qualify for the Supplemental Nutrition Assistance Program (SNAP), because UI is generally treated as income for purposes of SNAP eligibility, according to the Department of Agriculture, and in some cases, claimants’ regular benefits may make them ineligible for SNAP after the expiration of FPUC.[402] Generally, to be eligible for SNAP, a household’s gross income must not exceed 130 percent of the federal poverty level, and there are also generally net income limits and asset limits. At DOL’s 2019 average weekly UI benefit amount of $367, or $1,468 monthly, a single-person household would exceed the SNAP monthly gross income limit of $1,354.[403] Such households that continue to receive regular UI may have few alternatives for nutrition assistance apart from food banks.[404] According to a coalition of food banks, Feeding America, local partners are anticipating increased demand for their services, although they have also experienced reduced donations as well as a loss of volunteers.

Furthermore, enhanced benefits under FPUC likely limited the effects of labor market disruptions on consumer spending and helped stabilize the economy. For example, according to recent research, CARES Act stimulus payments to low-income households increased consumer spending sharply, but had modest effects on employment in the short run, perhaps because very little of the increased spending flowed to the most affected businesses.[405] These businesses, such as hotels and food services, require physical interaction and employed low-income workers but served high-income clients who reduced spending sharply in mid-March 2020.

Further, according to recent University of Chicago research, since mid-April, consumer spending has rebounded most rapidly for low-income households. The researchers observe that the recovery in low-income workers’ spending in part reflected the fact that enhanced UI benefits represented a larger share of such workers’ income as compared to high-income workers.[406] They also note that declines in income due to phasing out broad stimulus too quickly would result in declines in aggregate demand by low-income workers, which could pose further challenges to re-employment if more businesses in sectors catering to these workers close or scale down due to lower consumer demand.[407] As we have previously reported, research suggests that decreases in UI benefits can have ripple effects for the economy and for employment.[408]

Another UI program, Short-Time Compensation (STC), may offer an opportunity to further support workers. Under STC, which predates the pandemic and is operational in 25 states, participating employers allow workers to work reduced hours while receiving partial pay and partial UI benefits. There is some evidence of increased interest in this program among employers in some states. According to DOL, the number of employers participating in STC increased in 20 states between January and May 2020.[409] For example, Iowa’s STC program has grown from fewer than 10 employers covering 800 workers before the pandemic to approximately 183 employers covering over 8,000 workers as of June 5, 2020, according to the director of the state agency responsible for UI benefits.

The CARES Act provides for federal funding of benefits for existing STC programs through 2020. For states without STC programs, the CARES Act allows them to enact such a program via state law and receive the federal funding. Alternatively, such states can create an STC program via an agreement with DOL, in which case half of the funding is paid by the federal government, with the other half paid by employers.[410] However, according to DOL, no states have opted to do so yet.[411]

Some states seek federal loans to pay regular UI benefits. While initial regular claims have declined compared to the early weeks of the pandemic in March 2020, overall, the number of UI claims remains historically high, putting pressure on states’ capacity to pay benefits. While the CARES Act UI programs are federally funded, regular UI is primarily funded through state and federal taxes on employers. When a state exhausts the funds available for regular UI benefits, it may borrow from the federal government. According to DOL data, even before the pandemic, many states were not taking in enough UI tax revenue to satisfy the solvency standard specified in DOL regulations providing for interest-free loans to states.[412] From January 1, 2020, to August 31, 2020, 13 states and the U.S. Virgin Islands had such loans, totaling about $26 billion.[413]

DOL is continuing to monitor states’ implementation of CARES Act UI programs, provide guidance and technical assistance, and take steps to reinforce program integrity. To support its oversight of states’ implementation of the CARES Act UI programs, DOL has developed a suite of monitoring tools for use by its regional offices that it expected to finalize in August 2020. According to DOL, although the monitoring tools have not yet been implemented, preliminary review of states’ documentation and procedures has identified some issues regarding the PUA program in particular. For example, DOL found that a number of states did not have appropriate monetary determination processes for PUA claimants. According to DOL, the agency is working with the relevant states to address these issues.

DOL continues to issue guidance to support implementation of CARES Act UI programs and help state UI agencies and employers prepare for reopening of workplaces. Specifically, while not directly related to the CARES Act UI programs, the Occupational Safety and Health Administration (OSHA) has issued guidance for workplace protections to prevent the spread of COVID-19. As workplaces reopen, however, some individuals may choose not to return to work, for example, due to health and safety concerns for themselves or family members, or continued child care issues related to school closures. According to DOL, most states have laws that allow claimants to refuse offers of employment for good cause—which may include, but is not limited to, the degree of risk to an individual’s health and safety—and still maintain UI benefits.[414] DOL has encouraged states to ask employers to inform state UI agencies when workers decline suitable work without good cause, that is, for reasons that do not support their continued eligibility for benefits.[415]

Following a recommendation in our June 2020 report, DOL issued guidance on August 12, 2020, addressing potential risks