CARES Act’s Impact on Healthcare: Financial Relief for Providers, Expanded Access to COVID-19 Care, Increased Resources and More

March 28, 2020
Firm Publication

Financial Relief for Healthcare Providers

The CARES Act provides financial relief to healthcare providers that are being hit hard by the COVID-19 public health emergency. Perhaps most notably, the CARES Act establishes a $100 billion Public Health and Social Services Emergency Fund (PHSSEF) through which the U.S. Department of Health and Human Services (HHS) may reimburse “eligible healthcare providers” – which include public entities, Medicare- and/or Medicaid-enrolled providers and suppliers, and others (as determined by HHS) that diagnose, test, or care for individuals with possible or actual cases of COVID-19 – for non-reimbursable expenses related to COVID-19.

All non-reimbursable expenses and lost revenues attributable to COVID-19 may qualify for funding. Examples of expenses for which funding may be awarded include those related to the following:

  • Construction of temporary structures.
  • Leasing of properties.
  • Medical supplies and equipment (including personal protective equipment and testing supplies).
  • Increased workforce and trainings.
  • Emergency operation centers.
  • Retrofitting facilities.
  • Surge capacity.

Despite this broad range of potential qualifying expenses, expenses that are reimbursed or obligated to be reimbursed by insurance or other mechanisms do not qualify for funding.

The CARES Act provides HHS with significant flexibility in determining how PHSSEF funds may be allocated. Eligible healthcare providers that wish to receive such funding must submit an application to HHS that includes a statement justifying need for the payment. The CARES Act indicates that applications will be reviewed – and funds will be awarded – on a rolling basis, but does not otherwise provide details regarding application deadlines or procedures. Funding recipients will be required to submit reports and maintain documentation to demonstrate compliance with conditions imposed for PHSSEF fund payments. We anticipate that HHS will issue guidance on the application process imminently, and we are closely tracking updates in this area.

In addition to the financial relief outlined above, the CARES Act also provides financial assistance by way of payment adjustments and expansion of funding to providers. The CARES Act provides relief from scheduled reductions in Medicare payments, both of a specific nature (e.g., delaying Protecting Access to Medicare Act (PAMA) reporting requirements for clinical laboratories which typically reduce Medicare laboratory payment rates and delaying scheduled reductions in Medicaid disproportionate share hospital payments through November 30, 2020) and a general nature (e.g., from May 1 through December 31, 2020, temporarily lifting the Medicare sequester, which would have reduced payments to providers by two percent). In addition, the CARES Act increases payments or funding to certain types of providers and suppliers through:

  • Increased payments for the work component of physician fees in areas where labor cost is determined to be lower than the national average through December 1, 2020.
  • Increased payments for inpatient hospital services for treatment of COVID-19 patients by 20 percent.
  • Expanding the accelerated payments program for hospitals to cover children’s hospitals, critical access hospitals and cancer centers. Under the program, qualified facilities are able to request up to a six month advanced lump sum or periodic payments and would not be required to start paying down the loan for four months, and would also have at least 12 months to complete repayment without a requirement to pay interest.
  • Allocation of $1.32 billion in funding to community health centers that serve underserved and other vulnerable patient populations for fiscal year 2020, for the detection, prevention, diagnosis and treatment of COVID-19.
  • Extending federal funding for community health centers and health professionals comprising the National Health Service Corps, providing primary care services to medically underserved populations, through November 30, 2020.

Further, the CARES Act allocates billions of dollars in other funding to support research, treatment, surveillance and various emergency-related activities. For example, the CARES Act provides funding for emergency preparedness activities as follows:

  • At least $250 million for grants and cooperative agreements to expand the Hospital Preparedness Program’s support of emergency preparedness.
  • At least $3.5 billion for the Biomedical Advanced Research and Development Authority to advance the manufacture, production, and purchase of vaccines, therapeutics, diagnostics, and active pharmaceutical agreements.
  • Support for the Centers for Disease Control and Prevention in the amount of $4.3 billion, of which $1.5 billion is allocated for grants to or cooperative agreements with – among others – states, localities, and tribes, to carry out surveillance, infection control and mitigation, and other preparedness and response activities.
    Support in the amount of $425 million, available through September 30, 2021, for the Substance Abuse and Mental Health Services Administration to respond to COVID-19, including through grants targeted at increasing access to mental healthcare services and substance use disorders.
  • Expansion of the availability of grant funding for telehealth network projects and telehealth resource center initiatives – which are aimed at promoting and improving the use of telehealth technologies for underserved populations – by making $29 million available per year through the end of fiscal year 2025. Entities seeking grant funds must, in consultation with the appropriate state office of rural health or other state entity, submit an application that, among other things, describes how the project will meet the needs of rural or other populations to be served, show local support for the project, and demonstrate a plan for sustaining the project after Federal support has ended.

Expanded Access to COVID-19 Care

The CARES Act also alleviates certain COVID-19 related healthcare expenses for individuals. The Families First Coronavirus Response Act of 2020 waived cost-sharing arrangements for certain beneficiaries of federal healthcare programs with respect to COVID-19 testing and related services. The CARES Act goes a step further, expressly providing that any deductible or cost-sharing arrangement applicable to Medicare Part B and Medicare Advantage enrollees will not apply to the COVID-19 vaccine and its administration (once a vaccine has been developed and appropriately licensed by the federal government) and further refining private health insurance plans’ obligations as it relates to the novel coronavirus. For more details, refer to the Benefits and Obligations of Employers and Employees section of our CARES Act web page.

With respect to COVID-19 diagnostic testing, health insurance plans will pay the cash price as listed by the provider on their public internet website unless another price is negotiated. Each provider of a COVID-19 diagnostic test must make public the cash price for their COVID-19 test on a public website. The Secretary of HHS may impose civil monetary penalties of $300 per day on any provider that does not publicize their price on their website and has not completed a corrective action plan to comply with the requirements.

Increased Resources, Less Red Tape for Healthcare Providers

The CARES Act also aims to provide resources to healthcare providers to enable treating patients as safely and efficiently as possible. Some of the key ways the CARES Act works to increase access to resources and ease burdens for healthcare providers are as follows:

  • Increased Access to Medical Supplies and Equipment – The CARES Act takes steps to address supply shortages and provide greater access to much needed medical equipment, supplies, and medications. The CARES Act works to increase access to vital supplies and equipment by –
    • Requiring that Medicare Part D Prescription Drug Plans, with certain exceptions, provide up to a 90-day supply of a prescription medication during the emergency period.
    • Expanding the Strategic National Stockpile to include personal protective equipment, ancillary medical supplies and other applicable supplies required for the administration of drugs, vaccines and other biological products, medical devices and diagnostic tests in the stockpile, and allocating $16 billion toward that effort.
      Mitigating emergency drug shortages by requiring notification related to the discontinuance or interruption in the production of life-saving drugs and by adding reporting requirements for active pharmaceutical ingredients of certain drugs.
    • Preventing medical device shortages by requiring notification regarding the discontinuance or interruption in the manufacture of a device that is likely to lead to meaningful disruption in the supply of that device.
    • Delaying scheduled reductions in Medicare payments for durable medical equipment for the duration of the emergency period, in hopes to provide greater access to such equipment.

Increased Access to Telehealth Services – Building upon CMS’s existing 1135 telehealth waivers, and OIG’s policy regarding reductions or waivers of patient cost-sharing for telehealth services, the CARES Act provides flexibilities related to the provision of telehealth services during the emergency period. In addition to the funding for telehealth discussed above, these include, for example—

  • Allowing practitioners to provide telehealth services to new patients. The CARES Act eliminates the requirement set forth in the Coronavirus Preparedness and Response Supplemental Appropriations Act (H.R. 6074) that practitioners (or others in their group) must have treated a patient in the past three years in order to permit waiver of the “originating site” requirements during the public health emergency. This effectively allows practitioners to receive reimbursement for telehealth services that are furnished to new and established patients alike for the duration of the COVID-19 public health emergency.
  • Offering provider-specific flexibilities. The CARES Act provides additional relief from in-person requirements to facilitate post-acute care during the emergency period by (1) allowing qualified providers to use telehealth technologies in order to fulfill the hospice face-to-face recertification requirement, and (2) eliminating a requirement that a nephrologist conduct some of the required periodic evaluations of a patient on home dialysis via a face-to-face encounter. In addition, the CARES Act requires that HHS issue clarifying guidance encouraging the use of telecommunications systems, including remote patient monitoring, to furnish home health services.
  • Enhancing telehealth services for Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs). For the duration of the emergency period only, the CARES Act allows FQHCs and RHCs to serve as distant sites to provide telehealth services to patients in their homes and other eligible locations. FQHCs and RHCs will be reimbursed at a rate that is similar to payment for comparable telehealth services under the Medicare Physician Fee Schedule.

Relaxed standards for Post-Acute Care and Alternative Care Settings – The home health industry received a big win in the CARES Act related to its long desired expansion of practitioners beyond physicians who can certify patients for home health services. The CARES Act permanently changes current law to allow for mid-level providers (i.e., nurse practitioners, clinical nurse specialists, and physician assistants) to certify Medicare and Medicaid patients for home health services.

Moreover, in addition to the flexibility of hospice and dialysis facilities to utilize telehealth as discussed above, the CARES Act took other steps to enable utilization of and continuity of care in post-acute care settings even if typical standards are unachievable during the emergency period. For example:

  • Inpatient Rehabilitation Facilities (IRF). Ensuring Medicare coverage for inpatient rehabilitation services furnished by IRF, notwithstanding that an IRF patient may not be able to participate in the 15-hour per week therapy programs normally required as a condition to admission.
  • Long Term Care Hospitals (LTCH). Temporarily suspending some of the requirements for classifying as a LTCH in order to allow LTCH’s to ramp up treatment of COVID-19 related cases without fear of losing such classification.
  • Money Follows the Person Rebalancing Demonstration (MFP) Program & Other Federal Programs. Extending the duration of federal funding for certain federally-funded programs, including the MFP Program, through November 30, 2020. The MFP Program, which had been set to expire on May 22, 2020, encourages states to use Medicaid funds to transition Medicaid patients who have been residing in certain inpatient facilities, including hospitals, for 90 days or more to home health, personal care and other home-based services.

Limitation on Liability for Volunteer Healthcare Professionals – The CARES Act limits liability for healthcare professionals, under federal and state law, who provide volunteer medical assistance during the COVID-19 public health emergency provided that certain conditions are met. Namely, in order for the limitation to apply, the relevant act or omission must, among other things, occur in the course of providing healthcare services that (1) are within the scope of the volunteer’s license, registration, or certification; and (2) do not exceed their scope of practice. In addition, liability protection does not apply in the context of (1) willful or criminal misconduct, gross negligence, reckless misconduct, or a conscious flagrant indifference to the rights or safety of the individual harmed; or (2) services provided while under the influence of alcohol or an intoxicating drug. These provisions preempt any inconsistent state or local laws, unless such other laws provide greater protection from liability.

Changes to Confidentiality and Privacy Laws – Included in the CARES Act are provisions that significantly and permanently amend the statute governing the Confidentiality of Substance Use Disorder Patient Records, as well as direct HHS to implement amended regulations under 42 CFR Part 2. These changes permit covered entities and business associates that are subject to the Part 2 Regulations to have more flexibility in relying on patient consent for future permitted uses and disclosures of substance use disorder patient records; a more detailed analysis of these changes is forthcoming.

The CARES Act also directs HHS to issue guidance on permitted disclosures of Protected Health Information relevant to and in light of the COVID-19 public health emergency. Such guidance must be issued within 180 days after the enactment of the CARES Act.

We will continue to monitor developments and share updates related to the CARES Act and its impact on healthcare. If you have questions related to this topic, please contact one of the authors of this alert.