The CARES Act: Relief for Health Care Providers

The $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law on March 27, 2020, contains significant relief to assist health care providers faced with the double burden of an onslaught of COVID-19 patients and a drop in elective and non-urgent services. This assistance ranges from outright grants, to provisions significantly affecting the Medicare program, to modifications of group plan coverage and payment terms.

Loan opportunities afforded by the CARES Act may be applicable to some health care providers and are covered in "Opportunities for Small Businesses through the Federal Stimulus Bill and Current SBA Loan Program."

Emergency Relief Fund

The CARES Act makes $100 billion available to the Public Health and Social Services Emergency Fund (the “Fund”) to reimburse eligible health care providers for health care-related expenses or lost revenues that are attributable to coronavirus. The Act defines “eligible health care providers” as public entities, Medicare or Medicaid enrolled suppliers and providers, and other for-profit and nonprofit entities specified by the Secretary of HHS that “provide diagnoses, testing, or care for individuals with possible or actual cases of COVID-19.” Funds appropriated under the Act are available for “building or construction of temporary structures, leasing of properties, medical supplies and equipment including personal protective equipment and testing supplies, increased workforce and training, emergency operation centers, retrofitting facilities, and surge capacity.”

Payments from the Fund are to be made “in consideration of the most efficient payment systems practicable to provide emergency payment.” The Act permits pre-payments, prospective payments and retroactive payments. In order to receive reimbursement, an eligible health care provider must submit an application that includes a statement justifying the need of the provider for the payment and submit reports and maintain documentation as determined by HHS; however, HHS has not yet identified how providers can apply for funds or what documentation providers will need to submit in order to obtain reimbursement to date. An HHS spokesperson said “It is premature to speak in detail about how these funds will be distributed. Needless to say, the administration will seek to distribute the funds in a way that is fast, fair, simple and transparent.” A number of comments and suggestions regarding distribution of the funds are being reported:

• The Trump administration plans to use the funds to pay hospitals that treat uninsured people with COVID-19 as long as the hospital agrees not to bill those patients for the difference between the money the hospital receives and the costs of treatment, a practice known as balanced billing. Hospitals would be reimbursed at current Medicare rates.
• According to Senate Appropriations Health Subcommittee Chair Roy Blunt (R-Mo.), the Trump administration is considering a blanket distribution of a significant portion of the funds to hospitals around the country within the next three weeks.
• The American Hospital Association urged HHS to directly and immediately distribute to every hospital across the country $25,000 per hospital bed with an additional $5,000 per hospital bed for hospitals in a coronavirus “hot spot.” AHA estimated that funding request would cost $23 billion alone.

While no one knows the exact process that HHS will adopt to disburse money from the Fund, we believe hospitals should consider the following:

1. The Act states that HHS will consider applications for funds on a rolling basis. However, the Act does not state what happens if the dollar value of applications exceeds the amount of money available in the Funds. Prudent providers will start documenting their COVID-19 expenses now so that they can submit their applications and supporting documentation as soon as possible after HHS provides final guidance on the application process and required documentation.
2. As suggested by Senator Blunt’s comments and AHA’s letter to HHS, there is a possibility that HHS is going to come up with a formula to allocate an initial distribution of funds to hospitals across the country. While AHA’s dollar per hospital bed proposal to HHS does this, HHS could adopt an alternative allocation formula on a hospital’s number of confirmed COVID-19 patient days since this would allow HHS to distribute the most funds to the hospitals that are treating the most COVID-19 patients on an ongoing basis. As such, we would recommend that providers be quickly prepared to document the number of COVID-19 inpatients and outpatients treated.
3. The Act does not allow money from the Fund to be used to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse in the future. Providers should bear in mind that any sort of blanket distribution of funds by HHS may require a subsequent reconciliation to account for reimbursements that hospitals receive in the future, so some of the money received may need to be paid back at some point in time.

Changes in the Medicare Program

In addition to the $100 million in emergency relief, the CARES Act makes a number of significant changes to the Medicare program that benefit health care providers.

Temporary Suspension of Medicare Sequestration

The CARES Act temporarily suspends the current Medicare sequester for a period beginning May 1, 2020, through December 31, 2020, for all programs under Title XVIII of the Social Security Act. The Medicare sequester currently reduces fee-for-service claim payments made by Medicare to health care providers by 2% and decreases premium payments made to Medicare Advantage Organizations (MAOs) under Parts C and D by the same amount. Thus, the suspension of the sequester will increase payments to health care providers and hospitals, as well increase premium payments to MAOs, through the remainder of the year, and is intended to provide some relief during the COVID-19 pandemic. However, it is important to note that the CARES Act resumes the sequester as of January 1, 2021, and, due to this partial year suspension, has also extended it by one year through 2030 in an effort to avoid any negative effects the suspension may have on Medicare’s long-term financial future. (Sec. 3709) With respect to providers’ contracts with MAOs that subject the providers to reimbursement reductions due to the MAO sequester, providers should review those contract terms to determine if the reductions made by the MAOs should likewise be suspended for the same period.

20% Medicare Add-on Payment for Inpatient Treatment of COVID-19

HHS is increasing reimbursement by 20% for Medicare patients diagnosed with COVID-19 who are discharged during the declared emergency period. COVID-19 discharges subject to adjustment will be identified through the use of diagnosis codes, condition codes and similar means. (Sec. 3710). The adjustment is a 20% increase to the weighting factor that would otherwise apply to the diagnosis-related group for discharge. Such adjustments will not be taken into account for budget neutrality purposes.

Expansion of the Medicare Hospital Accelerated Payment Program

Under the CARES Act, the Centers for Medicare & Medicaid Services (CMS) has expanded the Accelerate and Advance Payment Program “to a broader group of Medicare Part A and Part B suppliers.” CMS stated that the expansion was done “in order to increase cash flow to providers of services and suppliers impacted by the 2019 Novel Coronavirus pandemic.” Overall, an “accelerated/advance payment is a payment intended to provide necessary funds when there is a disruption in claims submission and/or claims processing.” Specifically, under the CARES Act, hospitals participating in the program may request that the Secretary of HHS do the following:

1. Make accelerated payments on a periodic or lump sum basis.
2. Increase the amount of payment that would otherwise be made to hospitals under the program up to 100% (or, in the case of critical access hospitals, up to 125%).
3. Extend the period that accelerated payments cover to up to a six-month period.
4. Provide up to 120 days before claims are offset to recoup the accelerated payment.
5. Allow not less than 12 months from the date of the first accelerated payment before requiring that the outstanding balance be paid in full.

The CARES Act also expands participation in the Accelerate and Advance Payment Program to new hospital types including hospitals whose inpatients are predominantly minors, cancer hospitals and critical access hospitals. CMS has released a Fact Sheet on the Accelerated Payment Program that covers eligibility, processes and a step-by-step guide on how to request payments.

Increased Access to Telehealth in Medicare

Each iteration of legislation addressing the COVID-19 pandemic has included at least one provision to expand access to telehealth — the remote provision of health care services — during this emergency. The CARES Act includes a number of provisions for this purpose, including increased flexibilities in the Medicare program as well as funding streams from the Department of Health and Human Services (HHS), the Federal Communications Commission (FCC), and the Department of Veterans Affairs (VA).

The first bill, which was signed into law on March 6, gave the Secretary of HHS the authority to waive 1834(m) geographic and site restrictions on Medicare telehealth visits. That bill imposed a new limitation on those telehealth visits, restricting them only to patients for which the provider had billed Medicare in the previous three years. That not only created administrative barriers to ensure the prior three-year billing before practicing telehealth, but unnecessarily limited who can receive the services. Therefore, in the CARES Act, Congress removed that new restriction. Now, the Secretary of HHS has broad authority to waive restrictions and ensure access to telehealth. CMS has already taken advantage of this authority.

CARES also expands access to Medicare telehealth by allowing Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs) to serve as a distant site, eliminating the face-to-face requirements prior to home dialysis and hospice care, and encouraging the use of telehealth in home health settings.

Commercial Payor Coverage for COVID-19

In addition to the Medicare-related provisions described above, the CARES Act contains several new benefit coverage requirements applicable to group health plans and health insurance issuers (collectively referred to here as “Payors”) that will aid health care providers. These new requirements do not apply to short-term, limited duration coverage, excepted benefits or other types of limited benefit plans.

Testing Coverage and Cash Price Transparency

Section 3201 of The CARES Act expands coverage for COVID-19 diagnostic testing. Payors must now cover items and services provided during an individual’s visit for such testing with no member cost-sharing (e.g., deductibles, copayments and coinsurance). The expansion builds off of a similar provision enacted in The Families First Coronavirus Response Act (FFCRA), which only applied to FDA-approved, authorized or cleared tests. Section 3201 of The CARES Act expands the coverage in the FFCRA by requiring Payors to provide coverage for COVID-19 testing developed in and authorized by a state that has notified HHS of its intention to review diagnostic tests, and any other test approved by HHS through its guidance. In addition, the mandatory coverage requires Payors to cover services and items provided during a provider visit — including an in-person or telehealth visit to a doctor’s office, an urgent care center, or an emergency room — that results in coronavirus testing or screening, with no cost sharing obligation on the insured. The elimination of cost-sharing applies to both in-network and out-of-network diagnostic testing. The new requirement took effect March 18 and will last for the duration of the HHS-declared public health emergency.

Regarding reimbursement to providers of the COVID-19 diagnostic tests, section 3202 of the CARES Act requires Payors to reimburse the testing provider at whatever negotiated rate the Payor and provider might already have in place. If they do not have a negotiated rate in place, the parties may agree to one. Absent an agreed-upon rate, the rate would be whatever the provider designates as its “cash price” for the test, so long as it is listed on a public internet website throughout the declaration of the public health emergency. While there is no specific guidance as to what a ‘public internet site’ means, presumably the provider’s usual website would meet this requirement. There does not appear to be any limit on what the provider can charge, but failure to post the cash price on the provider’s website can result in penalties of $300/day or more.

Vaccines and Preventive Services

While a COVID-19 vaccine may not be available for some time, section 3203 of the CARES Act requires Payors to cover “qualifying coronavirus preventive services.” Qualifying coronavirus preventive services are items, services or immunizations that are intended to prevent COVID-19 and are recommended by the United States Preventive Services Task Force (the “Task Force”) or the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention (CDC). The qualifying coronavirus preventive service must be covered within 15 business days after the service is recommended by the Task Force or CDC, and the service must be covered without cost sharing when provided in-network. As for reimbursement to a provider for any COVID-19 vaccine or preventive services, there are no parameters outlined in the law, though Payors and in-network providers are expected to negotiate a rate according to existing contracts if there is no negotiated rate in place.

Expanded Options for Telehealth for Health Savings Account (HSA)-Qualified Plans

Section 3701 of the CARES Act incentivizes the use of telehealth to keep individuals away from health care settings strained by the outbreak. It allows for coverage of “telehealth and other remote care services” without a deductible, or a deductible lower than the standard deductible. This provision applies regardless of whether the telehealth visit is COVID-19 related, and implementing such a telehealth coverage incentive will not cause a plan to fail to be treated as a high-deductible health plan (HDHP) for purposes of determining HSA eligibility. In addition, sponsors can offer telehealth coverage (much in the way they can offer vision, dental or long-term care coverage today) to individuals enrolled in HSA-qualified high-deductible health plans without jeopardizing HSA eligibility. These telehealth provisions are effective immediately and will expire for plan years beginning on or before December 31, 2021.