CARES Act for Heath Care Providers

On March 27, 2020, the CARES Act was signed into law, providing sweeping fiscal stimulus, financial relief, and regulatory relaxation to industries across the United States, including special focus on the health care sector as it combats the spread of COVID-19. This article provides an overview of some of the CARES Act’s major federal health care program sections.

Discussion of Certain Key Provisions of the CARES Act for Health Care Providers

  • $100 BILLION HEALTH CARE EMERGENCY FUND. The CARES Act appropriates $100 billion for the Public Health and Social Services Emergency Fund for the purpose of reimbursing providers for expenses and lost revenue attributable to COVID-19:
  • Detailed criteria and methodologies for distribution of the funds should be published by the U.S. Department of Health and Human Services in the coming days.
  • Funds may be used for building or construction of temporary structures, property leases, medical supplies and equipment, increased workforce and training, emergency operations centers, facility retrofits, or surge capacity, among other purposes.
  • Eligible providers should include Medicare and Medicaid-enrolled providers and suppliers, as well as other entities (specified by HHS) that provide health care services to COVID-19 patients.
  • Funds may not be used to reimburse providers for expenses or losses that have been reimbursed from other sources or that are required to be reimbursed by other sources.
  • ACCELERATED MEDICARE REIMBURSEMENT. As discussed above, certain providers facing financial difficulties may be eligible for accelerated or advance reimbursement for Medicare services:
  • 100% of expected Medicare payments may be accelerated (instead of 70%).
  • 6 months of payments may be accelerated (instead of 3 months).
  • Recoupments begin 120 days after receipt, via the applicable MAC withholding payment on claims up to the amount of the accelerated payment.
  • MEDICARE SEQUESTRATION RELIEF. The CARES Act eliminates the automatic Medicare 2% sequestration imposed by the Budget Control Act of 2011:
  • Effective May 1, 2020 through December 31, 2020 (it is not clear if the dates apply to date of service or date of claim submission).
  • To pay for the elimination, sequestration is extended through the year 2030.
  • Medicare Advantage plans should receive a 2% payment increase, and participating providers should review contract terms to understand the impact on their reimbursement.
  • EXPANDED MEDICARE TELEHEALTH COVERAGE. The CARES Act expands the use of telehealth by relaxing some regulatory restrictions and providing funding opportunities to providers:
  • Telehealth costs are excluded from FQHC PPS calculations and RHC AIR calculation.
  • Coverage is allowed for telehealth services to new patients.
  • Easing requirement that a provider must physically see patient within last three prior years of telehealth visit has been eased.
  • Requirements for real-time video technology, so that coverage may be permitted for phone communication with patients.
  • MEDICARE COVID-19 DRG ADD-ON. For any discharges of individuals with COVID-19 during the national emergency, reimbursement may be increased by an additional 20% to eligible providers:
  • COVID-19 patients may be identified through diagnosis codes, condition codes, or other means.
  • Additional reimbursements should provide some additional relief to providers for treatment of COVID-19 patients, whose care tends to be more complex and exerts a higher demand on resources.

If you have any questions or concerns about how the CARES Act might apply to your business, please contact Heather Skelton, Ethan Dunn, or another member of Gardner Skelton’s health care and business teams.