The Cares Act: What’s In It For Health Care Providers?

The $2 trillion Coronavirus Aid, Relief and Economic Security (“CARES”) Act was unanimously approved by the Senate on March 25, and by the House on March 27, 2020. President Trump signed the Act into law soon thereafter.

The third federal stimulus package adopted in response to the COVID-19 pandemic, the CARES Act is said to include something for everyone, including individuals, families, the unemployed, small businesses, large corporations, affected industries, students, education, state and local governments, public health, health care providers, hospitals, and those in the federal safety net.

Baird Holm will periodically post summaries of the principal provisions of the CARES Act, covering many of these areas. These additional articles may be found at the Baird Holm COVID-19 Information Hub.

This article will address the principal funding programs under the $2 trillion CARES Act most likely to affect health care providers. These funding programs include the following:

CHC Monies: The $1.32B set aside for community health centers was appropriated as supplemental awards for the detection of SARS-CoV-2, and for the prevention, diagnosis and treatment of COVID-19. See Section 3211.

Protection from Sequestration: Medicare funding is protected from sequestration by later legislation, during the period from May 1, 2020 through December 31, 2020. However, Direct Spending Reductions currently scheduled through 2029 have been extended to 2030. See Section 3709. 

DRG Add-on for COVID-19 Diagnoses: During the national health emergency, PPS hospitals will enjoy a COVID-19 “add-on.” For each patient discharged with a diagnosis of COVID-19, the weighting factor for the applicable diagnosis-related group (“DRG”) will be increased by 20%. See Section 3710. 

Postponed DSH Reductions: Previously scheduled reduction of Medicare payments under the disproportionate share hospital (“DSH”) program will be postponed by six months. See Section 3813. 

Accelerated Payment Program for Hospitals Expanded: During the public health emergency, the Medicare Hospital Accelerated Payment Program will be expanded to include critical access hospitals, pediatric hospitals, and cancer research hospitals. Under this program, and upon hospital request, the Secretary may accelerate payments on the basis of a lump-sum payment or periodic payments, increase payments to 100% (and in the case of critical access hospitals to 125%), and/or extend the period of accelerated payments for up to six months. Upon hospital request, the Secretary is required to allow up to 120 days prior to offset of any overpayment resulting from the accelerated payments and allow not less than 12 months from the date of the first accelerated payment before the total overpayment is recouped. See Section 3719.

Grant Funding for Lost Revenue and Expenses: Finally, $100B will be made available, until expended, as the “Public Health and Social Services Emergency Fund” to prevent, prepare for and respond to coronavirus, domestically or internationally, for necessary expenses to reimburse, through grants or other mechanisms, eligible health care providers for health care related expenses or lost revenues attributable to coronavirus. The funds may not be used to reimburse expenses that are reimbursed, or will be reimbursed, by another source of payment. Eligible health care providers include public entities, Medicare and Medicaid enrolled suppliers and providers, and DHHS-designated for-profit and nonprofit organizations that provide testing, diagnosis or care for individuals with possible or actual cases of COVID-19. The funds are to be made available for reimbursement for the building or construction of temporary structures, leasing of space, medical supplies and equipment including personal protective equipment and testing supplies, increased workforce and training, emergency operation centers, retrofitting facilities, and surge capacity. See Division B.

Baird Holm LLP will continue to review relevant sections of the CARES Act and related guidance from federal agencies, including, without limitation, provisions impacting substance-use disorder records under Part 2, telehealth, the application process for public health funding, limitation on liability for volunteer health care providers etc., and publish articles on the COVID-19 Information Hub linked here.