Morris Manning & Martin, LLP

CARES Act - Potential Healthcare Emergency Relief Package

03.26.2020

Last night, the Senate unanimously approved an emergency relief package to combat the extensive effects of the novel coronavirus (COVID-19). The legislation, titled the Coronavirus Aid, Relief, and Economic Security Act (H.R. 748) (the CARES Act), includes a series of wide-ranging measures designed to address the impacts of COVID-19 on the healthcare system and hospitals – in particular, expanded insurance coverage and reimbursement, additional health system funding, and obligations of providers. These provisions are discussed below.

Expanded Insurance Coverage and Reimbursement 

By legislative mandate, Medicare, Medicaid, and private insurers will cover costs associated with vaccination and treatment of COVID-19 with no cost sharing amounts. When available, a COVID-19 vaccination will have cost sharing waivers similar to that of influenza vaccines, but this will apply only when such a preventive service exists. Additionally, scheduled payment decreases to Medicaid Disproportionate Share Hospitals will be postponed, and access to telehealth services will increase. There will be added flexibility for telehealth services provided by federally qualified health centers and rural health clinics. While the CARES Act addresses telehealth, the changes appear to be similar to those recently made by the Centers for Medicare and Medicaid Services (CMS). However, additional changes may be forthcoming.

Hospitals and providers will see increased Medicare and Medicaid payments via the Inpatient Prospective Payment System in connection with expenses incurred by treating patients diagnosed with the virus. The weighting factor for billing codes related to treatment of COVID-19 under the relevant diagnosis-related group, or DRG, will be increased by 20%. The Secretary of the U.S. Department of Health and Human Services (HHS) will determine which billing codes are eligible for the increased reimbursement and will administer such a program.

Additional Health System Funding

The CARES Act allocates $100 billion for a new program to provide direct aid to healthcare institutions to cover costs related to COVID-19. Recipients of this aid will include hospitals, public entities, nonprofits, and Medicare and Medicaid-enrolled suppliers and institutional providers. Various grant programs are established by the CARES Act to distribute this funding to eligible providers. Details of the grant programs will be provided by the applicable executive agency.

While not directly available to providers, billions of additional dollars are earmarked for federal, state, and local public health agencies to assist in their COVID-19 response efforts. This includes the requisition of personal protective equipment, laboratory testing to detect positive cases, infection control and mitigation, and other public health preparedness and response activities.

The CARES Act also expands eligibility, reimbursement amount, and the recoupment period under the Medicare Accelerated Payment System. Previously the program was only available to certain hospitals with significant cash flow issues, but the expansion will now allow participation by certain pediatric, long-term care, and critical access hospitals. Upon an eligible hospital’s request, CMS can make accelerated payments. Reimbursement amounts will increase from up to 70% to 100% of anticipated COVID-19-related claims, and in the case of critical access hospitals, the payments can be up to 125%. The accelerated reimbursement is available to cover up to a six-month period of anticipated claims. The CARES Act also extends the recoupment period to a maximum of 120 days and allows outstanding balances to exist for up to a year.

Small businesses, which should include healthcare providers with fewer than 500 employees, will be able to receive loans of up to $10 million, from a pool of approximately $350 billion. Various loan programs will soon be available, in addition to the presently available Economic Injury Disaster Loans, which are administered by the Small Business Administration (SBA) and are accessible to businesses that need support during the pandemic. While requirements and availability of the funds will vary by loan program, the general 7(a) small business financial assistance program will receive an infusion of capital that will be available to for-profit and nonprofit businesses with less than 500 employees.  The CARES Act also allows the SBA to expand loan forgiveness options. Eligible recipients can be forgiven for covered loans for costs incurred and payments made for payroll, interest on certain mortgage obligations, payment of certain rent obligations, and utility payments. Forgiveness amounts will be subject to reductions for employee layoffs or wage reductions. More information on SBA loans is available here.

Additional funds are available for development and production of COVID-19 vaccines, therapeutics, and diagnostic tests and equipment. 

Obligations of Providers

Among other items in the CARES Act, providers of diagnostic tests for COVID-19 are required to publicize the cash price for such a test on their websites. Providers who are not compliant will be subject to civil monetary penalties, which may not exceed $300 per day that the violation is occurring. 

Additional obligations for providers and grant recipients are anticipated. Such obligations will be subject to funds received and additional requirements promulgated by the Secretary of HHS as well as other executive agencies.  

 Subject to Change

The CARES Act now heads to the House of Representatives where it is subject to change.  At this time, it is expected that the House will approve the CARES Act as is.  Once passage in the House is secured, the CARES Act will be subject to presidential approval. 

For questions regarding COVID-19-related disclosures of PHI under HIPAA or to see if your state’s laws allow for disclosure, please contact the MMM Healthcare Group.