By: Alaina N. Crislip, Lindsay D. Petrosky, and James W. Thomas
The Coronavirus Aid, Relief and Economic Security (CARES) Act authorized $2.2 trillion in financial assistance to help individuals and business through the economic hardships caused by the COVID-19 pandemic. This economic relief includes critical financial resources for the health care system.
Title III of the CARES Act contains various provisions intended to support America’s health care system in responding to the COVID-19 pandemic. Some important economic relief opportunities contained within Title III are identified below.
Jackson Kelly is planning future briefings on additional topics included in Title III and not discussed in this briefing. As more information is made available about these opportunities, Jackson Kelly will issue additional briefings.
Direct Financial Assistance Opportunities
- Public Health and Social Services Emergency Fund – The CARES Act includes $100 Billion in new funding to reimburse “eligible health care providers” for “health care related expenses or lost revenues that are attributable to coronavirus.” It is anticipated that this would include things such as canceled procedures, facility surge expenses, and added supply or equipment costs (e.g., PPE, ventilators). Specific details about how to access these funds have not been made available to date, though the legislation calls for payments to be made on a rolling basis. The American Hospital Association has offered guidance to HHS on how it believes the funds should be distributed. We will provide an update when guidance is issued on how to apply for the funding.
- HRSA Grant Programs for Rural Entities – The CARES Act allocated additional funding to be used for the Health Resources and Services Administration (HRSA) grant programs for rural health care services outreach, rural health network development, and provider quality improvement to strengthen rural community health. This is in addition to the $100 Million awarded to 1,381 health centers through HRSA under the Corona Virus Preparedness and Response Supplemental Appropriates Act of 2020, to be used to address screening and testing needs, to acquire medical supplies, and boost telehealth capacity in response.
- PPP Forgivable Loans – Certain health care providers may qualify for financial benefits under the CARES Act including the Small Business Administration (SBA) Loans via the Paycheck Protection Program and Payroll Tax Delay. Additional details about this relief may be accessed through the detailed summaries and outlines previously prepared by our team. The application portal for receipt of SBA Loan applications opened on April 3 and loans will be made on a first come-first served basis. Eligible loan amounts will be based upon 250% of the employer’s monthly payroll costs for employees and will carry a two-year term at 1% interest. Jackson Kelly will continue to provide you with additional guidance as it becomes available from the Federal government.
- FTC Telehealth Grants – The Federal Trade Commission (“FTC”) announced on April 2 that it was making available approximately $200 Million in funding under the CARES Act to health care providers wishing to maximize their connectivity for telehealth in response to the COVID-19 epidemic. Applications for funding from the FTC are now being accepted. More information about these grants may be found here.
- Other Business Loans – Perhaps the largest tranche of funding under the CARES Act is the $454 Billion appropriation that will be overseen by the Department of Treasury. Few details are yet available about the process for accessing these funds, but it is believed that hospitals and other health care providers with 500 to 10,000 employees may be eligible to participate. One known aspect of this program will be the variety of limits that will be placed upon the compensation of highly-paid employees of recipients.
Medicare and Medicaid Payment Improvements and Adjustments
- Temporary Elimination of Medicare Sequestration – The Medicare sequestration reduction will be suspended from May 1 through December 31, 2020. This applies for all Medicare-enrolled providers currently accepting Medicare payments, and will have a big impact for Critical Access Hospitals (CAHs) who have been receiving 99% rather than 101% of allowable costs while sequestration has been in effect. To offset the expense of the 2020 cancellation, the CARES Act extends the Medicare sequestration required under Section 251A(6) of the balanced Budget and Emergency Deficit Control Act from fiscal year 2029 to fiscal year 2030.
- Inpatient Prospective Payment System (PPS) Add-on Payment – During the emergency period, the CARES Act provides for a 20% add-on to the Diagnosis Related Group (DRG) rate for patients with COVID-19. This add-on will apply to patients treated at rural and urban inpatient PPS hospitals to address increased costs associated with the care for these patients. Hospitals must identify COVID-19 discharges by using appropriate diagnosis or condition codes.
- Expanded Options for Accelerated Payments – Eligibility for Medicare accelerated payments has been expanded to assist hospitals experiencing financial difficulty due to delays in receiving payment for Medicare services. The Medicare accelerated payment program has been expanded to:
- Increase the prepayment amount from 70% to 100% (125% for CAHs) of expected Medicare payments;
- Increase length of time accelerated payments may cover from three (3) months to six (60 months;
- Delay the recoupment of any overpayments from 90 to 120 days;
- Extend the due date for any outstanding balances from 90 days to one (1) year; and
- Include children’s hospitals, cancer hospitals, and critical access hospitals during the COVID-19 emergency period.
(Section 3719) CMS issued a fact sheet on how to request accelerated payments.
- Medicaid Disproportionate Share Hospital (DSH) Payment Cuts – The CARES Act delays scheduled reductions in DSH payments by eliminating the $4 billion in cuts previously scheduled for fiscal year 2020 and reducing the cut for fiscal year 2021 from $8 Billion to $4 Billion.
- Increased State Access to Enhanced Medicaid FMAP – The CARES Act expanded availability of increased Medicaid payments originally established under the Families First Coronavirus Response Act of 2020 to ensure that states are able to receive 6.2% Federal Medicaid Assistance Percentage (FMPA) increase.
Health Plan Coverage for COVID-19 Services
- Diagnostic Testing – Health plans are required to cover all diagnostic tests for SARS-CoV-2 or COVID-19 without cost sharing (including deductibles, copayments, or coinsurance) or prior authorization; provided that (i) the test has been approved or otherwise authorized by the FDA; (ii) the test developer intends or has requested FDA authorization for emergency use; (iii) a state has authorized the test and notified HHS; or (iv) HHS has otherwise deemed the test appropriate. Health plans/insurers must reimburse at either the negotiated rate set forth in its provider contract OR if there is no negotiated rate with the provider for such a service, at the price listed by the provider, which must be included on the test provider’s public website.
- Preventive Services – Health plans are also required to cover qualifying COVID-19 preventive services, which include items, services, or immunizations recommended by the US Preventive Services Task Force or CDC’s Advisory Committee on Immunization Practices.
Tax Relief
- Payroll Tax Deferment – The CARES Act allows employers to defer payment of their share of Social Security taxes for their employees from April through December 2020. This benefit is available to all health care providers (for-profit, non-profit, governmental).
As noted, we will continue to monitor economic relief opportunities and will have additional information for hospitals and other health care entities as such information becomes available.