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CARES Act: Guidance for Hospitals and Health Care Providers

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By: Stephen Zaharias, William Reddington, Pierre Chabot, and Kathleen Peahl

April 6, 2020

This is the fifth installment in Wadleigh, Starr & Peters’ whitepaper series on the  “Coronavirus Aid, Relief, and Economic Security Act,” or “CARES Act,” the 880-page legislation recently signed into law that provides emergency financial support to individuals and businesses across the country. This whitepaper will focus on the financial assistance and opportunities the CARES Act offers for hospitals and health care providers.

This publication is a summary of key portions of the CARES Act as it relates to hospitals and health care providers; it does not include all of the details and specifics found in the many hundreds of pages of legislative text, or seek to predict the contents of the significant regulatory guidance that is soon to come from various agencies. If you have any specific questions, you should consult with counsel. Of course, the attorneys at Wadleigh, Starr & Peters are available to help you navigate, and take advantage of the assistance offered through, the CARES Act. 

Public Health and Social Services Emergency Fund

The CARES Act provides $100 billion to the Public Health and Social Services Emergency Fund, which is intended to reimburse eligible health care providers for health care related expenses and lost revenue attributable to the coronavirus that has not already been reimbursed from other payment sources.[1]

Eligible health care providers include public entities, Medicare or Medicaid enrolled suppliers and providers, and for-profit and nonprofit entities, as determined by the Secretary of Health and Human Services.[2] To qualify, an eligible health care provider must be located within the United States and provide diagnoses, testing, and/or care for individuals with possible or actual cases of COVID-19.[3] Eligible hospitals and health care providers must apply to the Secretary, who will review applications on a rolling basis and then distribute payments.[4] The application must include, among other pieces of information, a statement justifying the need of the provider for the payment.[5] The funds will remain available until expended.[6]

Funds eligible for reimbursement include those for building temporary structures, leasing properties, purchasing medical supplies and equipment (including personal protective equipment and testing supplies), increasing workforce and trainings, costs pertaining to emergency operation centers, retrofitting facilities, and more.[7] Although the CARES Act does not provide many specifics, a recipient of the funds must maintain certain documentation and submit reports to show that it is spending the money in accordance with the Act.[8] The Secretary will provide guidance on the form of the reports, when they are due, and the content that needs to be provided.[9]

The CARES Act provides little detail as to how this money is to be distributed to eligible health care providers; the Act merely states that funds are to be distributed through “grants or other mechanisms”[10] and that payments shall be in the form of prepayments, prospective payments or retrospective payments.[11] However, the Act does state that payments shall be made in consideration of the most efficient payment system practicable to provide emergency payments.[12] The Act further delegates much discretion to the Secretary under this section, and so additional guidance will likely be forthcoming.[13]

At bottom, this Fund is intended to provide a large general source of money that hospitals and health care providers may tap into on an emergency basis so as to quickly and efficiently combat the unprecedented health crisis caused by the coronavirus. 

Medicaid and Medicare Modifications

The CARES Act also modifies Medicare and Medicaid in several ways, which should benefit hospitals, health care providers, and patients.

For example, the CARES Act provides for a temporary suspension of the 2% Medicare sequestration through the end of the year.[14] Suspending the Medicare sequestration will provide an immediate economic boost to hospitals and other health care providers during the immediate phase of this economic crisis. That said, the Medicare sequestration will be extended by one year beyond current law (extending it from 2029 to 2030), thus ensuring that the temporary suspension of the sequestration this year (which provides necessary immediate economic relief) does not materially impair Medicare’s long-term financial outlook.[15]

The CARES Act also increases the payments to hospitals that treat admitted coronavirus patients. In particular, it increases by 20% the weighting factor that would otherwise apply for patients diagnosed with COVID-19.[16] Congress seems to recognize that treating COVID-19 patients is and will continue to be unusually complex and costly, justifying these higher payments. 

The CARES Act further expands Medicare’s accelerated payment program during the coronavirus crisis to provide cash to struggling hospitals to maintain their workforce and meet other obligations as they battle COVID-19.[17] This program allows qualified facilities to request a lump sum (or periodic payment) that covers up to a 6 month period and up to 100% of the prior period payment amount, with critical access hospitals able to receive up to 125%.[18] The CARES Act further provides up to a 120-day grace period before a hospital will be required to start paying Medicare back, and hospitals would have at least a year to complete repayment.[19]

            Additionally, Section 3720 of the CARES Act amends the Families First Coronavirus Response Act – signed into law on March 18, 2020 – to ensure that states can receive a 6.2% increase in Medicaid assistance.[20] This provides much needed assistance to the states as they battle this public health crisis, and incidentally benefits the providers who treat these Medicaid patients.

The Act also increases access to post-acute care during the emergency period, adding flexibility to care facilities so that they may transfer patients out of their facilities and into alternative care facilities in order to prioritize COVID-19 patients.[21] This works by waiving, among other requirements, the requirement that a beneficiary patient receive at least 15 hours per week of therapy,[22] and allows long term care hospitals to care for patients who require less intensive care during the emergency period without losing designation.[23] Furthermore, Section 3715 allows state Medicaid programs to pay for direct support professionals and caregivers trained to help with activities of daily living (and to assist individuals with disabilities in hospitals and acute care facilities), with the goal of reducing patient stays and freeing up beds.[24]

The CARES Act also provides coverage for testing and the eventual COVID-19 vaccine. Specifically, Section 3716 clarifies that uninsured individuals can receive a COVID-19 test with no cost-sharing,[25] and Section 3717 clarifies that Medicaid beneficiaries can receive all tests for COVID-19 with no cost-sharing.[26] Importantly, the CARES Act also provides that once a vaccine for the coronavirus is licensed, beneficiaries can receive that vaccine through Medicare Part B and Medicare Advantage with no cost-sharing.[27]

Medicaid beneficiaries should also be aware of provisions under the CARES Act pertaining to unemployment. The CARES Act expands unemployment benefits to individuals who do not qualify for regular unemployment and are unable to work because of the public health emergency.[28] Notably, the additional $600 per week in unemployment benefits available under the CARES Act is disregarded for purposes of determining Medicaid eligibility and for determining eligibility under the Children’s Health Insurance Program.[29]

The CARES Act also provides increased payments from now until December 1, 2020 for physician fees for work in areas where the labor cost is lower than the national average.[30] Additionally, the Act extends funds for quality measurement and performance,[31] as well as outreach and assistance for low-income programs,[32] in addition to a variety of other Medicare and Medicaid related provisions.[33]

The CARES Act further allocates $200 million to the Centers for Medicare and Medicaid Services to help prevent, prepare for, and respond to the coronavirus.[34] $100 million of this allocation is to be made available for necessary expenses related to the survey and certification program, prioritizing nursing home facilities in localities with community transmission of the coronavirus.[35]

Please note, this is not a complete list of all the Medicaid and Medicare related provisions in the CARES Act. Rather, this serves only to highlight some of the more important provisions from the perspective of hospitals and other health care providers.  

Telehealth

Considering the need for social distancing and to help limit exposure to our health care professionals during the coronavirus crisis, the CARES Act provides several provisions geared towards supporting and expanding telehealth services. For instance, certain high deductible plans will be able to cover telehealth services;[36] certain telehealth requirements have been waived, allowing Medicare beneficiaries to access telehealth services more easily in their homes;[37] and, federally qualified health centers and rural health clinics can serve as distant sites to provide telehealth services to eligible patients, receiving similar pay rates to comparable telehealth services.[38]

The CARES Act also takes steps to increase access to telehealth services and reduce regulatory burdens by waiving the requirement that only physicians can certify the need for home health services. Other health care professionals, such as nurse practitioners, physician assistants, and clinical nurse specialists, will have the ability to certify the need for home health services; this necessarily helps increase access to health care services.[39] The Health Resource and Services Administration will provide grants to promote telehealth technologies for health care services and to assist rural and small health care networks.[40] 

Health Care Workforce

            Part IV of the CARES Act reauthorizes and updates certain sections of the Public Health Services Act, which supports training and education for health professionals.[41] Specifically, the Act requires the Secretary of Health and Human Services to prioritize rural areas and tribal organizations in such areas in making grants or providing contracts.[42] In addition, Section 3403 provides that the Secretary shall provide grants or other mechanisms to support training of health care professionals in geriatrics,[43] which has been identified as an at-risk population for the coronavirus. Additionally, Section 3404 updates the Public Health Service Act nursing workforce development program.[44] Hospitals and health care providers may be able to take advantage of some of these grants or other programs offered to provide necessary education and training for their employees.

Additional Miscellaneous Appropriations

The Public Health and Social Services Emergency Fund will receive approximately $27 billion for research and development of vaccines, to purchase diagnostics and other necessary medical supplies, to help modernize the workforce, provide telehealth access and infrastructure, and for other preparedness and response activities.[45] From this fund, $16 billon is designated for the Strategic National Stockpile,[46] and $3.5 billion is for the Biomedical Advanced Research and Development Authority to bolster the manufacturing, production and the purchase of vaccines, diagnostics, and other necessary items.[47]

The CARES Act also provides economic support to health care providers on the front lines of the public health emergency. Specifically, Section 3211 provides supplemental awards for health centers, allocating $1.32 billon to community health centers for the prevention, diagnosis, and treatment of COVID-19.[48] Moreover, the Act provides another $250 million to the Hospital Preparedness Program, which provides grants and other assistance to regional health care systems to support collaboration and preparedness for emergencies and disasters.[49]

In addition to the appropriations noted above, the CARES Act provides a variety of other funding across numerous sectors of the healthcare industry. For instance, $1 billion is provided as part of the Defense Production Act to help produce medical and personal protective equipment;[50] another $415 million has been allocated for military medical research and development.[51] Yet another $1.5 billion has been set aside for the CDC, which shall be distributed to the states and other localities to carry out surveillance, epidemiology, laboratory capacity, infection control, mitigation and other preparedness and response activities.[52] The CARES Act contains a myriad of additional appropriations scattered throughout and which could be beneficial to hospitals and other health care providers.[53] 

Limitations on Liability for Volunteers During the COVID-19 Emergency 

Section 3215 of the CARES Act provides that a volunteer health care professional will not be liable under federal or state law for any harm caused in the provision of health care services (generally, those that relate to the diagnosis, prevention, or treatment of COVID-19) during the COVID-19 emergency.[54] The protection applies to health care services provided within the scope of the license or certification of the volunteer and so long as the services rendered are done so with a good faith belief that the patient is in need of health care services.[55] The limitation on liability will last until the Secretary of Health and Human Services declares that there is no longer a public health emergency.[56]

Of course, a volunteer health care professional will not be protected if he or she caused harm by an act or omission constituting willful or criminal misconduct, gross negligence, reckless misconduct or a conscious flagrant indifference to the rights of the individual harmed.[57] Likewise, if the volunteer health care professional rendered health care services under the influence of drugs or alcohol, this liability protection will not apply.[58]

Economic Help for Smaller Hospitals and Health Care Providers

Smaller hospitals and health care providers may be eligible for several opportunities that the CARES Act offers small businesses and nonprofit organizations.

Providers with 500 or fewer employees may qualify for a loan though the Paycheck Protection Program.[59] This Program, administered through the Small Business Administration, offers low interest rate loans of up to $10 million per business to help cover payroll costs, rent, utilities, and other operating costs.[60] This Program also offers loan forgiveness up to the entire amount of the loan, if certain requirements are met.[61] Please see our prior whitepapers in this series that further discuss the Paycheck Protection Program, as well as the recent guidance provided by Treasury on this topic. 

Hospitals or health care providers may also be eligible for Economic Injury Disaster Loans, or an “EIDL,” through the SBA.[62] Importantly, the CARES Act provides EIDL applicants with a possible advancement on the loan of up to $10,000, which advancement does not need to be repaid, even if the EIDL application is eventually denied.[63] Again, Wadleigh’s prior whitepapers discuss the EIDL program in more depth, and so we direct your attention to those previous publications.

Also included in those other whitepapers are discussions of additional benefits available to small businesses and nonprofits through the CARES Act, which could be of great interest to smaller independent hospitals and health care providers. Of course, any questions that you have about your particular organization should be directed to counsel.    

Other Opportunities

Midsize hospitals and health care providers – those with between 500 to 10,000 employees – may qualify for an Economic Stabilization Loan.[64] Entities with over 10,000 employees could also qualify for direct loans through the Treasury Department.[65] Additionally, business of all sizes may be eligible to delay payment of employer payroll taxes owed between now and the end of the year, so as to spread the payment out over the following two years.[66] Among other opportunities, hospitals and health care providers might also be eligible for an employee retention tax credit, which is intended to incentivize employers to retain their workforce.[67] Employers who would like to know more about these, and other, opportunities should consult Wadleigh’s previous publications on the CARES Act, particularly those whitepapers pertaining to nonprofits and larger business.

Seek Counsel

This publication is meant to serve as a summary of the more significant aspects of the CARES Act, as it relates to hospitals and health care providers. It is not a comprehensive explanation of the nearly 900-page bill, nor does it account for the regulatory guidance that will come down in the next few weeks. Hospitals and health care providers are urged to seek legal advice if considering any of the assistance that the CARES Act provides. The attorneys at Wadleigh, Starr & Peters, PLLC are here to address any questions or concerns that your organization may have about the assistance that the CARES Act offers.


[1] See Emergency Appropriations for Coronavirus Health Response and Agency Operations, Public Health and Social Services Fund, at p. 750 of the CARES Act.

[2] Id.

[3] Id. at p. 750-51.

[4] Id. at p. 751.

[5] Id.

[6] Id.

[7] Id.

[8] Id. at p. 750.

[9] Id.

[10] Id.

[11] Id. at p. 751

[12] Id.

[13] Id. at p.750-51.

[14] Sec. 3709.

[15] Id.

[16] Sec. 3710.

[17] Sec. 3719.

[18] Sec. 3719(f)(2)(B)(ii)-(iii).

[19] Sec. 3719(f)(2)(C).

[20] Sec. 3720.

[21] Sec. 3711.

[22] Sec. 3711(a).

[23] Sec. 3711(b)(1).

[24] Sec. 3715.

[25] Sec. 3716.

[26] Sec. 3717.

[27] Sec. 3713.

[28] Secs. 2102-2104.

[29] Sec. 2104(h).

[30] Sec. 3801.

[31] Sec. 3802.

[32] Sec. 3803.

[33] See, e.g., Secs. 3811-3813.

[34] See Emergency Appropriations for Coronavirus Health Response and Agency Operations, Centers for Medicare and Medicaid Services, at p. 734 of the CARES Act.

[35] Id.

[36] Sec. 3701.

[37] Sec. 3703.

[38] Sec. 3704(4).

[39] Sec. 3708.

[40] Secs. 3212-13.

[41] Sec. 3401.

[42] Id.  

[43] Sec. 4003(a)(1).

[44] Sec. 3404.

[45] See Emergency Appropriations for Coronavirus Health Response and Agency Operations, Public Health and Social Services Emergency Fund, at p. 743 of the CARES Act.

[46] Id. at p. 744.

[47] Id. at p. 745.

[48] Sec. 3211.

[49] See Emergency Appropriations for Coronavirus Health Response and Agency Operations, Public Health and Social Services Fund, at p. 745 of the CARES Act.

[50] See Emergency Appropriations for Coronavirus Health Response and Agency Operations, Defense Production Act Purchases, at p. 643 of the CARES Act.

[51] See Emergency Appropriations for Coronavirus Health Response and Agency Operations, Defense Health Program, at p. 644 of the CARES Act.

[52]  See Emergency Appropriations for Coronavirus Health Response and Agency Operations, CDC-Wide Activities and Program Support, at p. 728 of the CARES Act.

[53] See, e.g., Emergency Appropriations for Coronavirus Health Response and Agency Operations, at p. 730 et seq. of the CARES Act. 

[54] Sec. 3215(a)-(d).

[55] Sec. 3215(a)(2)(A)-(D).

[56] Sec. 3215(f).

[57] Sec. 3215(b)(1).

[58] Sec. 3215(b)(2)

[59] Sec. 1102.

[60] Sec. 1102. 

[61] Sec. 1106.

[62] Sec. 1110.

[63] Sec. 1110(e)(5).

[64] Sec. 4003(c)(3)(D)(i).

[65] Sec. 4003(a).

[66] Sec. 2302.

[67] Sec. 2301.