CARES Act Summary – Health Care

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[co-author: Sean Feely]

As the number of COVID-19 cases in the U.S. continues to grow, the CARES Act makes a number of changes to support the ability of the health care system to respond to the crisis over the coming months. In addition, the package includes additional appropriations for the Department of Health and Human Services (HHS), much of which will be distributed to providers, states, localities and tribes as they respond to the COVID-19 outbreak.

The health care provisions span the jurisdiction of several Senate committees and are principally designed to offer financial support and flexibilities to providers as they care for patients during the public health emergency. The CARES Act temporarily suspends sequestration-mandated cuts on Medicare claims from May 1, 2020 through December 31, 2020, which will have the effect of increasing payments to providers by approximately 2 percent. In addition, the Act creates a new 20 percent add-on payment under the Medicare inpatient prospective payment system (IPPS) for care provided to patients with COVID-19 and expands a program to provide hospitals with advance Medicare payments during the public health emergency.

The CARES Act also includes an expansion of telehealth under Medicare, eliminating a provision from the “Phase 1” package (P.L. 116-123) that required providers to have a pre-existing relationship with a patient in order to provide telehealth services during the emergency period. Federally qualified health centers and rural health clinics will be allowed to provide telehealth services, and high deductible health plans are permitted to cover telehealth before a patient reaches their deductible. The legislation also encourages the use of telehealth for home health.

Additional flexibilities are also provided to post-acute care providers, waiving certain regulatory requirements for inpatient rehabilitation facilities, long-term care hospitals and home health agencies. The legislation will also increase payment for durable medical equipment furnished in rural areas for the remainder of 2020. Other provisions include the easing of certain reporting requirements for clinical laboratories and the delay of scheduled payment reductions to clinical labs.

The package also prioritizes patient access to diagnostics and care related to the outbreak. The Act ensures that a COVID-19 vaccine is covered under Medicare Part B without cost-sharing, for instance. With respect to testing, the CARES Act clarifies that diagnostics covered under the “Phase 2” bill include all cleared and approved tests for COVID-19, including those authorized by the Food and Drug Administration (FDA) under an emergency use authorization and those authorized by a state. The measure also requires health insurers to cover “any qualifying coronavirus preventive service,” such as immunization, shortly after a recommendation by the U.S. Preventive Services Task Force or the Centers for Disease Control and Prevention (CDC).

The Act includes several provisions to address potential shortages of medical supplies, prescription drugs and medical devices, including new mandatory reporting for manufacturers, as well as measures to alleviate health professional workforce shortages during the public health emergency. One provision clarifies that personal protective equipment (PPE) and swabs can be stockpiled along with other supplies in the Strategic National Stockpile. Additionally, the package extends liability protection to manufacturers of respiratory protective devices used during the public health emergency. The CARES Act mandates a report on the security of the U.S. medical supply chain, with a particular focus on critical drugs and devices manufactured abroad. The measure also directs the HHS Secretary to prioritize and expedite reviews and inspections for drug applications that may prevent or lessen an existing shortage. The Act also includes over-the-counter (OTC) drug legislation to establish an FDA user fee review program for OTC drugs, among other changes.

The CARES Act extends a number of health care programs and provisions that were set to expire on May 22, 2020, providing funding through November 30, 2020, for community health centers, the National Health Service Corps, the Teaching Health Center Graduate Medical Education program, the Special Diabetes Program and the Special Diabetes Program for Indians. It would also extend several Medicaid programs and delay scheduled Medicaid disproportionate share hospital (DSH) payment reductions until December 1, 2020.

Division B of the CARES Act includes supplemental appropriations for a number of health-related programs and activities under HHS. This includes $100 billion for a new program to reimburse, through grants or other mechanisms, providers for coronavirus-related expenses or lost revenues. The Act also includes $3.5 billion for the development and purchasing of vaccines and therapeutics for COVID-19 and $16 billion for the Strategic National Stockpile to procure personal protective equipment and other supplies. $250 million is provided for grantees of the Hospital Preparedness Program.

The measure also adds $4.3 billion in funding for the CDC, including $1.5 billion in designated funding for state and local public health activities and $300 million for the Infectious Diseases Rapid Response Reserve Fund. Additional funding includes $945 million for the National Institutes of Health (NIH) for research activities related to COVID-19 and an additional $200 million to the Centers for Medicare & Medicaid Services (CMS) for program management, including funds to assist nursing homes with infection control.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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