First $30 Billion Tranche From Public Health and Social Services Emergency Fund Announced: Guidance for Healthcare Providers

During an April 7, 2020, White House briefing on the 2019 novel coronavirus (COVID-19), the Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma announced more details on distribution of the $100 billion Public Health and Social Services Emergency Fund provided for in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The fund reimburses eligible healthcare providers for expenses and lost revenue attributable to COVID-19.

The fund will be released in tranches in order to disburse dollars as quickly as possible, with the first $30 billion of the fund released to Medicare providers in the form of “no strings attached” grants.

Below are the details Administrator Verma announced regarding distribution of the first $30 billion of the fund:

  1. The funding will be in the form of grants based on Medicare revenue. There are no strings attached to the grants, which will allow healthcare providers receiving these funds to “spend that in any way that they see fit.”
  2. For healthcare providers with direct deposit accounts set up with CMS, the funds will be automatically deposited into the provider’s bank accounts. For providers without direct deposit, CMS will require the providers to complete a “very simple” registration in order to receive the funds. CMS has not yet released further details regarding the registration process.
  3. The first round of funding is expected to happen this week.
  4. Funding is not available on a first-come, first-serve basis; the program is based on providers’ Medicare revenue.
  5. The second tranche of funding will address organizations and healthcare providers that receive significant revenue from sources other than Medicare, including pediatricians, children’s hospitals, OB-GYNs, nursing homes and other providers receiving funds primarily from Medicaid or other payer sources.

In addition to the guidance released by Administrator Verma and discussed above, during an April 3, 2020 White House briefing, Health and Human Services Secretary Alex Azar announced that a portion of the fund will be used to cover healthcare providers’ costs of delivering COVID-19 care to uninsured individuals through the same mechanism used for testing. Secretary Azar stated that providers will be reimbursed at Medicare rates and will be prohibited from balance-billing uninsured patients.

The infusion of cash provided through the fund will offer eligible healthcare providers, including hospitals, on the front lines of the COVID-19 pandemic crucial support during a time of historic financial crisis. Further details likely will be announced soon regarding the registration process and direct deposit of the first $30 billion portion of the fund, and how to access the remaining portions of the fund. McGuireWoods will be monitoring further developments closely.

In the meantime, healthcare providers should continue preparing for additional facets of the fund to be announced. Healthcare providers should continue to quantify and monitor all COVID-19 expenses and retain copies of all relevant documents and reports, including records relating to their treatment of uninsured individuals for COVID-19. In addition, healthcare providers should track the revenue streams and funding sources used to cover such COVID-19 expenses, as the interaction between programs will be an important consideration for providers. McGuireWoods will be updating a previous legal alert to elaborate on program interactions as further guidance becomes available.

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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