The CARES Act Provides Some Financial Relief for Health Care Providers

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The Coronavirus Aid, Relief and Economic Security Act, or CARES Act, was passed by Congress and signed into law by the President on March 27, 2020. In addition to programs that are available to businesses, including health care providers, the statute includes a number of provisions designed to help health care entities financially during the COVID-19 pandemic crisis. This alert describes some of the key sections of the law that will provide that assistance.

Additional Funding for Public Health and Social Services Emergency Fund

The CARES Act adds $100 billion to the Public Health and Social Services Emergency Fund. These funds are available to “eligible health care providers” to cover lost revenue and health care related expenses to prevent, prepare for and respond to coronavirus.

“Eligible health care providers” are defined as public entities, Medicare or Medicaid enrolled suppliers and providers, and other for-profit entities and not-for-profit entities as the Secretary of the U.S. Department of Health and Human Services (HHS) may specify that provide diagnoses, testing or care for individuals with possible or actual cases of COVID-19. The statute provides that the funds provided “shall be available for building or construction of temporary structures, leasing of properties, medical supplies and equipment including personal protective equipment and testing supplies, increased workforce and trainings, emergency operation centers, retrofitting facilities, and surge capacity.”

The application process for these funds still needs to be fleshed out by the Secretary of HHS. Health care providers who plan to apply for funds under this fund should be prepared to document lost revenue as well as expenses related to the COVID-19 pandemic.

Increases in Reimbursements to Hospitals

The CARES Act also increases reimbursements to hospitals by adding an additional 20% to the normal Medicare diagnostic related group (DRG) reimbursement for inpatient hospital stays for patients diagnosed with COVID-19 during the emergency period. This increase acknowledges the complexity of care for COVID-19 patients.

In addition, the Medicare sequestration, which was instituted under the Budget Control Act of 2011, as amended, and reduced fee for service reimbursements across the board by 2%, is suspended for the period from May 1 through December 31, 2020. This suspension will result in higher payments for all health care providers who receive Medicare reimbursements. Sequestration will be extended through 2030, rather than the current deadline of 2029, to compensate for this period of suspension.

Expansion of Accelerated and Advance Payment Program under Medicare

The CARES Act also expands the Accelerated and Advance Payment Program under Medicare. This program permits the Centers for Medicare and Medicaid Services (CMS) to expedite payments in certain circumstances. During the public health emergency caused by the coronavirus pandemic, CMS can provide accelerated and advance payments to Medicare Part A providers and Part B suppliers. Most providers and suppliers can request up to 100% of the Medicare payment amount for a three-month period. Inpatient acute care hospitals, children’s hospitals and certain cancer hospitals can request up to 100% of the Medicare payment for a six-month period. Critical access hospitals can request up to 125% of the payment amount for a six-month period.

CMS is also providing relief for repayment of any overpayments made under this program. The relief extends the beginning of the period to repay overpayments to 120 days after the advance payment was made. Inpatient acute care hospitals, children’s hospitals, certain cancer hospitals and critical access hospitals have up to one year from the date the accelerated payment was made to repay the balance. All other Medicare Part A providers and Part B suppliers will have 210 days to repay the balance.

A fact sheet from CMS on the new temporary terms of the Accelerated and Advance Payment Program, including instructions for applying for payments, can be found at https://www.cms.gov/files/document/Accelerated-and-Advanced-Payments-Fact-Sheet.pdf .

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