Health Law Alert:  CARES Act


Health Law Alert: CARES Act and Emergency Relief for Health Care Industry

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act, or “CARES Act.” This client alert addresses certain provisions of the CARES Act that directly impact the health care industry. Our health care clients may also be able to take advantage of certain other business relief provisions of the CARES Act that are detailed in other client alerts, such as our recent Alert on paycheck protection loans.

Q. How does the CARES Act support the health care industry during this emergency?

A.  The CARES Act takes four broad approaches to supporting the health care industry:

  • Appropriates over $100 billion to be distributed to health care providers diagnosing or treating COVID-19 patients and other specified health care providers. 
  • Provides for, and in some cases increases, reimbursement for COVID-19 diagnosis and treatment.
  • Provides for accelerated payments to Medicare providers and suppliers.
  • Suspends, or changes the scope of, certain laws that might hinder diagnosis or treatment of COVID-19 patients or payment for diagnosis or treatment.

Q. How much does the CARES Act appropriate for health care providers?

A.  Among other appropriations, the CARES Act appropriates:

  • $100 billion to the Department of Health and Human Services (“HHS”) to be distributed to “eligible health care providers” that “provide diagnoses, testing or care for individuals with possible or actual cases of COVID-19” to cover health care related expenses or “lost revenues attributable to the coronavirus.”
  • $1.32 billion to the Health Resources & Services Administration to make supplemental awards to community health centers for the detection of the coronavirus or the prevention, diagnosis, and treatment of COVID-19.
  • $1.032 billion to the Indian Health Service (“IHS") “to prevent, prepare for, and respond to coronavirus,” of which $450 million must be distributed to programs directly operated by the IHS, to tribes and tribal organizations under the Indian Self-Determination and Education Assistance Act, and through contracts or grants with urban Indian organizations.

Q. What reimbursement does the CARES Act make available for the diagnosis and treatment of COVID-19?

A.  The Act provides the following:

  • During the COVID-19 emergency, Medicare will provide a 20% add on to the weighting factor applied to a diagnosis-related group (“DRG”) for treatment of COVID-19 patients who are hospital inpatients.
  • The CARES Act requires most health plans to cover approved tests for COVID-19 or coronavirus without any cost sharing from patients or requirements for preauthorization. Plans must also cover items, services, or immunizations recommended by the United States Preventive Task Force or the CDC that are intended to prevent or mitigate COVID-19.
  • Medicare will pay for telehealth services furnished by federally qualified health centers and rural health centers while the COVID-19 emergency persists.

Q. Does the CARES Act offer advance payments from Medicare?

  • For most Medicare enrolled providers and suppliers, yes. Previously, the Centers for Medicare & Medicaid Services (“CMS”) was limited to providing advanced, or accelerated, payments to certain types of hospitals that experienced cash flow problems due to “unusual circumstances.” Under the CARES Act, CMS has dramatically expanded the number of Medicare providers and suppliers eligible for accelerated payments during the COVID-19 emergency.

Q.  Who is eligible for accelerated Medicare payments?

A. On March 28, 2020, CMS issued guidance that allows all Medicare enrolled suppliers and providers to receive accelerated payments if they:

  • Have billed Medicare in the past 180 days;
  • Are not in bankruptcy;
  • Are not subject to an active medical review or program integrity investigation; and
  • Do not have any outstanding delinquent Medicare overpayments.

Q. How do providers and suppliers apply for accelerated Medicare payments?

A. By filing the Accelerated or Advance Payment Request form found on the website of the Medicare Administrative Contractor (“MAC”) with jurisdiction over the provider or supplier. CMS has created COVID-19 hotlines for each MAC to deal with requests for accelerated payments. For most Arkansas, Oklahoma, and Texas providers and suppliers, the Hotline number for Novitas Solutions is 1-855-847-8428.

Q. What is the amount of the accelerated Medicare payments that providers and suppliers can receive?

A. Providers and suppliers can designate the amount of accelerated payments they wish to receive on the Accelerated or Advance Payment Request form provided by their MAC. The maximum accelerated payment varies depending on type of provider or supplier as follows:

  • Inpatient acute care hospitals, children’s hospitals, and cancer hospitals may request up to 100% of the amount paid by Medicare for a six-month period.
  • Critical access hospitals may request up to 125% of the amount paid by Medicare for a six-month period.
  • All other Medicare enrolled providers and suppliers may request up to 100% of the amount paid by Medicare for a three-month period.

Q. How quickly will Medicare make the accelerated payments after receiving an application?

A.  CMS has indicated that each MAC will work to review and issue payments within seven calendar days of receiving the request.

Q. Do providers and suppliers have to repay accelerated payments from Medicare?

A.  Yes. Medicare will begin to offset accelerated payments from future payments beginning 120 days after making the accelerated payment. Consequently, providers and suppliers who request accelerated payments should anticipate not receiving Medicare payments starting four months after receiving the accelerated payment until the amount of the accelerated payment is recouped. The remaining balance of an accelerated payment must be paid by direct payment:

  • One year from the date of the accelerated payment for inpatient acute care hospitals, children’s hospitals, cancer hospitals, and critical access hospitals.
  • 210 days from the date of the accelerated payment for all other providers and suppliers.

Q. What are some of the laws that the CARES Act suspends to provide greater reimbursement to health care providers?

  • The CARES Act suspends the current two percent Medicare sequestration for the period from May 1, 2020 to December 31, 2020. Thus, providers subject to sequestration will receive increased reimbursement from Medicare during this time.
  • The CARES Act eliminates the $4 billion reduction in disproportionate share hospital allotments for FY 2020 and reduces the allotment reduction for FY 2021 to $4 billion from $8 billion.

Q. What other laws does the CARES Act suspend or amend to ease the burden of diagnosing and treating patients with COVID-19?

  • The CARES Act revises Part 2 of the Public Health Service Act to allow substance abuse programs to receive a single consent from a patient to the disclosure of records for treatment, payment, and health care operations in the same manner as HIPAA.
  • The CARES Act limits the liability of health care professionals who volunteer to provide services within their scope of licensure during the COVID-19 emergency, where (1) the services are provided in good faith to diagnose, prevent, or treat COVID-19, and (2) any resulting harm was not caused by gross negligence, reckless misconduct, or due to the influence of alcohol or drugs.
  • During the COVID-19 emergency, the CARES Act allows a hospice physician or nurse practitioner to conduct the face-to-face encounter required for hospice recertification via telehealth.
  • During the COVID-19 emergency, the CARES Act eliminates the requirement that a professional providing telehealth services to a Medicare patient must have seen that patient within the last three years.

Conner & Winters’ Health Care Practice Group is monitoring developments in the above programs and legal changes. We are unable to provide advice in the abstract and without knowing the details of your particular situation. If you have specific questions about your circumstances, please contact our health care attorneys to discuss.

This summary is provided as an informational tool. It is not intended to be and should not be considered legal advice, and receipt of this information does not establish an attorney-client relationship.