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The CARES Act Throws a Lifeline to Hospitals and Providers Confronting the COVID-19 Pandemic

On Friday, March 27, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted into law. The CARES Act provides broad relief to the many sectors of the economy reeling from the effects of COVID-19, including provisions aimed at giving critical financial and operational relief to hospitals and other providers on the front lines of the pandemic.  These health-related provisions, listed below, offer various forms of direct and indirect financial assistance and actions intended to reduce barriers for pandemic response. Several of these measures—such as the $100 billion in emergency funding for hospitals and providers—will be fleshed out by the Department of Health and Human Services (HHS) over the coming days and weeks.

On Capitol Hill, there are already discussions of additional legislative packages to focus on pandemic aid, and we expect the government to take further administrative and regulatory actions to address the increasing needs of the health sector in its response to the coronavirus. Our healthcare team, including attorneys and policy professionals, is assisting all health-related entities in anticipating and complying with these changes.

Fiscal support:

Public Health and Social Services Emergency Fund ($127 billion)

  • Allocates $100 billion for reimbursement to hospitals and healthcare providers to ensure these entities continue to receive the support they need for COVID-19-related expenses and lost revenue. HHS is expected to review applications and make payments on a rolling basis, in order to get money into the health system as quickly as possible.
  • Allocates at least $250 million for hospital preparedness to improve the capacity of healthcare facilities to respond to the coronavirus.

Increased payments for COVID-19 treatment and care

  • Section 3710. Medicare Add-on IPPS Payment for COVID-19 Patients
    Increases the payment that would otherwise be made to a hospital for treating a patient admitted with COVID-19 by 20 percent, available through the duration of the COVID-19 emergency period.

Expanded access to Medicare advance payments

  • Section 3719. Providing Hospitals Medicare Advance Payments
    Expands the existing Medicare accelerated payment program for the duration of the COVID-19 emergency period. Qualified facilities are able to request up to a six-month lump sum or periodic payment, and most hospital types may receive up to 100 percent of the prior period payments, with Critical Access Hospitals able to receive up to 125 percent. Qualifying hospitals would not be required to start repaying the loan for four months and would also have at least 12 months to complete repayment without a requirement to pay interest. The Centers for Medicare and Medicaid Services has issued guidance here .

Other payment increases/extensions of prior payment reduction delays

  • Section 3709. Increasing Provider Funding through Immediate Medicare Sequester Relief
    Temporarily lifts the Medicare sequester, which reduces payments to providers by 2 percent, from May 1 through December 31, 2020. The Medicare sequester is extended by one-year beyond current law.
  • Section. 3801. Extension of Physician Work Geographic Index Floor
    Increases payments for the work component of physician fees in areas where labor cost is determined to be lower than the national average through December 1, 2020.
  • Section 3813. Delay of Medicaid DSH Reductions
    Continues the delay of the scheduled reductions in Medicaid DSH payments through November 30, 2020.

Removing obstacles to expand access to care:

  • Section 3711. Increasing Medicare Access to Post-Acute Care
    Gives acute care hospitals flexibility, during the COVID-19 emergency period, to transfer patients out of their facilities and into alternative care settings in order to prioritize resources needed to treat COVID-19 cases. Specifically, this section waives the Inpatient Rehabilitation Facility (IRF) 3-hour rule, which requires that a beneficiary be expected to participate in at least 3 hours of intensive rehabilitation at least 5 days per week to be admitted to an IRF. It allows a Long Term Care Hospital (LTCH) to maintain its designation even if more than 50 percent of its cases are less intensive. It also temporarily pauses the current LTCH site-neutral payment methodology, thus reimbursing LTCHs at the LTCH PPS rate for all admissions.
  • Section 3701. Health Savings Accounts for Telehealth Services
    Allows a high-deductible health plan (HDHP) with a health savings account (HSA) to cover telehealth services prior to a patient reaching the deductible, increasing access for patients who may have the COVID-19 virus and protecting other patients from potential exposure for those plan years beginning on or before December 31, 2021.
  • Section 3703. Expanding Medicare Telehealth Flexibilities
    Enables Medicare beneficiaries to access telehealth, including in their home, from a broader range of providers, thereby reducing COVID-19 exposure in care delivery.
  • Section 3704. Allowing Federally Qualified Health Centers and Rural Health Clinics to Furnish Telehealth in Medicare
    Allows, during the COVID-19 emergency period, Federally Qualified Health Centers, Community Health Centers, and Rural Health Clinics to furnish telehealth services to beneficiaries in their homes. Medicare will reimburse for these telehealth services based on payment rates similar to the national average payment rates for comparable telehealth services under the Medicare Physician Fee Schedule. It will also exclude the costs associated with these services from both the FQHC prospective payment system and the RHC all-inclusive rate calculation.
  • Section 3707. Encouraging the Use of Telecommunications Systems for Home Health Services in Medicare
    Requires HHS to issue clarifying guidance encouraging the use of telecommunications systems, including remote patient monitoring, to furnish home health services consistent with the beneficiary care plan during the COVID-19 emergency period.

Privacy rule changes to allow more flexibility in sharing information:

  • Section 3224. Guidance on protected health information.
    Requires HHS to issue guidance on what is allowed to be shared of patient record during the public health emergency related to COVID-19.
    • Note that HHS OCR has issued several bulletins regarding relaxed disclosure rules during the COVID-19 pandemic, which is a public health emergency and national emergency. See here .
  • Section 3221. Confidentiality and disclosure of records relating to substance use disorder.
    Allows for additional care coordination by aligning the 42 CFR Part 2 regulations, which govern the confidentiality and sharing of substance use disorder treatment records, with HIPAA, with initial patient consent.
© Copyright 2020 Squire Patton Boggs (US) LLP


About this Author

Sven Collins, Squire PB, Healthcare attorney

Sven Collins focuses his practice on Medicare and Medicaid reimbursement litigation, as well as on litigation and risk-management guidance in areas of employment and labor, trade secrets, unfair competition and other commercial disputes.

Sven litigates and tries cases before courts, arbitrators and government agencies and  regularly represents hospitals and healthcare providers in innovative reimbursement appeals seeking additional payment under Medicare.  

He also counsels and represents employers in disputes in a variety of employment and labor-related...

Beth Goldstein, Health care Attorney Squire Patton Boggs

Beth Goldstein draws from a multifaceted background in health law and policy to counsel clients on legislative, regulatory, and legal matters relating to the health care sector.

Beth formed a deep understanding of Congress by serving for four years on the legislative staff of a committee in the U.S. House of Representatives, where she assisted the chairman in shepherding legislation through all stages of the legislative process, including a presidential veto override. Beth worked with outside stakeholders and across chambers to build strategic coalitions and advance the chairman’s agenda. Her responsibilities included policy research and development, speechwriting, legislative drafting, and advising the chairman and committee members on policy issues. 

During law school, Beth expanded her legislative experience by serving as a legal intern to another congressional committee, focusing on oversight and investigations of healthcare and environmental health matters. She was also a senior staff member on The Tax Lawyer, a law fellow for the Legal Research and Writing curriculum, and a graduate intern for a healthcare nonprofit organization.

Beth gained a global perspective on health care issues through her graduate studies. Her coursework focused on comparative international health policy, health financing, aging and long-term care, and social policy innovations. Her dissertation discussed the history of American health care legislation, with particular emphasis on the procedural and political obstacles the Democratic Party has faced when attempting large-scale health reform.