Update (June 21, 2021):
Healthcare providers receiving Provider Relief Fund payments will have
to report to the government on using such payments before certain newly
announced spending deadlines. The first spending deadline is June 30,
2021, with a 90-day reporting period beginning July 1, 2021, to report
on funds received in the first half of 2020. For the most recent
updates on future deadlines and further guidance on Provider Relief
Fund reporting, visit
our Provider Relief Fund reporting page.
Update: On Oct. 1, 2020, the U.S. Department of Health and Human Services, through the Health Resources and Services Administrative (HRSA), announced $20 billion in new Phase 3 General Distribution Funding for providers from the Public Health and Social Services Emergency Fund (Provider Relief Fund). For more information, please see our Oct. 2, 2020, alert.
Update (May 22, 2020): Eligible providers have until June 3, 2020, to
take action to be eligible to receive an additional payment from the Provider
Relief Fund General Distribution, as discussed in a May 22, 2020 alert, which
also discusses updated guidance.
Update (May 7, 2020): The Department of Health and Human Services (HHS)
updated the deadline for its required attestation before being deemed acceptance
until at least May 24, 2020, and issued additional guidance, as discussed in a
May 7, 2020 alert. Providers applying for the second $20 billion general
distribution fund will still need to attest to the terms and conditions
discussed below to apply for additional funds, as discussed in an
April 27, 2020 alert.
Update (April 10, 2020): This article was originally published on April 9, 2020. It has been updated to reflect new guidance released on April 10, 2020, by the Department of Health and Human Services (HHS) regarding the delivery of the initial $30 billion in relief funding that began being deposited to providers the same day.
Further, HHS has since released clarifications about certain key conditions of the program, including those related to eligibility discussed in an April 14, 2020 alert.
On April 10, 2020, HHS announced the immediate release of $30 billion 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 the 2019 novel coronavirus (COVID-19). As discussed below, the fund will be released in tranches to prioritize disbursing dollars as quickly as possible, with the initial $30 billion in immediate relief funds being delivered first beginning April 10, 2020, by direct deposit to all facilities and providers that received Medicare fee-for-service (FFS) reimbursements in 2019. Many providers already have begun to receive these funds, including various categories and specialties of providers.
This updated alert summarizes eight key takeaways for providers from the HHS release and additional guidance from HHS Secretary Alex Azar and Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma.
1. Eligible Providers. All facilities and providers that received Medicare FFS reimbursements in 2019 are eligible to receive funds, subject to the terms and conditions discussed below. Relief payments will be made to providers according to their tax identification number (TIN). For example, large organizations will receive relief payments for each of their Medicare billing TINs, while group practices will receive the relief fund payment under the group practice’s TIN used to bill Medicare rather than directly to the individual physician and other providers that are part of the group practice. Practices that are part of larger medical groups should expect to receive payment through the group’s central billing office.
2. Payment Calculations. Medicare facilities and providers are allotted a portion of the $30 billion based on their share of 2019 Medicare FFS reimbursements. Each provider can estimate their payment today by multiplying their 2019 Medicare FFS payments (not including Medicare Advantage payments) by 0.06198 for their estimated portion of the relief funds. HHS gave the example of a community hospital with a TIN that billed Medicare FFS $121 million in 2019, which will receive $7,500,000.
3. Method of Payment Distribution. HHS has partnered with UnitedHealth Group (UHG) to distribute the initial $30 billion in funds via Automated Clearing House account information on file with UHG or CMS. Providers will receive Automated Clearing House payments via Optum Bank. Despite HHS’ announcement that providers will receive payments with "HHSPAYMENT" as the payment description, providers reportedly are receiving payment with “HHS STIMULUS” as the payment description. For other providers without direct deposit, CMS previously stated that they will require the providers to complete a “very simple” registration to receive the funds. HHS stated on April 10, however, that providers who normally receive a paper check for reimbursement from CMS rather than direct deposit payments, will also receive a paper check within the next few weeks for this payment.
4. No Repayment. The fund payments are grants, not loans, and HHS will not require repayment. This is unlike the CMS Accelerated and Advance Payment Program, which provides loans to providers to be repaid by offsetting future Medicare reimbursement. Providers can participate in both programs.
5. Terms and Conditions. While Administrator Verma announced during the April 7, 2020, White House briefing that these grants would be provided with “no strings attached” to allow healthcare providers receiving these funds to “spend that in any way that they see fit,” providers should note there are
important terms and conditions that providers will have to submit an attestation with respect to as described further below. Key restrictions most likely to impact certain providers include:
a. The recipient of these funds is obligated to abstain from "balance billing" any patient for COVID-19-related treatment. HHS explains that due to the COVID-19 public health emergency, patients are more limited in their healthcare choices and may be forced to receive treatment from out-of-network providers. Therefore, providers may not seek collection of out-of-pocket payments from a COVID-19 patient that are greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network provider.
b. The recipient must certify that the payment will only be used to prevent, prepare for, and respond to COVID-19, which includes healthcare-related expenses and lost revenues attributable to COVID-19. HHS has not yet provided further details regarding this condition. In other cases like the
blanket Stark Law waivers, COVID-19 purposes were broadly defined, but this condition could be limiting for providers in areas not hard hit by COVID-19.
c. The recipient must certify that it is (i) currently providing diagnoses, testing or care for individuals with possible or actual cases of COVID-19; (ii) is not currently terminated from participation in Medicare; (iii) is not currently excluded from participation in Medicare, Medicaid, and other federal healthcare programs; and (iv) does not currently have Medicare billing privileges revoked. HHS has not issued guidance about these restrictions. It is unknown what these restrictions will mean for providers that would not typically be testing COVID-19 patients or for providers that limited their current operations due to stay-at-home orders or orders delaying elective procedures. The funding of these grants does not appear to have distinguished between such providers.
d. The recipient must certify that it will not use the payment to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse. Further guidance will determine how this limitation interacts with other financial support opportunities available for healthcare companies during the COVID-19 crisis and whether receipt of these funds will limit participation in other programs, including loan forgiveness and tax treatments available to providers. For example, other programs have built-in limitations in the regulations that limit interactions with other programs. We will be updating a previous
McGuireWoods legal alert to elaborate on program interactions as further guidance becomes available.
e. The recipient must submit reports to ensure compliance with these conditions, with additional quarterly reporting requirements for recipients receiving more than $150,000 total in funds under the CARES Act, the Families First Coronavirus Response Act (FFCRA), and any other COVID-19 appropriated funds. The secretary of HHS will provide further guidance regarding the reports and documentation needed to support providers’ requests for funding. As with other grants or waivers providers are utilizing during the COVID-19 pandemic, providers should prepare and maintain the necessary records, reports and documentation required by the fund.
f. The recipient must maintain records and cost documentation information to substantiate the reimbursement of costs under this award. The recipient must submit copies of these records, cost documentation, and fully cooperate in all audits to ensure compliance with the terms and conditions.
g. In addition, the general statutory provisions in FY 2020 Consolidated Appropriation also apply to these payments. For example, none of the funds may be used to pay the salary of an individual at a rate in excess of Executive Level II ($197,300). Though we are awaiting further guidance from the secretary of HHS, this may limit providers from using the fund payments to pay physicians who receive production-based compensation if their annual compensation may exceed $197,300. Further details are set forth in the
terms and conditions.
6. Attestation. Providers will have 30 days to sign an attestation through an online portal confirming receipt of the funds and agreeing to the terms and conditions as a condition of payment. The portal for signing the attestation will be open on the HHS website the week of April 13, 2020. If the terms and conditions are not accepted by the provider within 30 days, the applicable provider will be required to refund the full payment to HHS.
7. Additional Tranches. Administrator Verma announced earlier this week that organizations and healthcare providers typically receiving significant revenue from sources other than Medicare — such as Medicaid and other payors, including pediatricians, children’s hospitals, OB-GYNs, nursing homes and other providers — will be addressed in the second tranche of funding. HHS also announced that the remaining $70 billion will focus on providers in areas particularly impacted by the COVID-19 outbreak, rural providers, providers of services with lower shares of Medicare reimbursement or that predominantly serve the Medicaid population, and providers requesting reimbursement for the treatment of uninsured Americans.
8. Uninsured Patients. In addition to the guidance discussed above on additional tranches, during an April 3, 2020, White House briefing, Secretary Azar announced that a portion of the fund will be used to cover healthcare providers’ costs of delivering COVID-19 care for 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 or any patient for COVID-19-related treatment or medical expenses. Providers should ensure they properly document their treatment of uninsured individuals for COVID-19 for potential reimbursement purposes.
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. We anticipate further details to be provided as direct deposit of the first $30 billion portion of the fund has begun. Additional guidance regarding how to access the remaining portions of the fund should be announced soon, and McGuireWoods will monitor further developments.
In the meantime, healthcare providers should prepare for additional facets of the fund. 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 update a previous legal alert to elaborate on program interactions as further guidance becomes available.
Please contact the authors or any of the McGuireWoods COVID-19 Response Team members for additional information on the Public Health and Social Services Emergency Fund and its availability to healthcare providers and for assistance with the documentation and registration process.
Healthcare Department chair
Amber Walsh discusses tips for providers receiving CARES Act emergency fund payments.