HHS Announces Release of Remaining $70 Billion of CARES Act Funds to Healthcare Providers

April 23, 2020

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.

On April 22, 2020, HHS announced the release of the remaining $70 billion of the $100 billion Public Health and Social Services Emergency Fund appropriated 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). HHS released the first $30 billion on April 10, 2020 (discussed in an April 10, 2020 legal alert).

HHS allocated the remaining funds as follows: (i) $20 billion for general distribution to healthcare facilities and providers; (ii) $10 billion for hospitals determined to be in areas particularly impacted by COVID-19, with an application for such funds due today, April 23; (iii) an unspecified portion for the treatment of the uninsured and possibly other further releases for Medicaid providers; (iv) $10 billion for rural health clinics and hospitals; and (v) $400 million for Indian Health Service facilities.

This alert summarizes the five new buckets of funding from the $100 billion in CARES Act allocation, and the actions providers must take in short order to receive these funds.

General Allocation ($50 Billion). The first $30 billion disbursed to providers (beginning April 10, 2020) was part of a $50 billion general distribution allocation. The disbursement of the additional $20 billion is detailed below.

1. Additional $20 Billion. HHS is releasing an additional $20 billion of this general allocation to Medicare enrolled healthcare facilities and providers based on eligible providers’ 2018 net patient revenue to augment providers’ previously disbursed allocation so the entire $50 billion general distribution is allocated in proportion to providers’ share of 2018 net patient revenue. If HHS has cost report data for providers on file, certain providers can expect to receive the first wave of funds beginning April 24, 2020.

Even though some providers will receive automatic payments, providers must still verify their payment amounts by submitting revenue information. HHS Secretary Alex Azar implied in an April 22, 2020, press briefing that the new formula will “entail a significant rebalancing for many providers” and ensures that those providers with low Medicare patient populations receive adequate funding from this tranche. As the first tranche of funding targeted Medicare reimbursement data, facilities with low Medicare reimbursement (e.g., children’s hospitals, and safety net hospitals with high Medicaid reimbursements) received low payment amounts from the emergency fund. On the other hand, it is unclear if there will be any impact on the first $30 billion previously distributed based on the original Medicare data. HHS very likely will publish further guidance in the coming days.

Like the original $30 billion fund allocation, HHS has required providers to sign an attestation confirming receipt of the additional funds and agreeing to the terms and conditions. As of this writing, HHS is directing providers to the same attestation portal and terms and conditions that were released for the first $30 billion tranche, though updates have been made to account for specifics to this tranche of funding. For example, the terms and conditions now include civil or criminal penalties for any deliberate omissions, misrepresentations, or falsifications of any information given to HHS. Providers can expect payments to be apportioned differently than the first tranche, as noted below.

a. Automatic Payments. Only some providers will automatically receive payments during this round of funding, contrasted to the first tranche of $30 billion, where all providers received the funds automatically. Those that have cost reports on file with CMS will be eligible for automatic receipt of payment based on the revenue data submitted in the CMS cost reports, while those who do not have cost report data on file will be able to submit additional information to receive the funds.

b. All Other Providers. HHS has stated that providers who do not have sufficient cost reporting data are still eligible to receive funds so long as they submit their 2018 net patient revenue information, among other requested information, to HHS’ forthcoming portal. HHS will publish this portal on its website. Notably, for those providers who must submit additional information, payments will be processed on a rolling basis as information is validated. Though further guidance is necessary to understand HHS’ intent regarding payment distribution to these providers, it is possible not all providers will receive additional funds depending on when their applications are submitted and the revenue information is produced. It is also not clear if some providers are ineligible to submit such information. At a minimum, it appears that the same Medicare enrollment criteria as the first tranche will apply.

c. Fraud and Abuse Monitoring. Notably, HHS stated that recipients must submit sufficient documentation to ensure funds are used for healthcare-related expenses or lost revenue attributable to COVID-19. This use is also required for the original $30 billion distribution. In an April 22, 2020, media briefing, Secretary Azar highlighted that there will be “significant anti-fraud and auditing done” by HHS alongside the Office of Inspector General to prevent fraud and abuse. HHS will be closely monitoring to ensure that recipients comply with the terms and conditions of these programs, including the prohibition against balance billing for presumptive or actual COVID-19 patients.

Targeted Allocations. HHS allocated funds for certain targeted areas, as detailed below.

2. Allocation for “Hot Spots” — COVID-19 High-Impact Areas ($10 Billion). An additional $10 billion will be allocated to hospitals in areas acutely hit by the COVID-19 outbreak. Unlike the initial round of $30 billion that was based on a provider’s share of Medicare reimbursements, this allocation targets regions where the impact from COVID-19 is greatest. For example, hospitals serving COVID-19 patients in New York are expected to receive a large share of these funds based on their share of COVID-19 patients.

Also unlike the initial round in which funds were automatically deposited in providers’ accounts, hospitals will be required to apply for a portion of the funds, through the HHS COVID-19 Portal established by HHS’ vendor TeleTracking, before midnight, Pacific time, April 23, 2020. In submitting the application, hospitals will need to gather and provide the following information:

  • Tax Identification Number
  • National Provider Identifier
  • Total number of intensive care unit beds as of April 10, 2020
  • Total number of admissions with a positive diagnosis for COVID-19 from Jan. 1 to April 10, 2020|

Hospital site administrators should have received an email from HHS regarding the TeleTracking validation and registration page, which is accessible by email invitation only. Hospitals must submit this data before the deadline of midnight, Pacific time, April 23, 2020, as a prerequisite to receive future payments, although submitting the data neither guarantees a hospital’s eligibility nor receipt of any amount from this distribution. If hospitals have questions about the authentication or registration process, they should contact TeleTracking’s technical support team at 877-570-6903.

HHS will use the data it receives from hospitals to inform how these funds will be distributed and determine what facilities will qualify for the future distribution. Secretary Azar announced that the distribution will also take into consideration the challenges facing facilities serving a significantly disproportionate number of low-income patients, as reflected by their Medicare Disproportionate Share Hospital Adjustment.

3. Allocation for Treatment of the Uninsured. An unspecified portion of the $100 billion CARES Act fund will be allocated to a program administered by Health Resources & Services Administration (HRSA) to reimburse healthcare providers who enroll in the program and submit claims for COVID-19-related treatment of uninsured patients. The Families First Coronavirus Response Act also appropriates $1 billion to reimburse providers for conducting COVID-19 testing.

Healthcare providers who have provided treatment for uninsured COVID-19 patients with dates of service or admittance on or after Feb. 4, 2020, can request claims reimbursement through the program electronically and will be reimbursed at Medicare rates, subject to available funding and timely filing requirements. Providers can register for the program on April 27, 2020, and begin submitting claims in early May 2020 with payments expected to begin in mid-May. Providers can expect that the program will require (1) enrolling as a provider participant, (2) checking patient eligibility, (3) submitting patient information, (4) submitting claims and (5) receiving payment via direct deposit.

Providers should also be aware that the program contains certain attestations for providers, including that the provider must have verified the patient’s uninsured status, the provider must accept the defined program reimbursement as payment in full, the provider must not balance bill the patient, and the provider must agree to the program terms and conditions and may be subject to a post-reimbursement audit review. These attestations are consistent with the “strings attached” to the general funding, prohibiting providers from out-of-network balance billing of patients, as discussed in a previous McGuireWoods legal alert.

More detailed information on the program, qualifying expenses and services covered under the program, and claims reimbursement is available on HRSA’s website.

4. Allocation for Rural Providers ( $10 Billion). As early as the week beginning April 27, rural health clinics and hospitals will receive distributions from the $10 billion allocated to rural providers. HHS stated that distributions will be based on operating expenses using a methodology that will distribute payments proportionately to each facility and clinic. This $10 billion allocation is in addition to the $165 million HRSA awarded on April 22, 2020, to support rural hospitals and telehealth resource centers.

5. Allocation for Indian Health Service ( $400 Million). As early as the week of April 27, $400 million will be allocated for Indian Health Service (IHS) facilities and distributed based on operating expenses for these facilities. The CARES Act also provided more than $1 billion to IHS to prevent, prepare for and respond to the COVID-19 pandemic. It directed a minimum of $450 million for distribution to IHS directly operated programs, tribal health programs and urban Indian organizations; up to $65 million for electronic health record stabilization and support; and the remaining allocated at the discretion of the IHS director for COVID-19 response activities, with up to $125 million transferred to the IHS facilities account for COVID-19-related facilities activities.

Future Allocations. Although skilled nursing facilities, dentists and providers that solely take Medicaid were not specifically addressed in the earlier round of funding, and may not be fully made whole by the updated $20 billion general allocation described above, HHS continues to promise further funding through a later, separate allocation from remaining amounts from the $100 billion fund.

HHS continues to release additional information on the initial $30 billion distribution from the CARES Act emergency relief fund that was automatically delivered to Medicare fee-for-service providers beginning April 10, 2020, discussed in a previous McGuireWoods legal alert. HHS has since modified its guidance and stated that not returning the payment within 30 days of receipt will be viewed as acceptance of the terms and conditions. To reject payment, the provider must contact HHS within 30 days of receipt of payment and then remit the full payment to HHS as instructed.

McGuireWoods is continuously monitoring information released by HHS and the Trump administration regarding the relief fund. Please contact the authors or any of the McGuireWoods COVID-19 Response Team members for additional information on the relief fund and its availability to healthcare providers and for assistance with the documentation and attestation and reporting process.

 

Tim Fry
The Paycheck Protection Program and Healthcare Enhancement Act
The Paycheck Protection Program and Healthcare Enhancement Act passed by Congress on April 23, 2020, offers much-needed relief to providers. McGuireWoods’ Kayla McCann Marty discusses three key points: additional funding provided to the Public Health and Social Services Emergency Fund administered by HHS; an additional $310 billion to help small businesses impacted by COVID-19; and testing funding. For additional videos in our healthcare series, click here.
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