The U.S. House of Representatives passed the Paycheck Protection Program and Health Care Enhancement Act by vote of 388 to 5 on April 23, 2020. This followed the U.S. Senate’s passage of the bill on April 21, 2020. President Donald Trump is expected to sign the bill into law shortly.
The bill, which some call “Phase 3.5” of Congress’s 2019 novel coronavirus (COVID-19) pandemic response, is a $484 billion relief package that amends certain portions of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). While a key element of the bill is increasing funding for small business loans and grant programs (which will be discussed in a forthcoming McGuireWoods alert), hospitals and healthcare providers should be aware that the bill provides additional healthcare funding.
Specifically, the bill: (i) provides $75 billion for healthcare-related expenses and lost revenue attributable to COVID-19; (ii) provides $25 billion for COVID-19 testing; and (iii) requires strategic planning with the states to increase testing and ease COVID-19 community mitigation policies.
Below are details on the key healthcare provisions.
1. Healthcare Provider Relief Grants. The bill includes an additional $75 billion for the U.S. Department of Health and Human Services (HHS) to distribute through grants and other mechanisms to hospitals, health systems and other healthcare providers aimed at reimbursing providers for healthcare expenses and lost revenue attributable to COVID-19. Notably, this relief package is in addition to the $100 billion that the CARES Act previously set aside for the Public Health and Social Services Emergency Fund, a relief fund for eligible healthcare providers. The statutory language of this bill mirrors that of the original grant under the CARES Act creating the relief fund. HHS broadly distributed the original relief fund, with the first $30 billion being allocated to all Medicare-enrolled providers and suppliers based on 2019 fee-for-service reimbursement, with additional funds to be distributed to hospitals, rural providers, Medicaid providers and uninsured care, as described in an April 23 McGuireWoods alert.
The bill provides the Secretary of HHS broad discretion to develop programs under these appropriations. Many discuss these funds as being used for hospitals, which are eligible, but as with the CARES Act, the bill does not prioritize the different categories of eligible healthcare providers with respect to this portion of the funding. Consistent with the CARES Act, the bill specifies that providers may — but are not required to — use the funds for expenses related to building or construction of temporary structures, leasing of properties, purchasing medical supplies and equipment (including personal protective equipment and testing supplies), increased workforce utilization and training, establishing emergency operation centers, retrofitting facilities and managing the surge in capacity, among other activities. McGuireWoods will monitor HHS’ development of plans and programs to expend these funds.
2. Funding for COVID-19 Testing. The bill also provides $25 billion to support efforts to expand capacity for COVID-19 tests. Specifically, the funding provides $11 billion for states, localities, territories and tribes for COVID-19 tests, increasing laboratory capacity, implementing trace contacts monitoring and supporting employer testing. The bill allocates additional funding to governmental agencies (including the Centers for Disease Control and Prevention, the National Institutes of Health, and the Food and Drug Administration) and tribal health organizations to support activities necessary to accelerate COVID-19 testing. The bill also requires HHS to issue a report, within 180 days of enactment, on the number of positive COVID-19 cases, hospitalizations and deaths that is specifically categorized by race, ethnicity, sex, geographic region and other relevant factors.
3. Strategic Planning to Assist in Testing. Finally, the bill requires formulation of a strategic plan for providing assistance to states for COVID-19 testing and increasing each state’s testing capacity. Within 30 days of the bill’s enactment, states, localities, territories and tribes receiving funds from the bill will need to submit their plans and specific goals for COVID-19 testing, including but not limited to:
a. the number of tests (e.g., diagnostic, serological, etc.) needed, month-by-month;
b. month-by-month estimates of laboratory and testing capacity, which includes capacities related to workforce, equipment and supplies, and overall availability; and
c. a description of how the state will use its resources for testing and reducing community mitigation policies related to the COVID-19 pandemic.
The bill requires HHS to submit to Congress a strategic testing plan to assist the states. This strategic plan would address how HHS will increase domestic testing capacity and federal resources to greater expand overall capacity. HHS would update this plan every 90 days until all testing funds under the bill are expended.
Healthcare providers should continue to monitor information with respect to the additional funding distributed under the bill and track all COVID-19 expenses and retain copies of all relevant documents and reports. Providers should also review the terms and conditions of the previously released Public Health and Social Services Emergency Fund, as noncompliance could expose them to potential recoupment of some or all of the funds received from the original relief fund, in addition to these new funds.
Please contact the authors for additional information on the bill and its various healthcare provisions. McGuireWoods has published additional thought leadership on how companies across various industries can address crucial coronavirus-related business and legal issues. The firm’s COVID-19 response team stands ready to help clients navigate urgent and evolving legal and business issues arising from the COVID-19 pandemic.
|McGuireWoods’ Tim Fry discusses three updates regarding CARES Act provider relief funds. These updates focus on HHS’ announcement on April 22, 2020, for expending its $100 billion CARES Act fund, congressional efforts to provide $75 billion more to providers, and the fund’s terms and conditions. For additional videos in our healthcare series, click here.