CARES Act - What Does It Means to Healthcare Providers?

March 27, 2020

By Amie K. Alexander

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) allocates $100 billion in emergency funding to healthcare providers for treating patients infected with COVID-19 and mitigating financial losses stemming from the pandemic. The legislation sets few parameters for how the Federal Department of Health and Human Services (HHS) is to distribute the funds, but it does stipulate that the money can be used for medical supplies and equipment, such as masks and other protective gear, as well as construction, to help deal with an expected patient surge. Additional funds are allocated to address shortages of critical medical supplies and drugs, as well as to expand payments to hospitals and Telehealth efforts.  

Medical Supplies and Drug Shortages

The CARES Act allocates $16 billion to replenish the Strategic National Stockpile supply of pharmaceuticals, personal protective equipment and other medical supplies, which are distributed to state and local health agencies, hospitals and other healthcare entities facing shortages during emergencies. An additional $1 billion is allocated for the Defense Production Act to bolster domestic supply chains to ramp up production of personal protective equipment, ventilators, and other urgently needed medical supplies. 

The CARES Act also directs HHS to enter into agreements with the National Academies of Sciences, Engineering and Medicine to assess and evaluate the dependence of the United States on critical drugs and devices that are manufactured or sourced outside of the United States, and to provide recommendations to address supply vulnerabilities or potential disruptions of such products that would significantly affect or pose a threat to public health security or national security. 

Additional reporting requirements will be imposed on manufacturers of drugs and devices and will require the notification of a current or expected shortage or supply disruption of critical drugs and medical devices to the Secretary of HHS, which will then be compiled into reports which will be made available to the public. 

Mandated Coverage of COVID-19 Testing 

The CARES Act mandates group health plans and health insurance issuers to reimburse providers for diagnostic testing for suspected COVID-19 patients. The reimbursement must be at the negotiated rate (if available) or the cash price for the service. The act specifically requires providers to publish the cash price for COVID-19 diagnostic testing on its public internet website. The act also allows HHS to impose a Civil Monetary Penalty on any provider who does not follow this mandate in an amount not to exceed $300 per day that it is in violation. 

Mandated Coverage of COVID-19 Preventive Services

Under the CARES Act, the Secretary of HHS, the Secretary of Labor, and the Secretary of the Treasury will require group health plans and health insurance issuers offering group or individual health insurance to cover – without cost-sharing – any “qualifying coronavirus preventive service.” These services are defined as “an item, service or immunization that is intended to prevent or mitigate coronavirus disease 2019” and that is recommended by the Centers for Disease Control and Prevention (CDC). The coverage must be in effect within 15 business days after a recommendation is made by the CDC relating to the qualifying coronavirus preventive service. 

Adjustment of Payment for Hospitals

Hospitals providing inpatient care to patients diagnosed with COVID-19 will receive a 20 percent add-on payment under the CARES Act. 

The legislation will also boost Hospital payments by suspending the Medicare sequester, which reduced spending for most benefits by 2 percent starting in 2013. The sequester will be suspended from May 1 to December 31, 2020. As a trade-off, the sequestration will be extended for an additional year past its original end date. 

 Telehealth Expansion

As expected, telehealth investment and expansion is a key portion of the act. The CARES Act appropriates $200 million in new funding to the Federal Communications Commission (FCC) to “support efforts of health care providers to address coronavirus by providing telecommunications services, information services and devices necessary to enable the provision of telehealth services during an emergency period.” The FCC is expected to use these funds to boost Skype-style health checkups by investing in services and devices that help health care providers connect remotely with patients, most likely through its existing Rural Health Care Program. 

The legislation would require the HHS secretary to develop and implement a new rule for Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs) that provide telehealth services to eligible patients. FQHCs and RHCs are not currently authorized to act as the distant site (the site that furnishes telehealth service to an eligible Telehealth individual), but this will change under the CARES Act. Payment rates will be based on payments that currently apply to comparable Telehealth services under the physician fee schedule, and not at the increased special payment rate for such entities. 

The law will also allow Medicare beneficiaries to use telehealth services regardless of whether they have seen the provider in-person in the preceding three years. Current face-to-face visit requirements for home dialysis patients and for the recertification of eligibility for hospice care will also be temporarily waived. These statutory relaxations come after last week’s significant federal and state relaxations on telehealth laws, which we’ve recently outlined here.

Amie K. Alexander's practice is focused in the area of healthcare where she works primarily on various corporate and compliance matters. She drafts and reviews policies to ensure compliance with federal healthcare regulations such as HIPAA, Stark I and Stark II, Anti-Kickback and Medicare/Medicaid reimbursement.

Disclaimer: The information included here is provided for general informational purposes only and should not be a substitute for legal advice nor is it intended to be a substitute for legal counsel. For more information or if you have further questions, please contact one of our Attorneys.