On Apr. 22, 2020, the Department of Health and Human Services (HHS) issued guidance which can be found here outlining the allocation of an additional $70 billion in appropriations allocated by the CARES Act to the Public Health and Social Services Emergency Fund (the Provider Relief Fund).
The initial $30 billion tranche of the total $100 billion provided for under the CARES Act was distributed earlier this month based on 2019 Medicare fee-for-service (FFS) receipts and was summarized in an earlier article, which can be found HERE. One of the complaints about the methodology used for the initial $30 billion distribution was that it did not provide relief for providers with a relatively small share of their revenue coming from Medicare FFS, such as children’s hospitals. In addition, another complaint was that the previous distribution did not allocate additional funds to areas that have been severely impacted, such as New York.
In allocating the funds, HHS stated they are “working to address both the economic harm across the entire health care system due to the stoppage of elective procedures, and addressing the economic impact on providers incurring additional expense caring for COVID-19 patients, and to do so as quickly and transparently as possible.” In this new guidance, HHS provides for both a “General Allocation” of $50 billion and smaller “Targeted Allocations.”
It should be noted that, on Apr. 21, 2020, the U.S. Senate passed a bill, colloquially referred to as “Stimulus Phase 3.5,” which provides for an additional $75 billion to replenish the Provider Relief Fund. These latest allocations are not related to the potential Stimulus 3.5 Funds. We will continue to monitor and update once additional guidance is released.
$50B to Providers
$10B to COVID-19 High Impact Areas
$10B for Rural Providers
$400M for Indian Health Service
Allocation for Treatment of Uninsured
Terms and Conditions
Providers who receive funds from the general distribution have to sign an attestation, which can be found here, confirming receipt of funds and agreeing to the terms and conditions. The terms and conditions include measures to ensure that these funds were used for health care-related expenses or lost revenue attributable to coronavirus. HHS warned that there will be significant anti-fraud and auditing work done by HHS, including the work of the Inspector General. In the latest allocation, HHS reinforced President Trump’s directive that as a condition to receiving these funds, providers must agree not to seek collection of out-of-pocket payments from a presumptive or actual 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.
Failure to abide by the terms and conditions could result in False Claims Act liability for health care providers that do not make proper use of the funds. It should be noted that one of the conditions is that providers will not use the funds to pay for expenses that have been reimbursed (or will be reimbursed) from other sources, including insurance proceeds or other stimulus funds such as the Paycheck Protection Program. Providers should consult with their respective professionals about best practices for tracking such funds and ensuring that proper controls are in place for proper use of the funds.
If you have questions or would like to discuss further, please contact Jarod Moss.