March 27, 2020

President Trump signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27, 2020 in response to the economic impact of the COVID-19 pandemic. This analysis is part of a series of articles on the stimulus package. View other articles in the series on our Coronavirus Resource Page.

It is expected that the administrative agency responsible for implementing each section of the CARES Act will adopt administrative rules providing clarity on the various provisions. We will continue to provide updates as details become available.

 

The CARES Act includes hundreds of billions of dollars in funding to expand America's health care infrastructure and to reimburse hospitals and other health care providers across the nation for supplies, staffing, new construction, and other expenses directly attributable the coronavirus outbreak (such as lost revenue from postponement of elective procedures). Some of the notable health care grants earmarked in the Act include:

  • $100 billion emergency fund for hospitals and other health care providers
  • $27 billion, available through 2024, to fund activities such as developing vaccines, and purchasing vaccines, diagnostics and medical surge capacity; including $16 billion toward stockpiling medical equipment that has become scarce because of the outbreak, such as ventilators and protection equipment for doctors and nurses
  • $1.3 billion in emergency funding for community health centers and the extension of funding from May 22 until November 30
  • $1 billion to the Indian Health Service
  • $425 million for Mental and Behavioral Health Services

Hospitals will receive a 20 percent payment boost for Medicare patients admitted for COVID-19 treatment via a diagnosis-related group (DRG) add-on payment, and certain scheduled cuts to Medicaid (DSH cuts) and across-the-board cuts to Medicare (sequester) are temporarily halted by the Act. Eligible hospitals can also request accelerated payments from Medicare. 

The Act also builds upon previously enacted legislation by expanding access to coronavirus diagnostic testing and requiring the vaccine (once developed) to be covered without cost-sharing on a permanent basis. Medicare will pay approximately $50 for a commercial coronavirus test. For private payers, if there is no negotiated rate between the plan and provider (out-of-network), the plan must reimburse at whatever price is set by the provider. Although coronavirus test providers are required to publicly disclose prices, if testing remains limited transparency alone may not be enough to keep prices down. 

The Act also implements a variety of regulatory changes to reduce the strain placed on the health care system. The FDA will now be able to circumvent rulemaking procedures and approve over-the-counter drugs administratively. The Act seeks to expand access to telehealth services by increasing funding and easing regulatory obstacles such as allowing Health Savings Accounts to be used for telehealth services before a patient's deductible kicks in and eliminating Medicare's requirement to schedule an in-person visit prior to the start of any virtual doctor-patient encounter.

It is important to note (and unsurprising) that the CARES Act does not address exactly how the money will be divvied up among health care stakeholders, aside from the fact that applications will be submitted to the Secretary of Health and Human Services "justifying the need" for the payment. Congress is essentially passing the buck to the Trump Administration to sort out most of these very critical details. Consequently, the Trump Administration will be responsible for triaging the needs of American health care providers amidst this global crisis.

If you have questions about the health care provisions in the CARES Act, please reach out to a member of our Health Care Law group.

This article contains material of general interest and should not be construed as legal advice or a legal opinion on any specific facts or circumstances. Under applicable rules of professional conduct, this content may be regarded as attorney advertising.