Details Regarding $30 Billion Distribution to Health Care Providers

April 13, 2020Alerts

On April 10, 2020 the U.S. Department of Health and Human Services (HHS) distributed the first $30 billion in funds allocated in the CARES Act as part of the Public Health and Social Services Emergency Fund (PHSS Relief Funds). The funds are not limited to one type of provider.

The initial broad distribution of the PHSS Relief Funds was allocated based on providers’ 2019 Medicare FFS reimbursements. Any health care provider — including hospitals, physicians, hospices, ambulatory surgery centers, etc. that received Medicare FFS reimbursements in 2019 — also received a portion of the $30 billion distribution.

$30 Billion Payments to Providers

  1. Grants, Not Loans. The money received is a payment, not a loan, to healthcare providers. Health care providers who are able and choose to abide by the Terms and Conditions, may retain the distributed funds.
  1. Payment Amount. Each health care provider’s payment is a proportionate share of the total Medicare FFS reimbursements in 2019. In general, providers received payments that are approximately 6% of the Medicare FFS revenue they received in 2019.
  1. Payment Distribution Method.
  • Large Organizations and Health Systems will receive relief payments for each of their billing TINs that bill Medicare.
  • Group Practices will receive the relief fund payment as the billing organization. Individual physicians in the group practice will not receive separate or additional payments.
  • Solo practitioners who bill Medicare will receive a payment under the TIN used to bill Medicare.
  • The automatic payments will come to providers via Optum Bank with "HHSPAYMENT" as the payment description.
  • Providers who normally receive a paper check for reimbursement from CMS will receive a paper check in the mail for this payment as well, within the next few weeks.
  1. Different Payment. Providers received these payments without making any request. These payments are in a different category than the Accelerated and Advance Medicare payments that HHS also has begun distributing in response to provider requests. These funds are an advance on expected Medicare payments and are a loan that must be paid back through claims submission. Providers may access both sources of payments and one does not reduce the amount of funds available from the other program.

Provider Requirements to Retain Distribution

To keep the PHSS Relief Funds, within 30 days of receiving the payment, providers must certify receipt of the PHSS Relief Funds and that they will abide by HHS’ Terms and Conditions, which require:

1. Eligibility:

  • Billed Medicare in 2019
  • Is not currently terminated from participation in Medicare
  • Is not excluded from participation in federal health care programs
  • Does not currently have Medicare billing privileges revoked
  • Provides, or provided after January 31, 2020, diagnoses, testing or care for individuals with possible or actual cases of COVID-19

2. The provider/recipient submit an attestation that addresses the eligibility requirements including that:

  • It provides, or provided after January 31, 2020, diagnoses, testing or care for individuals with possible or actual cases of COVID-19.
    • If a provider retired or closed its practice before this time for reasons unrelated to COVID-19, it is not likely eligible to retain the funds.
    • HHS has stated: “If you ceased operation as a result of the COVID-19 pandemic, you are still eligible to receive funds so long as you provided diagnoses, testing or care for individuals with possible or actual cases of COVID-19. Care does not have to be specific to treating COVID-19. HHS broadly views every patient as a possible case of COVID-19.”
    • HHS’ language indicates a very broad interpretation of what constitutes providing diagnoses, treatment or care to individuals with possible or actual cases of COVID-19. We expect further guidance from HHS.
  • The provider will use the payment only to prevent, prepare for, and respond to coronavirus and to reimburse the provider for health care-related expenses or lost revenues attributable to coronavirus.
    • HHS has noted that the PHSS Relief Funds can be used for “those providers who are struggling to keep their doors open due to healthy patients delaying care and cancelled elective services.”  This HHS language indicates a very broad interpretation of activities deemed to be responding to or attributable to coronavirus.  We expect further guidance from HHS.
    • Our interpretation at this time, given limited HHS guidance, is that providers can use the funds to pay for activities such as, operational and other expenses to stay in business, maintain staff, respond to patient calls, provide telehealth, become educated on how COVID-19 can affect other aspects of a patient’s care after recovery from symptoms, assess appropriate screening and treatment of the provider’s patients when the provider can resume active practice, etc. However, a provider cannot use the funds for non-practice purposes such as vacations, children’s college expenses, etc. It is also reasonable to expect that providers can pay historical salaries and benefits but not give raises, pay additional distributions, etc. Prudent providers will try to pace the funds over the coming months and not use them all at once.
  • It will not use the payment to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse. There is no clear guidance yet on how this will be interpreted.
    • HHS guidance states that providers may receive the PHSS Relief Funds and Accelerated and Advance Medicare Payments.
    • We have learned of informal feedback to providers that they may also keep both the PHSS Relief Funds and payments through the Paycheck Protection Program (PPP). Although there is not yet definitive guidance, we expect that PHSS Relief Funds should not be used to cover the portion of salary expenses listed in the PPP for purposes of loan forgiveness since both would be considered use of different grant funds to cover the same expense.  Additionally,  if staff were furloughed and received unemployment compensation, the provider likely should not use PHSS Relief Funds to double-dip and pay the staff a full salary as well.
    • Providers should review the requirements of their state  unemployment laws in conjunction with the Relief Act requirements.
  • For all care for a possible or actual case of COVID-19, the provider will not seek to collect from the patient out-of-pocket expenses in an amount greater than what the patient would have otherwise been required to pay if provider were in network with the payor for that patient.

3. Reporting if Received More than $150,000.

  • The provider must submit a report not later than 10 days after the end of each calendar quarter if it received more than $150,000 in total funds from any federal appropriations related to the coronavirus response and associated activities (including but not limited to the Coronavirus Aid, Relief, and Economics Security Act, the Coronavirus Preparedness and Response Supplemental Appropriations Act, and the Families First Coronavirus Response Act) (COVID-19 Acts).
  • This report shall contain:
    • The total amount of funds received from HHS under the COVID-19 Acts;
    • The amount of funds received actually expended or obligated for projects or activities;
    • A detailed list of all projects or activities for which large amounts of covered funds were expended or obligated, including: the name and description of the project or activity, and the estimated number of jobs created or retained by the project or activity, where applicable; and
    • Detailed information on any level of subcontracts or sub-grants awarded by the covered recipient or its subcontractors or sub-grantees.

4. Tracking Expenses and Documentation

  • Providers should track expenses associated with addressing treatment of patients with possible COVID-19 and staying in operation despite significantly reduced patient visit or procedure volumes due to the pandemic.  Although no guidance has yet been issued, examples include decreased revenues due to government orders to cease non-essential services and stay at home; increased supply costs; salaries for staff when not able to see patients; and increased write-offs of patient co-pays to comply with the law
  • Providers should maintain documentation of their expenses and use of PHSS Relief Funds in the event of an audit or future compliance requirements.

Return of Distribution

If a health care provider determines that it cannot satisfy the Terms and Conditions it should notify HHS and arrange for the return of the PHSS Relief Funds within 30 days. HHS will announce details regarding how to return the PHSS Relief Funds.

Prohibitions Associated with Receipt of Funds

Consistent with existing federal requirements, funds cannot be expended for a number of purposes, including to pay for:

  • Salary of an individual at a rate in excess of $197,300 (“Executive Level II” salary rate)
  • Unpaid federal tax liabilities
  • Lobbying
  • Advocacy for gun control
  • Abortions, except in the case of rape, incest or to prevent the mother from being in danger of death
  • Any organization that discriminates against a provider that refuses to do abortions
  • Embryo research
  • Promotion of legalization of controlled substances
  • Needle exchange, except in limited circumstances
  • Computer networks, unless they block pornography
  • Association of Community Organizations for Reform Now (ACORN) activities
  • Providers that prevent employees or contractors from reporting waste or abuse
  • Providers that restrict whistleblower protections or have policies that conflict with other federal laws
  • Providers that do not comply with human trafficking laws
  • Providers that do not comply with human research subjects requirements

Remaining $70 Billion in Funds

The CARES Act provides a total of $100 billion in funds for health care providers. Information at this time suggests future distributions will provide more targeted relief.

1.       Next Distribution

Additional distributions to providers are expected to focus on “providers in areas particularly impacted by the COVID-19 outbreak, rural providers and providers of services with lower shares of Medicare FFS reimbursement or who predominantly serve the Medicaid population.” This supplemental funding will also reimburse providers for COVID-19 care for uninsured Americans.

2.       Applications for Additional Funds

The PHSS Relief Fund provides that:

  • Funds shall be distributed to prevent, prepare for and respond to coronavirus, for necessary expenses to reimburse, through grants or other mechanisms, eligible health care providers for health care-related expenses or lost revenues that are attributable to the coronavirus.
  • Eligible health care providers are defined as “public entities, Medicare or Medicaid enrolled suppliers and providers, and such for-profit entities and not-for-profit entities not otherwise described in this proviso as the Secretary may specify, within the United States (including territories), that provide diagnoses, testing or care for individuals with possible or actual cases of COVID-19.”
  • The PHSS Relief Funds come with the following limitations:
    • Funds may not be used to reimburse expenses or losses reimbursed by or to be reimbursed by other sources
    • Recipients shall submit reports and maintain documentation as the Secretary determines are needed to ensure compliance with conditions imposed for such payments, and such resources
  • DHHS shall, on a rolling basis, review applications and make payments to eligible health care providers.
  • PHSS Relief Funds appropriated shall be available for building or construction of temporary structures, leasing of properties, medical supplies and equipment including PPE and testing supplies, increased workforce and trainings, emergency operation centers, retrofitting facilities and surge capacity.

HHS has not yet provided an application to request additional PHSS Relief Funds. It is unclear when an application may be available.