Locke Lord QuickStudy: Healthcare Highlights in the Federal CARES Act

On March 27, 2020, President Trump signed into law the latest coronavirus stimulus package, ‎known as the Coronavirus Aid, Relief, and Economic Security Act or the “CARES Act.”  The ‎President’s approval follows around-the-clock bipartisan efforts to pass the legislation earlier in ‎the week.  ‎

The CARES Act will provide significant financial relief—a $2 trillion stimulus package—to ‎address the economic and health crisis resulting from the spread of COVID-19.  Title III of the ‎CARES Act focuses on supporting America’s health care system in the fight against the ‎coronavirus by, among other things, providing substantial financial assistance for providers ‎seeking to cover expenses or reimburse losses due to coronavirus and providing necessary ‎flexibility in the provision of healthcare, such as loosening restrictions related to telemedicine.  ‎Below is an overview of the top healthcare highlights from the CARES Act.‎

$100 Billion Emergency Fund for Providers‎

Perhaps the most notable healthcare emergency appropriation in the CARES Act is the $100 ‎billion “public health and social services emergency fund” that is available to all types of ‎hospitals and other health care providers, including public health entities, not-for-profit entities, ‎Medicare and Medicaid enrolled suppliers and providers, and other for-profit entities that ‎provide diagnosis, testing or care for persons with (or who might have) COVID-19. Grants will ‎be available to cover coronavirus-related expenses or reimburse lost revenues directly attributable ‎to coronavirus, such as cancelled surgeries or other procedures.  Funds will be available for ‎building or construction of temporary structures, retrofitting structures, leasing of properties, ‎purchasing medical supplies and equipment, personal protective equipment, testing supplies and ‎to cover the expense of training, all related to the diagnosis, testing or treatment of COVID-19 .  ‎

The CARES Act requires the Secretary of Health and Human Services to develop an application ‎process for applicants, contemplates a rolling application and process in review, and instructs the ‎Secretary to develop efficient payment mechanisms practicable to provide emergency payment.  ‎The Secretary is required to report on expenditures from the fund every sixty days, implying that ‎Congress expects quick action.  Monies from the fund may not be spent to reimburse expenses or ‎losses than have been or will reimbursed from other sources.  We expect there will be additional ‎guidance from the Department of Health and Human Services to further instruct how to apply ‎for the funds.  The fund will be available until it runs out, subject to further appropriation.‎

Telemedicine / Telehealth

There are a number of telemedicine and telehealth related provisions in the CARES Act that ‎enhance flexibility in access and use of technology to facilitate the provision of healthcare amid ‎the coronavirus outbreak.‎

  • First, the CARES Act eliminates a requirement from the first coronavirus stimulus ‎package (specifically, the “Telehealth Services During Certain Emergency Periods Act of ‎‎2020”) that would have required a qualified provider to have treated a patient within the ‎last three years to use the telehealth expansion authority under Medicare.‎
  • Second, high-deductible health plans with Health Savings Accounts may cover telehealth ‎services prior to a patient reaching the deductible.‎
  • Third, certain geographic and site restrictions have been eliminated to expand access to ‎treatment during the emergency period.  For example, a physician or nurse practitioner ‎may conduct a face-to-face encounter required for recertification of eligibility for hospice ‎care via telehealth.  Additionally, a patient receiving home dialysis would not need to ‎have face-to-face assessment to qualify for telehealth services.‎
  • Fourth, Federally Qualified Health Centers and rural health clinics are permitted to serve ‎as distant sites that furnish telehealth services to a beneficiary during the coronavirus ‎emergency period with accompanying reimbursement based on payment rates similar to ‎the national average rates for comparable telehealth services under the Medicare Physician ‎Fee Schedule.‎
  • Fifth, the Federal Communications Commission has been appropriated $200 million to ‎support health care providers in addressing coronavirus by providing telecommunications ‎services, information services, and devices necessary to provide telehealth services during ‎the emergency period.  ‎
  • Sixth, $25 million is available for telemedicine and distance learning grants for rural areas, ‎as well as a separate public health and social services emergency appropriation of $180 ‎million for other telehealth and rural health activities.‎

Temporary Elimination of Medicare Sequestration

Another key aspect of the CARES Act is that it temporarily suspends Medicare’s automatic 2% ‎payment reduction to hospitals and other health care providers, known as sequestration, from ‎May 1 through December 30, 2020 and extend the sequester an additional year to 2030.  ‎Adjusting sequestration to exempt Medicare would result in billions of dollars of increased ‎payments to providers and create an immediate economic boost for the health care services ‎industry.  ‎

Diagnosis-Related Group Increases for Medicare IPPS Hospitals for COVID-19 Treatment‎

The CARES Act also increases the payment for inpatient hospital services rendered to patients ‎with a diagnosis of COVID-19 by 20%.  In other words, hospitals will receive a 20% increase in ‎their Medicare payments for treating a patient with COVID-19 during the emergency period.  ‎This add-on payment applies to patients treated at rural and urban inpatient prospective payment ‎system (IPPS) hospitals.  The increase is exempted from budget neutrality.‎

Mandated Coverage of COVID-19 Testing and Other Services‎

The CARES Act provides that any group health plan and health issuer must provide coverage for ‎all COVID-19 testing, without imposing any cost-sharing in the form of deductibles, ‎copayments, or coinsurance, or prior authorization or other medical management requirements for ‎such testing.  This mandatory coverage includes any test that the Secretary of Health and Human ‎Services determines appropriate in guidance.  

With respect to reimbursement, the group health plan or health insurance issuer must reimburse ‎the provider of the testing as follows: (1) the negotiated rate (if one exists); (2) if there is not a ‎negotiated rate, an amount that equals the cash price for such service as listed by the provider on ‎a public website; or (3) the plan or issuer may negotiate a rate with the provider for less than the ‎cash price.  Each provider of a COVID-19 diagnostic test much publicize the cash price for the ‎test on its website or be subject to a civil monetary penalty not to exceed $300 per day that the ‎violation is ongoing.‎

Additionally, group health plans and health insurance issuers are required to cover any qualifying ‎COVID-19 preventative services such as a service or immunization recommended by the U.S. ‎Preventative Services Task Force or CDC’s Advisory Committee on Immunization Practices with ‎respect to the individual involved.‎

Coverage of COVID-19 Vaccines‎

The CARES Act removes Medicare Part B’s cost-sharing requirements for future COVID-19 ‎vaccine.  The CARES Act also requires Medicare Advantage plans to cover the COVID-19 ‎vaccine without cost-sharing. ‎

Home Health Services

The CARES Act now allows nurse practitioners, clinical nurse specialists, and physician ‎assistants to order home health services for Medicare beneficiaries in an effort to increase ‎beneficiary access to care in the safety of their home.‎

Changes to Substance Use Treatment Confidentiality Rules in 42 C.F.R. Part 2‎

The CARES Act incorporates changes to 42 C.F.R. Part 2 regulations governing the disclosure of ‎patient records related to substance abuse disorders.  Under this section, patient records related ‎to substance abuse disorder treatment or related activities may be used or disclosed by a covered ‎entity, business associate for purposes of treatment, payment, and health care operations as ‎permitted by HIPAA, once prior written consent is obtained. Any information so disclosed may ‎then be re-disclosed in accordance with HIPAA. It is permissible for a patient’s prior written ‎consent to be given once for all such future uses or disclosures for purposes of treatment, ‎payment, and health care operations until the patient revokes such consent in writing.   This ‎change will be welcomed by accountable care organizations and other health care providers that ‎work to coordinate care for persons with substance use disorders.‎

De-identified substance use disorder records may be disclosed to a public health authority so ‎long as such content meets the standards established under HIPAA for creating de-identified ‎information.  Substance use disorder records cannot be used to discriminate against an individual ‎for the admission, access to, or treatment for health care. The CARES Act  states that the ‎HITECH Act Breach requirements will apply to substance use disorder records, but this was the ‎case prior to the enactment of the law.‎
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Other Notable Emergency Appropriations

In addition to the $100 billion provider fund, other notable emergency appropriations for ‎healthcare purposes include the following:  ‎

  • $27 billion for various public health initiatives, including countermeasures and vaccines ‎‎(in addition to the $3.5 billion to the Biomedical Advanced Research and Development ‎Authority for the manufacturing, production, and purchase of vaccines, therapeutics, and ‎diagnostics); ‎
  • $4.3 billion for CDC-wide activities and program support, including grants or agreements ‎with states and local entities to carry out surveillance, epidemiology, laboratory capacity, ‎infection control, and other preparedness and response activities; ‎
  • $3.5 billion for the Child Care and Development Block grant, which funds may be ‎authorized in part to provide child care assistance to health care sector employees; ‎
  • ‎$706 million for the National Institute of Allergy and Infectious Diseases to be used in ‎part for vaccine and infectious diseases research facilities; ‎
  • $250 million for grants through the Hospital Preparedness Program (derived from the $27 ‎billion fund listed above);‎
  • $200 million for CMS Program Management, including for necessary expenses of the ‎survey and certification program, prioritizing nursing home facilities in areas with ‎community transmission of coronavirus; and ‎
  • $900 million for aging and disability services programs.‎

Your Locke Lord contacts and the authors of this article would be happy to ‎help you navigate ‎the CARES Act and its implications as it relates to the health care industry.‎

Please visit our COVID-19 Resource Center often for up-to-date information to help you stay ‎informed of the legal issues related to COVID-19.‎