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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.
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.