The CARES Act Provider Relief Fund: What Are the Terms and Conditions?

The recently enacted federal CARES Act allocated $100 billion in relief funds to help healthcare providers weather the COVID-19 pandemic. Many providers have already received payments without submitting any application or request for funding. What are the terms and conditions for receiving and retaining these payments?

The federal government’s response to the COVID-19 pandemic includes a series of legislative enactments that have quickly injected billions of dollars into different sectors of the U.S. economy, including healthcare. To date, the federal government’s signature legislative measure is the CARES Act (short for the Coronavirus Aid, Relief, and Economic Security Act), which became law on March 27, 2020.

Under the CARES Act, the U.S. Department of Health and Human Services (HHS) is responsible for administering a Provider Relief Fund with an initial allocation of $100 billion to disburse to healthcare providers. The fund seeks to mitigate their expenses in responding to the COVID-19 outbreak and offset the revenue that many healthcare practices have lost amid the public health crisis. The $100 billion comprises the following categories of funds:

• $30 billion in general distribution funds, which were intended as quick infusions of money to provide immediate support to providers. HHS made these payments between April 10 and 17, 2020.
• An additional $20 billion in general distribution funds to providers that receive a relatively small share of their revenues from Medicare, such as children’s hospitals. HHS began making these payments on April 24, 2020.
• $50 billion in targeted funding for COVID-19-related treatment of the uninsured, hospitals in high-impact areas (such as New York City), and other specified purposes.

How do I qualify for payment from the Provider Relief Fund?

To qualify for payment from the initial $30 billion in general distribution funds, a healthcare provider must have received fee-for-service (FFS) payments from Medicare in 2019. No prior application or request for payment is required.

Providers should have automatically received their general distribution payment from the Provider Relief Fund in the same manner that Medicare usually pays the provider. For providers that ordinarily receive Medicare payments through electronic transfer, the payment should have appeared automatically in the provider’s bank account with the description “HHSPAYMENT,” made payable by HHS via Optum Bank.

Additional qualifications apply to payments HHS is making from the remaining $20 billion in general distribution funds and the $50 billion in target allocation funds.

How are the Provider Relief Fund payment amounts determined?

HHS paid the initial $30 billion in general distribution funds according to a formula based on the qualifying healthcare provider’s total 2019 FFS payments from Medicare, divided by $484 billion (i.e., total FFS payments Medicare made in 2019), and then multiplied by $30 billion (i.e., the total initial general distribution funds in the Provider Relief Fund). 

As an example, a community hospital that received $121 million in FFS payments from Medicare in 2019 would receive an initial general distribution payment of $7.5 million from the Provider Relief Fund, based on the following equation: ($121 million / $484 billion) x $30 billion = $7.5 million.

Providers should be aware that these initial payments are based on payments that Medicare made in 2019 – not services rendered in 2019. Because Medicare generally requires providers to file their claims for payment within one year of the date of service, many providers have claims for services they provided in 2019 but that they filed or will file in 2020. These pending or prospective payments are not considered for purposes of the initial general distribution fund payments.

The other $20 billion in general distribution funds will be paid to augment the initial $30 billion so that the whole $50 billion in general distribution funds is allocated proportionally to providers’ share of 2018 net patient revenue. Unlike with the initial payments, some providers may have to submit revenue information to the Centers for Medicare and Medicaid Services (CMS) before they receive further general distribution fund payments. 

The formula for the payments from the $50 billion in target allocation funds is specific to each target category. For example, HHS will provide reimbursement to providers generally at applicable Medicare rates for testing for and treatment of COVID-19 within the target allocation of treating uninsured individuals with a COVID-19 diagnosis.

I received payment from the Provider Relief Fund. What are my legal obligations regarding the funds I received?

Within 30 days of receiving a payment from the Provider Relief Fund, a healthcare provider must sign an attestation confirming receipt of the funds. An online CARES Act Provider Relief Fund Payment Attestation Portal guides providers through the attestation process to accept or reject the funds. 

Through the attestation process, a provider that decides to retain a payment from the Provider Relief Fund must agree to certain terms and conditions. If a provider retains a payment for at least 30 days without remitting the funds back to HHS, the provider will be deemed to have agreed to the terms and conditions. 

The terms and conditions that apply to the initial general distribution fund payments include the following:

• The recipient must certify that it “provides or provided after January 31, 2020 diagnoses, testing, or care for individuals with possible or actual cases of COVID-19[.]”
• The recipient must certify that the payment “will only be used to prevent, prepare for, and respond to coronavirus, and that the Payment shall reimburse the Recipient only for health care related expenses or lost revenues that are attributable to coronavirus.”
• The recipient must certify that 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.” 
• The recipient must maintain appropriate records, cost documentation, and “other information required by future program instructions to substantiate the reimbursement of costs” under a payment and compliance with the terms and conditions. To these ends, the recipient must acknowledge that it may be subject to record requests and audits conducted by the HHS Secretary, the Office of Inspector General within HHS, and the Pandemic Response Accountability Committee.
• If a recipient is an entity that receives more than $150,000 total in funds under the CARE Act or other legislation “primarily making appropriations for the coronavirus response and related activities,” then no later than 10 days after the end of each calendar quarter, the recipient must submit to the HHS Secretary and the Pandemic Response Accountability Committee a report containing: (1) the total amount received from HHS under COVID-19-related legislation; (2) the amount of funds received that were expended or obligated for each project or activity; (3) a detailed list of all projects or activities for which large covered funds were expended or obligated; and (4) detailed information on any level of sub-contracts or subgrants awarded by the recipient.
• For all care for a “presumptive or actual case of COVID-19,” a recipient must certify that it “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 the care had been provided by an in-network Recipient.”

HHS has indicated on its website that it “broadly views every patient as a possible case of COVID-19.” While this should give providers that receive an initial general distribution fund payment some latitude in how they use the funding, it is not clear what HHS deems to be “health care related expenses or lost revenues that are attributable to coronavirus.”

As providers work to recover from the disruption of COVID-19 in the weeks and months ahead, they should consider updating their compliance plans to address how they will ensure compliance with the Provider Relief Fund payment terms and conditions. Additional guidance from HHS in interpreting these terms and conditions will likely be forthcoming, so providers should continue to stay informed of HHS’s enforcement priorities and tailor their compliance strategies accordingly.  

I have not received payment from the Provider Relief Fund, but I think I qualify for payment. Why haven’t I been paid? 

HHS paid the initial $30 billion in general distribution funds between April 10 and 17, 2020. If a healthcare provider did not receive one of these payments, it is likely because the provider did not receive reimbursement from Medicare in 2019. Physicians and other healthcare practitioners who are employed by organizations that bill for their services should be aware that their billing organization will receive the initial general distribution fund payments – not the practitioners individually.

There does not appear to be any process for a provider to appeal nonpayment of an initial general distribution fund payment. In any event, the initial $30 billion in those funds have already been depleted. Currently, HHS is underway distributing the other $20 billion in general distribution funds. Some providers will receive additional payments from these funds automatically. Others must submit an application for these additional payments.

As to the $50 billion in target allocation funds, each funding category has its own criteria for eligibility and payment procedures. For example, providers seeking reimbursement for testing for and treatment of COVID-19 in uninsured patients must enroll in this target allocation program and submit claims to receive payment. The claims submission process for this target allocation will open on May 6, 2020.

As of this writing, HHS has not yet announced how it will allocate all of the $50 billion in target allocation funds. Without specifying details, HHS has indicated on its website in reference to target allocation funding that “[t]here are some providers who will receive further, separate funding, including skilled nursing facilities, dentists, and providers that solely take Medicaid.”

What is the Paycheck Protection Program and Healthcare Enhancement Act, and how does it impact funding through the Provider Relief Fund?

The Paycheck Protection Program and Health Care Enhancement Act, which took effect on April 24, 2020, is the latest legislative measure to respond to COVID-19. The new law replenishes some of the funding measures that the CARES Act established. Among its funding allocations, $75 billion is for healthcare providers for “health care related expenses or lost revenues that are attributable to coronavirus.”

The statutory provisions governing the expenditure of these $75 billion in funds mirror those in the CARES Act that govern the $100 billion in funding through the Provider Relief Fund. However, it is not clear that HHS will administer these new funds in the same manner that it has distributed the CARES Act funds, as HHS has not yet made any formal announcements.

If you have any questions about the implementation of the CARES Act and other legislation relating to the COVID-19 pandemic and how they might impact your practice or business, reach out to the experienced attorneys at Jackson LLP: Healthcare Lawyers.

The COVID-19 pandemic is a dynamic and evolving public health emergency. The laws and situation are fluid, and this article may not reflect the most current situation.

This blog is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between our firm and the reader and should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.