On March 27, 2020, Congress passed and President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). At $2.2 trillion, the CARES Act is the largest stimulus package in United States history. The CARES Act was designed to provide relief for businesses, individuals, states, and the healthcare industry dealing with the damaging effects of the novel coronavirus ("COVID 19") and includes provisions intended to bolster the healthcare industry in preparation for future emergencies. This alert highlights key provisions in the CARES Act that impact the health care industry.
Support for Hospitals, Critical Access Hospitals, and other Healthcare Providers.
The CARES Act provides the following to bring funding, support, and relief to healthcare providers:
- Most significantly, allocates $100 billion to fund grants to hospitals, public entities, not-for-profit entities, and Medicare and Medicaid enrolled suppliers and institutional providers to cover unreimbursed healthcare-related expenses or lost revenues attributable to COVID-19. It is not yet clear how these funds will be divvied up.
- Provides a 20% payment increase for the care of inpatients with COVID-19 to hospitals that treat Medicare patients during the emergency.
- For the duration of the emergency, increases access to post-acute care by waiving the "50% rule." The "50% rule" adjusts payments for long-term care hospitals that do not have a discharge payment percentage for the period that is at least 50 percent. Additionally, the CARES Act waives the site-neutral payment cuts for long-term care facilities for a discharge if the admission occurs during the emergency and is in response to the emergency and the inpatient rehabilitation facility ("IRF") requirement that patients of an IRF receive at least 15 hours of therapy per week.
- The CARES Act suspends the 2% Medicare sequestration that was put into effect on May 1, 2020, and ending December 31, 2020, and extends the direct spending reduction on the back end from 2029 to 2030.
- Expands the existing Medicare accelerated payment program during the emergency to allow qualified hospitals (e.g., critical access hospitals, pediatric hospitals, cancer treatment and research centers) to obtain, as a lump sum or in periodic payments, up to six months of advanced Medicare payments (based on prior-period experience) as a loan to stabilize cash flow. The amount of payment that would otherwise be made to hospitals under the program may be increased up to 100 percent (or, in the case of critical access hospitals, up to 125 percent). Hospitals receiving such advances may request to delay repayment for 120 days before claims are offset to recoup the accelerated payment, and are allowed at least 12 months to complete repayment before any requirement that the outstanding balance is paid in full. CMS has recently published a fact sheet providing guidance on the accelerated payment program. The document is available here for your convenience.
- Extends funding for various Medicare programs, Medicaid programs, and other public health programs that were expected to run out of money on May 23, 2020. For example, the CARES Act extends funding for quality measure endorsement, input, and selection, and extends funding to community mental health centers through November 30, 2020.
- Provides $275 million in funding for the Public Health and Social Services Fund including $90 million for Ryan White HIV/AIDS programs and $180 million to support rural critical access hospitals, rural tribal health, and telehealth programs.
- Provides $16 billion to replenish the Strategic National Stockpile supplies of pharmaceuticals, personal protective equipment ("PPE"), and other medical supplies. These supplies are distributed to State and local health agencies, hospitals and other healthcare entities facing shortages during an emergency. The CARES act also requires Strategic National Stockpile to include certain types of medical supplies, e.g., PPE.
- Provides $4.3 billion to support CDC activities to prevent, prepare for, and respond to COVID-19 domestically and internationally, including for the purchase of PPE, laboratory testing, infection control and mitigation at the local level, and other public preparedness and response activities.
- Provides at least $250 million to expand the Hospital Preparedness Program's support of emergency preparedness, including hospital preparedness cooperative agreements.
The CARES Act contains numerous initiatives to promote telehealth services through the current emergency period, and also invests in the long-term development of telehealth services including:
- For the duration of the emergency, expands Medicare telehealth coverage and reimbursement by removing the requirement that qualified providers be limited to physicians and other professionals who treated the patient in the past three years. This change enables Medicare patients to access telehealth from a broader range of providers.
- For the duration of the emergency, expands Medicare telehealth coverage for home dialysis patients by waiving the requirement that home dialysis patients receive periodic face-to-face (non-telehealth) assessments in order to be eligible to receive end-stage disease-related assessments via telehealth.
- For the duration of the emergency, permits a hospice physician or nurse practitioner to conduct the Medicare required face-to-face encounter via telehealth for purposes of recertification.
- For the duration of the emergency, permits federally qualified health centers and rural health clinics to furnish telehealth services to Medicare patients in their homes.
- Allocates funds to support research and development of vaccines, diagnostics, and increased telehealth access infrastructure, among other initiatives.
The CARES Act alters the Public Health Service Act (“PHSA”) by removing the cap on “other transaction authority” (“OTA”) during a public health emergency. This amendment grants the Biomedical Advanced Research and Development Authority the ability to enter into contracts with the private sector on research and development and to develop drugs on a more competitive basis. The CARES Act also makes numerous amendments to the Federal Food, Drug, and Cosmetic Act that allows it to expedite the approval process for drugs that assist with the prevention and treatment of COVID-19.
Medical Device Manufacturer Reporting Requirements
The CARES Act imposes reporting requirements on manufacturers of medical devices. Medical device manufacturers will be required to monitor their supply chains, and develop a system to share information regarding supply disruption shortages with the Secretary of Health and Human Services (“HHS”). The requirement applies to devices and equipment deemed “critical to a public health emergency.” Notification of potential disruptions must be submitted to HHS at least six months in advance of the anticipated disruption, or as soon as practicable. Once notified, HHS will make the information available to the public, but is authorized to withhold the information from the public if the disclosure would adversely affect public health, such as causing the public to panic and “over purchase” the product in question.
Drug Manufacturer Reporting Requirements
In an attempt to mitigate drug shortages during emergencies, the CARES Act expands current Federal, Food, Drug and Cosmetic Act requirements for drug manufacturers to notify HHS of a permanent discontinuance in the manufacture of the drug or an interruption of the manufacture of the drug that is likely to lead to a meaningful disruption in the supply of that drug in the United States, and the reasons for such discontinuance or interruption to include drugs deemed "critical to the public health during a public health emergency." In addition, drug manufacturers will now be required to report a permanent discontinuance in the manufacture of an active pharmaceutical ingredient or an interruption in the manufacture of the active pharmaceutical ingredient of such drug that is likely to lead to a meaningful disruption in the supply of the active pharmaceutical ingredient of such drug.
Limits Liability for Volunteer Healthcare Workers
The CARES Act contains a broad limitation on liability for health care professional engaged in volunteer health care services work during the COID-10 public health emergency as long as the health care professional is practicing within the scope of his/her license and believes in good faith that the individual being treated is in need of health care services. There are some common sense exceptions to the application of the limitation. Notably, the limitation does not extend to acts or omissions that rise to the level of willful or criminal misconduct or services provided under the influence of alcohol or an intoxicating drug. Importantly, the law makes clear that the limitation on liability is intended to preempt inconsistent state and local laws, unless such laws provide greater protection from liability.
Development of Healthcare Workforce
The CARES Act includes several provisions to improve the training of healthcare workers and health care workforce programs. For example, funding was allocated to allow grants, contracts or cooperative agreements for healthcare training specifically related to geriatrics and funds were also allocated to allow for training relating to primary care training and enhancement.
Coverage of Testing and Preventive Services
The CARES Act also includes specific requirements related to the coverage for testing and preventative services related to COVID-19. Key requirements include:
- Group health plans and health insurers are required to pay providers of diagnostic tests either a) their previously negotiated rate (in effect prior to the declaration of the public health emergency); or b) the provider's publicly available cash price or a negotiated rate for less than the cash price. During the emergency, the CARES Act requires each provider of a diagnostic test for COVID-19 to make public the cash price for the test on the provider's public website.
- Medicare beneficiaries are eligible to receive COVID-19 testing under Medicare Part B at no cost.
- Group and individual health plans are required to cover, without cost-sharing, qualifying preventive services defined as immunization or any other item or services intended to "prevent or mitigate" COVID-19 that meet certain criteria.
- Medicare prescription drug plans and Medicare Advantage Part D plans are required to allow beneficiaries of plans to receive up to a 90-day supply of covered prescription drugs during the COVID-19 emergency period.
Healthcare providers may also be eligible for small business loans under the CARES Act. Please click here for details and eligibility requirements
Given the urgency to draft and approve the CARES Act, many of the details regarding how these provisions will be interpreted and implemented, including decisions regarding division of funding, are yet to be determined.
This is a fluid and rapidly changing situation and these resources are current only as of the date of publication. We recommend that you contact your local Quarles & Brady attorney regarding the most up-to-date information or with any other questions regarding this subject matter, or contact Lisa Lyons: (414) 277-5679 / [email protected].