CMS to Distribute $30 Billion in Grants Under the CARES Act to Providers to Alleviate the Burden Imposed by COVID-19

In a Coronavirus Task Force press briefing on April 7, 2020, Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma (the “Administrator”) announced that CMS will distribute $30 billion in grants from the Public Health and Social Service Emergency Fund (PHSSEF) to providers to help alleviate the burden that COVID-19 has caused to the healthcare industry. By way of background, the CARES Act appropriated $100 billion to be disbursed by the Secretary of Health and Human Services (HHS) to reimburse eligible health care providers (e.g., Medicare or Medicaid enrolled providers and suppliers) for health care related expenses or lost revenues associated with COVID-19. In view of the lack of definitive guidance from CMS, it is not absolutely clear the extent to which the implementing rules will require providers to demonstrate that expenses were related to, or revenues were lost expressly as a result of, the COVID-19 pandemic. While this will be evident, for example, in the case of a hospital incurring expenses to establish satellite facilities to handle the augmented patient burden, showing the nexus in other scenarios or between revenue decline and COVID-19 could be more difficult.

During the press briefing, the Administrator specified that the initial $30 billion would be distributed to healthcare providers based on their Medicare revenue. While CMS has not yet issued specific guidance regarding the distributions, the Administrator indicated that they could be disbursed as early as this week. Note that these PHSSEF distributions are separate from the payments CMS is distributing under the Medicare Accelerated and Advance Payment Program.

Note that pursuant to the CARES Act, there is supposed to be an application process for providers to demonstrate their need for a PHSSEF distribution. However, an application has not yet been made public by CMS or HHS. Further, the Administrator’s remarks in the press briefing did not mention an application process but rather indicated that healthcare providers with direct deposit set up for Medicare reimbursement would automatically receive a PHSSEF distribution. Moreover, if the provider does not have direct deposit set up for Medicare reimbursement, they would just need to complete a simple registration to receive the distribution.

There is also ambiguity as to how the funds may be utilized by the healthcare provider. The CARES Act specifies that these PHSSEF funds may be used for the following purposes:

  • Building or construction of temporary structures;
  • Leasing of properties;
  • Medical supplies and equipment, including personal protective equipment and testing supplies;
  • Increased workforce and trainings;
  • Emergency operation of centers;
  • Retrofitting facilities; and
  • Surge capacity.

However, in the press briefing the Administrator specifically stated that “[t]here are no strings attached” to the PHSSEF distributions and that “healthcare providers that are receiving these dollars can essentially spend that in any way that they see fit.” Based on the Administrator’s remarks, CMS or HHS guidance should be issued soon detailing the distribution process and any applicable requirements. Therefore, healthcare providers and suppliers should periodically check the CMS and HHS websites for any applicable guidance.

Lastly, please note that due to these distributions being based on Medicare revenues, providers that see primarily uninsured, Medicaid or Medicare Advantage patients would not benefit from this initial $30 billion PHSSEF distribution. However, the Administrator announced that a second tranche of distributions will be disbursed to address the needs of providers that primarily bill payors other than Medicare.

For more information regarding the CMS distributions under the CARES Act or other questions, please contact your regular HLP attorney, or, or call (212) 734-0128 or (248) 996-8510.

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