10 April 2020

Federal Governments Distributes $30 Billion to Health Care Providers Under the CARES Act

***Information and guidance in client updates was up to date at time of publication. During the pandemic, information and guidance has been changing rapidly. If you have any questions about the information contained in a client update, please contact the author(s) or your Miller Johnson attorney.***

Health care providers across the country received a pleasant surprise on Friday April 10th as the Department of Health and Human Services (HHS) distributed $30 billion to providers across the country. The payments were the first distribution from the $100 billion dollar in relief funds allocated under the CARES Act and are a welcome relief for many hospitals and health care providers that have seen declining revenues as they stopped performing elective procedures and services.

Eligibility and distribution amounts

All facilities and providers that received Medicare fee for service (FFS) payments in 2019 are eligible for this initial distribution. This will include virtually all hospitals, most physicians and any psychologists, social workers, physical therapists or other health care providers that billed Medicare in 2019.

This initial disbursement is based on the provider’s share of total Medicare FFS payments. Health care providers can estimate what they will receive by dividing what they billed Medicare in 2019 by $484,000,000,000 and then multiplying that by $30,000,000,000. In its announcement, HHS provided this example: “A community hospital billed Medicare FFS $121 million in 2019. To determine how much they would receive, use this equation:  $121,000,000/$484,000,000,000 x $30,000,000,000 = $7,500,000”

Many clients have already received the funds electronically.  But for those who have not, the payments will come via Optum Bank with “HHSPAYMENT” as the description. Health care providers that receive Medicare payments as paper checks can expect to receive their check in the mail within the next few weeks. The payments are made according to tax identification numbers, so large organizations may receive several, separate payments.

Other considerations

Accepting the money does require health care providers to agree to a set of terms and conditions. For example, any clients receiving $150,000 or more, will be required to submit quarterly reports to HHS. Those reports must, among other things, state the total amount of funds received from HHS, how those funds were used and the estimated number of jobs created or retained by the project or activity.  In addition, health care providers accepting the funds are prohibited from collecting out-of -pocket expenses from patients that are greater than what they charge in-network patients.  In other words, providers must treat all patients as if they are in-network when it comes to collecting co-pays and deductibles.  This does not preclude charging out-of-network insurers more.  Health care providers who do not want to comply with the terms, must notify HHS and return the money within thirty days.

Accepting this initial distribution does not mean health care providers are ineligible for the Medicare Accelerated and Advanced Payment Program or prohibit them from applying for loan under the Paycheck Protection Program.  However, health care providers will need to carefully document how they spend the money received through these various program in order to file the requisite reports and demonstrate compliance with the terms and conditions of each program.

As we discussed in our Thursday morning webinar titled “The CARES Act: Considerations for Health Care Providers” HHS has said a second distribution will take place that will target providers who bill Medicaid and private insurance plans. As always, contact your Miller Johnson attorney with any questions.