CARES ACT Grants to the Healthcare Industry

Written By: David T. Azrin Jay L. Hack Jared B. Foley Beatrice Lesser Kyle G. Kunst Craig S. Tarasoff

03/30/20
close up of doctor with stethoscope

GRANTS TO THE HEALTHCARE INDUSTRY
 
The CARES Act includes $127 billion in grants and appropriations for the healthcare industry.
 
Who is getting the money?
Most of that amount – $100 billion – is granted directly to the Department of Health and Human Services to provide funds to “eligible health care providers” through “grants or other mechanisms.” Entities eligible for these funds are broadly defined as “public entities, Medicare or Medicaid enrolled suppliers and providers, and such for-profit entities and not-for-profit entities not otherwise described in this proviso as the Secretary may specify….” However, to qualify, any such entity must “provide diagnoses, testing or care for individuals with possible or actual cases of COVID-19.”
 
In addition to the $100 billion mentioned above, the CARES Act provides for $250 million for hospitals that have qualified as grantees or sub-grantees under the Hospital Preparedness Program. The Center for Medicare Services program which provides for advanced payment of hospital services has been modified, increasing the prepayment amount from 70% to 100%, and in the case of “critical access hospitals,” 125%. The hospital must have suffered financial difficulty due to the expected delay or experienced some other exceptional circumstance. CMS will also delay recoupment of any overpayment by waiting 120 days to seek such recoupment instead of the usual 90 days. The CARES Act also suspends The Budget Control Act of 2011, which established a 2% reduction of Medicare. 
 
The Department of Health and Human Services has also been provided with $180 million for rural health networks and telehealth services to respond to the coronavirus. Regulatory burdens on Medicare reimbursement for telehealth services have also been relaxed, including that the patient and telehealth provider no longer need a pre-existing relationship.
 
The CARES Act further provides $27 billion to restock the National Strategic Stockpile with personal protection equipment and to purchase or develop vaccines. Funding to community health centers has been increased nearly $1.5 billion, from $2.5 billion to $4 billion for the remainder of the fiscal year 2020, and increased to nearly $7 billion for the fiscal year 2021.
 
How will the funds be disbursed?
There are few provisions in the CARES Act that address the manner in which these funds will be disbursed. The funds are specifically meant to reimburse eligible health care providers for either expenses or lost revenue “attributable to coronavirus.” Further, eligible health care providers cannot obtain these funds if they have been reimbursed from some other source.
 
Recipients of these funds will be required to submit reports and documentation as required by HHS, which has not yet implemented a procedure for reimbursement of these funds as of the date of this article.
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Readers are encouraged to contact our firm if you have any further questions or need assistance in obtaining the benefits of these programs. 

about the authors

David T. Azrin

Partner

David T. Azrin represents clients in business law matters, including intellectual property, franchising, employment law, and commercial litigation matters.

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Jay L. Hack

Partner

Mr. Hack’s primary practice focus is providing a full range of legal services to banks and other financial institutions.

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Jared B. Foley

Partner

Jared B. Foley's practice focuses on commercial litigation, white-collar criminal defense, employment litigation, and intellectual property litigation.

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Beatrice Lesser

Partner

For more than 20 years, Ms. Lesser has been counsel to numerous co-ops and condos, individuals and businesses, landlords and tenants, and homeowners associations. Ms. Lesser has been advising them regarding all aspects of litigation in real estate law, contracts, leases, discrimination, restrictive covenants, Loft Law, and other related issues.

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Kyle G. Kunst

Associate

Kyle G. Kunst has litigated commercial disputes throughout the nation in both state and federal courts, servicing a wide array of industries and clients. 

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