COVID-19 Federal Stimulus Package: Impact on Providers
Congress has officially passed the $2 trillion federal stimulus package – the “Coronavirus Aid, Relief, and Economic Security Act” (or “CARES Act”) – which the President has said he will sign into law. As expected, there are a number of provisions aimed at providing much-needed relief to the hospitals, health systems, and physician practices at the front lines of the pandemic. Most notably (especially in the near-term), the legislation includes $100 billion in relief funding for health delivery organizations to “prevent, prepare for, and respond to coronavirus.” This includes relief payments to providers for care-related expenses or lost revenue directly attributable to COVID-19, as well as prospective or retrospective relief payments for activities such as purchasing needed medical supplies and personal protective equipment, workforce training, and construction to address surge capacity. Relief funding cannot be used for expenses or losses that have already been reimbursed, or for expenses that will be reimbursed (e.g., by payers or other sources). To be eligible to receive relief funding, a given health delivery organization will be required to submit an application to HHS “justifying the need of the provider for the payment.” HHS will review applications and distribute funds “on a rolling basis.”
For most hospitals and health systems, the $100 billion in relief funding (which will be available via the Public Health and Social Services Emergency Fund) is unquestionably the biggest takeaway, particularly in the near-term. However, it is important to note that there are a number of other provisions in the stimulus package that are aimed at providing relief to health delivery organizations during this crisis as well, such as: a temporary 20% increase in Medicare reimbursement for hospitals treating patients with COVID-19; the temporary suspension of a 2% Medicare reduction (i.e., the Medicare sequester); and the elimination (and delay) of certain Medicaid cuts. The CARES Act also includes provisions aimed at: improving access to needed medical supplies; expanding coverage of COVID-19 testing; and encouraging use of – and reducing barriers to – telehealth. For a detailed summary of all the provisions in the CARES Act that are relevant to hospitals and health systems, we recommend this excellent “Special Bulletin” from the AHA.
Impact Advisors’ Point of View:
These are unprecedented and extremely challenging times for provider organizations. It speaks volumes that Congress included the full amount – $100 billion – of relief funding that the AHA, AMA, and ANA had lobbied for. In the near-term, the ability for providers in hard-hit areas to quickly apply for and receive that relief funding will be critical – and as such, we expect there will be a considerable amount of pressure on HHS to provide specific details on the process for health delivery organizations to submit applications, receive relief payments, and maintain any required documentation. Longer term though, it is important to remember that this is a massive, highly complex stimulus package that was created to address an unprecedented and rapidly evolving crisis. Not only is it extremely difficult to predict the overall impact of this legislation, it is possible – perhaps even likely – that additional action from Congress will be needed in the near future.