March 30, 2020

Coronavirus Response - CARES Act Summary

Holland & Knight Healthcare Blog
Miranda A. Franco | Lisa Hawke | Robert H. Bradner
Healthcare Blog

Below is a summary of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), a $2 trillion stimulus package that is the third phase of the federal government's response to the coronavirus (COVID-19) pandemic. The proposed stimulus package was passed by both the U.S. Senate and the U.S. House of Representatives and then signed by President Donald Trump.

The first section of this post summarizes the healthcare-related provisions appropriating additional federal money for specific programs. The second section summarizes the other healthcare-related policy provisions included in the package.

Notably, the bill extends funding for several healthcare programs (currently set to expire on May 22, 2020), including Medicaid Disproportionate Share Hospital (DSH), National Health Service Corps, Community Health Centers, and Teaching Health Centers that operate Graduate Medical Education (GME) programs through Nov. 30, 2020.

It also further expands Medicare telehealth flexibilities, including for federally qualified health centers (FQHC), rural health clinics (RHC) and home dialysis patients. The bill temporarily lifts the Medicare sequester and institutes an add-on payment for hospital in-patients with COVID-19. The bill would also clarify that all testing, regardless of whether a diagnostic has an emergency use authorization from the Food and Drug Administration (FDA), must be covered without cost-sharing by insurers. Additionally, the bill would align 42 CFR Part 2 regulations with the Health Insurance Portability and Accountability Act (HIPAA).

I. Healthcare-Related Appropriations

*Funds noted below are in addition to those provided in the first $8.3 billion Coronavirus Emergency Appropriations Act.

Centers for Disease Control (CDC): 
$4.5 billion to remain available from Fiscal Year (FY) 2020-2022 for public health preparedness and response. $3 billion of the total is designated as follows:

  • $1.5 billion in designated funding for state and local preparedness and response grants (the first bill provided $1 billion); hese funds will likely be dispersed through the Public Health Emergency Preparedness (PHEP) cooperative agreements, but the CDC is permitted to use other vehicles; current grantees are to receive no less than the amount received in 2019
  • $700 million to continue the CDC's global health efforts
  • $500 million for Public Health Data Surveillance and Infrastructure Modernization; this is a rolling-forward that has been planned as a 10-year modernization program (at $50 million per year)
  • $300 million for the Infectious Disease Fund to give the U.S. Department of Health and Human Services (HHS) flexibility to respond to future pandemic threats

The $1.5 billion balance supports the CDC's response efforts, including repatriation and quarantine efforts, purchase and distribution of diagnostic test kits (including for state and local public health agencies) and support for laboratory testing, workforce training programs, combating antimicrobial resistance and antibiotic-resistant bacteria as a result of secondary infections, and communications.

The funds may be used to support the construction/renovation of non-federal facilities.

National Institutes of Health (NIH):
$945 million as follows:

  • $103 million for the National Heart, Lung, and Blood Institute (NHLBI)
  • $706 million for National Institute of Allergy and Infectious Diseases (NIAID)
  • $60 million for National Institute of Biomedical Imaging and Bioengineering (NIBIB)
  • $10 million for the National Library of Medicine (NLM)
  • $36 million for National Center for Advancing Translational Sciences (NCATS)
  • $30 million for the Office of the Director to remain available through FY 2023

Funds will support the expansion of research plans under the first supplemental, including developing an improved understanding of the prevalence of COVID-19, its transmission and the natural history of infection, novel approaches to diagnosing the disease and past infection, and developing countermeasures for prevention and treatment.

Substance Abuse and Mental Health Services Administration:
$425 million to remain available through FY 2021 apportioned as follows:

  • $250 million for the Certified Community Behavioral Health Clinic Expansion Grant Program
  • $50 million for suicide prevention programs
  • $100 million under Section 501(o) of the Public Health Service Act (PHSA) for noncompetitive grants, contracts or cooperative agreements to public entities to enable such entities to address emergency substance abuse or mental health needs in local communities

Centers for Medicare and Medicaid Services (CMS):
$200 million, including $100 million for survey and certification focused on nursing homes in communities with community transmission.

Public Health and Social Services Emergency Fund (PHSSEF):
The PHSSEF was created in 1998 as an account into which emergency funds could be placed. The bill appropriates over $130 billion into this account and directs that it be used as follows:

  • $27 billion for a wide range of preparedness and response activities to remain available through FY 2023 for a domestic and international response, including 1) the development of countermeasures and vaccines, prioritizing platform-based technologies with U.S.-based manufacturing capabilities, the purchase of vaccines, therapeutics, diagnostics and necessary medical supplies; 2)medical surge capacity; 3) addressing blood supply chain, workforce modernization, telehealth access and infrastructure, novel dispensing, enhancements to the U.S. Commissioned Corps; and 4) other preparedness and response activities. Up to $16 billion of this amount may be used to procure items for the Strategic National Stockpile (SNS).
  • $250 million for hospital preparedness program grants or cooperative agreements with current grantees, subgrantees or other entities meeting criteria established by the secretary.
  • $3.5 billion for the Biomedical Advanced Research and Development Agency (BARDA) to support the development of countermeasures, vaccines and other technologies, treatments and therapies.
  • $90 million for Ryan White HIV/AIDS program supplemental awards.
  • $5 million for poison centers to cover increased call volume.
  • $180 million for Health Resources and Services Administration (HRSA) rural health programs, including telehealth and rural health.
  • Reimbursement of the Veterans Health Administration (or other agencies) for healthcare provided to civilians.

Language clarifies that funds can be used to clarify prior obligations and that community health centers can use COVID-19 funds to expand treatment capacity.

New $100 Billion Program for Hospitals and Healthcare Providers:
Responding to concerns from the healthcare community over the intense impact of COVID-19 response, $100 billion of the PHSSEF appropriation will remain available until expended or is provided through grants or other mechanisms to "eligible healthcare providers" to cover unreimbursed healthcare-related expenses or lost revenues attributable to the public health emergency resulting from the coronavirus.

The funds are subject to several stipulations:

  • Recipients shall maintain documentation as determined by the secretary.
  • Eligible entities are public entities, Medicare- or Medicaid-enrolled suppliers and providers, and such for-profit and nonprofit entities as the secretary may specify that provide diagnosis, testing, or care to individuals that have or may have COVID-19.
  • Applications will be on a rolling basis.
  • Funds can be used for the construction of temporary structures, leasing of properties, medical supplies and equipment, including personal protective equipment (PPE) and testing supplies, increased workforce and training, emergency operation centers, retrofitting facilities and surge capacity.
  • Prepayment, prospective payment or retrospective payment, as determined appropriate by the secretary, are all allowed.

To be eligible for a payment under this paragraph, an eligible healthcare provider shall submit to the secretary of the HHS an application that includes a statement justifying the need of the provider for the payment, and the eligible healthcare provider shall have a valid tax identification number (TIN).

II. Supporting America's Healthcare System in the Fight Against COVID-19

Part I – Addressing Supply Shortages

Subpart A – Medical Product Supplies

Section 3101. National Academies Report. Requires HHS to contract with the National Academies of Science to perform a study and report on the medical product supply chain within 60 days. The report will assess and evaluate the dependence of the private sector, state and federal government on critical drugs and devices that are sourced or manufactured outside the U.S.

Section 3102. SNS to Include Certain Medical Supplies. Requires the SNS to include PPE, ancillary medical supplies and other applicable supplies as are necessary for the administration of drugs, vaccines and other biological products, medical devices and diagnostic tests.

Section 3103. Treatment of Respiratory Protective Devices. A respiratory protective device that is approved by the National Institute for Occupational Safety and Health and determined by the secretary to be a priority for use in a public health emergency is considered a covered medical countermeasure.

Subpart B – Mitigating Emergency Drug Shortages

Section 3111. Prioritize review of certain drug applications. Requires the FDA to prioritize and expedite reviews of drug applications and any inspections necessary to mitigate or prevent drug shortages.

Section 3112. Additional reporting requirements regarding drug shortages. Expands drug manufacturer reporting requirements to include active pharmaceutical ingredients in the event of an interruption or permanent discontinuance in the manufacture of an active pharmaceutical ingredient if that is likely to lead to a meaningful disruption in the supply of the ingredient of a drug needed to protect the public health during a public health emergency, or a drug that is life-sustaining, life-supporting, or intended for use in the prevention or treatment of a debilitating disease or condition. It also requires manufacturers to develop risk management plans.

Subpart C – Preventing Medical Device Shortages

Section 3121. Discontinuance or interruption of production of medical devices. Requires manufacturers of medical devices that are critical to the public health during a public health emergency are life-supporting or life-sustaining to report certain discontinuances or interruption of the manufacture of the device it is likely to disrupt the supply of the device.

Section 3121. Preventing medical device shortages. Requires manufacturers of devices critical to the public health (i.e., those life-supporting or sustaining) to notify the Secretary of HHS of any permanent or temporary interruption in manufacture of the device and; creates an expedited pathway for device consideration and facility inspection of a facility to mitigate such a shortage; establishes a public list of devices that are or may be in shortage.

Part II – Access to Healthcare for COVID-19 Patients

Subpart A – Coverage of Testing and Preventive Services

Section 3201. Coverage of diagnostic testing for COVID-19. Amends the definition of a COVID-19 diagnostic test as contained in the recently-enacted Family First Coronavirus Response Act (FFCRA) (HR 6201) to provide more specificity. The FFCRA had extensive test coverage and cost-sharing requirements for public and private payers.

Section 3202. Pricing of diagnostic testing. Sets the price during the public health emergency period that a commercial insurer (both Employee Retirement Income Security Act (ERISA) and non-ERISA) will pay for a COVID-19 diagnostic test as follows: 1) an existing negotiated rate if the insurer and manufacturer have one in effect, or 2) the cash price for the test as published on a website. Manufacturers are required to publish such cash price or incur a Civil Monetary Penalty of $300 per day. A health plan can negotiate a price less than the cash price.

Section 3203. Rapid coverage of preventive services and vaccines for coronavirus. Requires commercial insurers (ERISA and non-ERISA) to cover without cost-sharing "qualifying coronavirus preventive services" defined as preventive services with an A or B rating from the U.S. Preventive Services Task Force (USPSTF) and vaccines listed by the CDC within 15 days of the rating or listing.

Subpart B – Support for Healthcare Providers

Section 3211. Health centers. Authorizes and appropriates the full amount ($4 billion) for FY 2020 for health centers to avoid a major cut the program (the CHC "Cliff"). Provides partial funding for the FY 2021 cliff.

Section 3212. Telehealth network and telehealth resource center grant programs. Expands grant funding for evidence-based telehealth networks and telehealth technologies by $29 million for each fiscal year from 2021 through 2025.

Section 3213. Rural healthcare services outreach, deployment and small healthcare provider quality improvement programs. Expands rural healthcare services by $79.5 million for each fiscal year from 2021 through 2025.

Section 3214. The United States Public Health Service Modernization Act. Makes extensive technical changes to update the authorization and response authority of the U.S. Public Health Service Commissioned Corps and Ready Reserve.

Section 3215. Limitation on liability for volunteer healthcare professionals during COVID-19 emergency response. Preempts state law to provide liability protection (immunity) to any volunteer health professional for harm caused by simple negligence in providing in good faith treatment in response to and during the COVID-19 public health emergency. The professional must be acting within the scope of their license, not acting in an intentional or willful and wanton manner, and not be under the influence of alcohol or drugs.

Section 3216. Flexibility for members of the National Health Service Corps during the emergency period. Amends the Public Health Service Act (PHSA) to allow the secretary of the HHS to re-deploy members of the National Health Service Corps from currently assigned locations to new locations provided the member agrees, the new site is a reasonable distance from the current duty site and the hourly commitment is not increased.

Subpart C – Miscellaneous

Section 3221. Confidentiality and disclosure of records relating to substance use disorder. Allows patients to give a broad authorization to share their records. Once that is granted, HIPAA will govern those records. However, patients can revoke their authorization, and the bill retains restrictions on law enforcement use on the records.

Section 3222. Nutrition services. Certain nutrition requirements under the Older Americans Act of 1965 meal programs would be waived during the COVID-19 public health emergency to ensure seniors can receive meals.

Section 3223. Continuity of service and opportunities for participants in community service activities under Title V of the Older Americans Act of 1965. Individuals participating in projects can extend their participation and increase the average participation cap for eligible individuals to ensure continuity of services during the COVID-19 emergency.

Section 3224. Guidance on protected health information (PHI). Directs the HHS to issue guidance on the sharing of PHI during the COVID-19 emergency period.

Section 3225. Reauthorization of the Healthy Start program. Appropriates $125.5 million in funding for each fiscal year from 2021 through 2025 for the Healthy Start program to help reduce infant mortality and address health disparities.

Section 3226. Importance of the Blood Supply. The secretary of HHS is directed to carry out a national awareness campaign to the public and healthcare providers about the importance and safety of blood donation and the need for donations for the blood supply during the public health emergency.

Part III - Innovation

Section 3301. Removing the cap on Other Transaction Authority (OTA) at Biomedical Advanced Research and Development Authority (BARDA) during public health emergencies. Removes limitations and grant cap ($100 million) on other arrangements (beyond contracts, grants, cooperative agreements, etc.) between the BARDA and external entities in the development of medical countermeasures during a public health emergency.

Section 3302. Accelerating zoonotic animal drugs. Accelerates consideration of a new animal drug if that drug alone, or in combination with another drug, has the potential to treat an animal disease that could cause serious illness in humans.

Part IV - Healthcare Workforce

Section 3401. Reauthorization of health professions workforce programs. Makes extensive changes to Title VII of the PHSA, which authorizes various allied health programs administered by HRSA. In general, the section is reducing various authorized funding levels.

Section 3402. Health workforce coordination. Requires the secretary of HHS to develop a comprehensive and coordinated plan and report concerning the healthcare workforce development programs of the HHS, including education and training programs.

Section 3403. Education and training relating to geriatrics. Amends Title VIII of the PHSA to authorize grants for the establishment or operation of Geriatrics Workforce Enhancement Programs.

Section 3404. Nursing workforce development. Makes extensive changes to Title VIII of the PHSA, which authorizes nursing workforce programs. In general, this section is reducing authorized levels, creating new demonstrations, allowing nursing retention grants and creating a clinical nurse specialist activity.

Subtitle D - Finance Committee

Section 3701. Exemption for telehealth services. Includes a safe harbor for high deductible health plans that begin on or before Dec. 31, 2021, that provide predeductible coverage for telehealth and other remote care services.

Section 3702. Over-the-counter medical products without prescription. Eliminates the requirement under Section 9003 of the Affordable Care Act (ACA) that permitted the use of health savings accounts (HSAs) to prescribed medicines or drugs, meaning an individual would no longer need a prescription for drugs or medicines to receive preferred tax treatment under an has. This change would apply for amounts paid or expenses incurred after Dec. 31, 2019.

Section 3703. Increasing Medicare telehealth flexibilities. Eliminates the requirement in the CARES Act of 2020 (Public Law 116-123) that limits the COVID-19 Medicare telehealth expansion authority during the COVID-19 emergency to situations where the physician or other professional has treated the patient in the past three years. This would enable beneficiaries to access telehealth, including in their home, from a broader range of providers, reducing COVID-19 exposure.

Section 3704. Allowing federally qualified health centers and rural health clinics to furnish telehealth. Allows, during the COVID-19 outbreak, federally qualified health centers and rural health clinics to furnish telehealth services to beneficiaries in their home or other settings. Medicare would reimburse for these services at a composite rate similar to payment provided for comparable telehealth services under the Medicare Physician Fee Schedule.

Section 3705. Expanding telehealth for home dialysis patients. Eliminates a requirement during the COVID-19 outbreak that a nephrologist conducts some of the required periodic evaluations of a patient on home dialysis face-to-face, allowing these vulnerable beneficiaries to get more care in the safety of their home.

Section 3706. Use of telehealth to conduct face-to-face encounters prior to recertification of eligibility for hospice care during the emergency period. As determined by the HHS secretary, during the emergency period, a physician or nurse practitioner may conduct a face-to-face encounter via telehealth.

Section 3707. Encouraging the use of telecommunications systems for home health. Directs the HHS secretary to consider ways to encourage the use of telecommunications systems, including for remote patient monitoring during the emergency period by clarifying guidance and through outreach as appropriate.

Section. 3708. Improving care planning for Medicare home health services. Allows physician assistants, nurse practitioners and other professionals, including nurse midwives, to order home health services for beneficiaries, reducing delays and increasing beneficiary access to care in the safety of their home.

Section. 3709. Adjustment of sequestration. Provides prompt economic assistance to healthcare providers on the front lines fighting the COVID-19 virus, helping them to furnish needed care to affected patients. Specifically, this section would temporarily lift the Medicare sequester, which reduces payments to providers by two percent, from May 1 through Dec. 31, 2020, boosting payments for hospital, physician, nursing home, home health and other care. The Medicare sequester would be extended by one year beyond current law to provide immediate relief without worsening Medicare's long-term financial outlook.

Section 3710. Medicare add-on for in-patient hospital COVID-19 patients. Increases the payment that would otherwise be made to a hospital for treating a patient admitted with COVID-19 by 20 percent. It would build on the CDC's decision to expedite the use of a COVID-19 diagnosis to enable better surveillance as well as trigger appropriate payment for these complex patients. This is effective Jan. 27, 2020, through the end of the COVID-19 emergency, as declared by the HHS secretary under the PHSA Section 319.

Section 3711. Increasing access to post-acute care during the emergency period. Allows in-patient rehabilitation facilities (IRFs) to waive the "3-hour rule," which requires the IRF in-patient to be able to participate in three hours of rehabilitation therapy per day, five days per week, or 15 hours of rehabilitation therapy over one week. It also directs the HHS secretary to utilize enforcement discretion for the long-term acute-care hospitals (LTCHs) 50 percent rule to allow them to serve additional patients during this emergency. This is effective Jan. 27, 2020, through the end of the COVID-19 emergency, as declared by the HHS secretary under the PHSA Section 319.

Section. 3712. Payment rates for durable medical equipment (DME). Prevents a scheduled decrease in payment amounts for DME, which helps patients transition from hospital to home and remain in their home. This is effective Jan. 27, 2020, through the end of the COVID-19 emergency, as declared by the HHS secretary under the PHSA Section 319.

Section. 3713. Coverage of the COVID-19 vaccine under Part B. Ensures that access to testing and a COVID-19 vaccine (once one is licensed) would be quickly covered without cost-sharing permanently.

Section. 3714. Requiring Medicare prescription drug (PD) plans and MA–PD plans to allow during the COVID-19 emergency period for fills and refills of covered Part D drugs for up to a 3-month supply. The plans, as mentioned above, must permit a Part D-eligible individual enrolled in such a plan to obtain in a single fill or refill, the total day supply (not to exceed a 90-day supply). This is effective Jan. 27, 2020, through the end of the COVID-19 emergency as declared by the HHS secretary under the PHSA Section 319.

Section. 3715. Providing home and community-based support services during hospital stays. Allows state Medicaid programs to pay for direct support professionals, including caregivers trained to assist with activities of daily living for disabled individuals in the hospital to reduce the length of stay and free up beds.

Section. 3716. Clarification regarding uninsured individuals. The Families First Coronavirus Act of 2020 provided coverage for COVID-19 testing and related services provided to uninsured individuals. The bill defined for purposes of that section an uninsured individual as one who is not enrolled in a federal healthcare program or a plan on the group or individual market. The CARES Act section clarifies that the uninsured definition will be amended to include individuals who are enrolled for benefits under a state program or another federal healthcare program, but whose benefits under such program do not include coverage at no cost-sharing of a COVID-19 vaccine (and the administration of such vaccine) or coverage at no cost-sharing of an in-vitro diagnostic testing product.

Subtitle E — Health and Human Services Extenders

Part I — Medicare Provisions

Section. 3801. Extension of the work geographic index floor under the Medicare program through Dec. 1, 2020.

Sec. 3802. Extension of funding for quality measure endorsement, input and selection increased to $20 million for each of the FY 2020 and until Nov. 30, 2020.

Section. 3803. Extension of funding outreach and assistance for low-income programs, including state health insurance programs, Aging and Disability Resource Centers and for the National Center for Benefits and Outreach Enrollment through Nov. 30, 2020.

Part II — Medicaid Provisions

Section 3811. Extension of the money follows the person rebalancing demonstration program through Nov. 30, 2020.

Section. 3812. Extension of spousal impoverishment protections through Nov. 30, 2020.

Section. 3813. Delay of Disproportionate Share Hospital (DSH) reductions through Nov. 30, 2020 (cuts begin on Dec. 1, 2020 if Congress does not intervene).

Section. 3814. Extension and expansion of the community mental health services demonstration program through Nov. 30, 2020.

Part III — Human Services and Other Programs

Sec. 3821. Extension of sexual risk avoidance education program through Nov. 30, 2020.

Sec. 3822. Extension of personal responsibility education program through Nov. 30, 2020.

Sec. 3823. Extension of demonstration projects to address health professions workforce needs until Nov. 30, 2020.

Section. 3824. Extension of the temporary assistance for needy families program and related programs through Nov. 30, 2020.

Part IV — Public Health Provisions

Section. 3831. Extension for community health centers, the National Health Service Corps through and teaching health centers that operate GME programs through Nov. 30, 2020.

Section. 3832. Diabetes programs through Nov. 30, 2020.

Part V — Miscellaneous Provisions

Section. 3841. Prevention of duplicate appropriations for the FY 2020.

New Sections (sections added following Majority Leader McConnell's draft bill on Sunday )

Section 3717: Clarification regarding coverage of COVID-19 testing products. Would expand Medicaid coverage without cost-sharing to experimental COVID-19 in-vitro diagnostic products that have not been approved through certain approval processes under the Food, Drug, and Cosmetic Act (Sections 510(k), 513, 515, or 564).

Section 3718: Amendments relating to reporting requirements with respect to clinical diagnostic laboratory tests. Would prevent scheduled reductions in Medicare payments for clinical diagnostic laboratory tests furnished to beneficiaries in 2021. It would also delay by one year the upcoming reporting period during which laboratories are required to report private payer data.

Section 3719: Expansion of the Medicare hospital accelerated payment program during the COVID-19 public health emergency. Would expand, for the duration of the COVID-19 emergency period, an existing Medicare accelerated payment program. Specifically, qualified facilities would be able to request up to a six-month advanced lump sum or periodic payment. This advanced payment may be based on net reimbursement represented by unbilled discharges or unpaid bills. Most hospital types could elect to receive up to 100 percent of the prior period payments, with critical access hospitals able to receive up to 125 percent. Finally, a qualifying hospital would not be required to start paying down the loan for four months and would also have at least 12 months to complete repayment without a requirement to pay interest.

Section 3720: Delaying requirements for enhanced Federal Medical Assistance Percentages (FMAP) to enable state legislation necessary for compliance. If a state increased premiums between the Families First Act and the enactment of the CARES Act, a state would still be eligible for the FMAP increase (6.2 percent) under the Families First Act.

Subtitle F (Sections 3851-56; 3861-62): Would change the process for FDA's regulation of over-the-counter (OTC) drug products to an administrative order process and address specific issues related to certain products. It would establish a user fee program for the consideration of new OTC product applications.

Section 5001: Coronavirus relief fund. Provides $150 billion to states, territories and tribal governments to use for expenditures incurred due to the public health emergency with respect to COVID-19 in the face of revenue declines, allocated by population proportions, with a minimum of $1.25 billion for states with relatively small populations. Of that, $3 billion is reserved for the District of Columbia and the U.S. territories, and $8 billion is available for tribes.

DISCLAIMER: Information contained in this alert is for the general education and knowledge of our readers and is not intended to constitute legal, tax, accounting or investment advice. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.

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