Congress has provided an unprecedented infusion of funding and other financial relief through a variety of new and existing programs to address the coronavirus (COVID-19) outbreak. This blog post outlines how the federal funds are flowing and how hospitals and healthcare providers will be able to access them to the extent that such information is available. Accompanying this memo is a 39-page FAQ recently developed by congressional staff that provides additional useful information.
Congress has temporarily expanded the ability of hospitals to receive accelerated payments under the Medicare program under the Social Security Act Section 1815(e). This allows the secretary to provide to under subsection (d) hospitals with periodic interim payments (PIPs) if they are experiencing significant cash flow problems resulting from operations of its intermediary or unusual circumstances of the hospital's operation. The Coronavirus Aid, Relief, and Economic Security (CARES) Act also expands the types of hospitals, including critical access, children's and cancer hospitals, that are eligible to apply for accelerated payments during the COVID-19 national emergency. Update: The administration is using the new statutory language to expand the program to include inpatient and outpatient services as well as to Medicare Part B suppliers and providers.
Upon receiving a request from a hospital, the secretary may:
Upon receiving a request from a hospital, the secretary shall:
How to Access Funding: Hospitals and providers should contact their Medicare Administrative Contractor (MAC). The MACs have set up hotlines to answer questions. Those who opt to submit an application will be required to request a specific payment amount. Most providers will be able to request up to 100% of Medicare payment amounts for a three-month period. Inpatient hospitals may request payment for up to a six-month period. Payments will be made within seven days of receiving an application.
Applications for the payments are available from each Medicare Administrative Contractor's (MAC) website. Each MAC has its own application. To locate your MAC, visit here. The program includes a recoupment process. At the end of the eligible period, every claim submitted by the hospital, provider or supplier will be offset from new claims to repay the accelerated or advanced payment.
For more information, please see the Centers for Medicare & Medicaid Services (CMS) Fact Sheet.
Congress has provided $127 billion to the PHSSEF. It is not yet clear how this fund will be administered, as the U.S. Department of Health and Human Services (HHS) will need to set out criteria it will use to allocate the funds.
How to Access Funding: The Office of the Assistant Secretary for Preparedness and Response (ASPR) will likely provide NETEC and HPP funding for special pathogens treatment centers through amendments to existing cooperative agreements and grants or through new Funding Opportunity Announcements (FOAs). BARDA's additional funding of $3.5 billion will support foster manufacturing of therapeutics in the U.S. and includes funding for construction and manufacturing. BARDA has issued a solicitation on its website to which a brief proposal may be provided, followed by a more extensive 10-page proposal under the existing Broad Agency Announcement (BAA). The additional SNS funding will allow for more supplies of available products, but it is unlikely to help with ventilator shortages due to the lack of production capacity. Existing ventilators in the stockpile are being apportioned to states and localities based on need. SNS flows through the states, and most governors have made requests and supplemental requests. SNS has not been able to meet demand with current stockpile items.
How to Access Funding: Contact your state hospital association. If you are a special pathogen treatment center, funding will be provided through existing mechanisms.
Congress is providing $4.3 billion to support federal, state, and local public health agencies to prevent, prepare for, and respond to the COVID-19.
Every current grantee under the Public Health Emergency Preparedness (PHEP) program is guaranteed to receive not less than the amount provided to them in the fiscal year 2019.
How to Access Funding: State and local public health departments will receive substantial amounts of funding. Hospitals and providers should work directly with their state and local health departments. The CDC's flexible funding may provide another opportunity for grants or cooperative agreements in support of their activities on testing, training and communicating with the public.
The program provides $945 million as follows:
Funds will support the expansion of research plans under the first supplemental, including developing an improved understanding of the prevalence of the COVID-19 virus, its transmission and the natural history of infection, novel approaches to diagnosing the disease and past infection, and developing countermeasures for prevention and treatment.
How to Access Funding: NIAID has issued a Notice of Special Interest, which can expedite extramural awards. Additional notices are likely.
Congress has provided $275 million to HRSA as follows:
How to Access Funding: Ryan White and poison funds should be spent as a supplemental award to existing grantees. Accordingly, if you are currently receiving funds via these HRSA sources, we suggest you reach out to your existing programmatic contacts at HRSA.
The CARES Act allocates $500 billion to what is called an Exchange Stabilization Fund (ESF), which is an emergency reserve fund that provides the U.S. Department of the Treasury secretary with authority to distribute emergency funding to assist companies of all sizes. A portion is set aside for critical industries. The balance of $454 billion is to be transferred to the Federal Reserve banks to establish a program of loans and loan guarantees to "eligible business." The definition of eligible business is extremely broad, encompassing virtually any business that is adversely impacted by COVID-19. Unlike the Small Business Administration (SBA) program, loans are to be repaid. There are various conflicts of interest provisions and other constraints. The program requires consumer credit scores to be maintained as "current" if a lender enters into an accommodation agreement with a consumer. While the ESF will support businesses of all sizes, the new federal facility will seek to address the gap between the relief provided to small businesses of fewer than 500 employees, and some of the largest and most sophisticated companies that have access to other relief.
How to Access Funding: Treasury and the Federal Reserve have yet to provide details on how the funds will be accessed. It is understood that existing financial institutions backstopped by the Federal Reserve will be the vehicle for loans.
The CARES Act includes the Keeping American Workers Employed and Paid Act, which authorizes $350 billion worth of 100 percent-guaranteed SBA loans, a portion of which SBA will forgive based on allowable expenses for the borrower. Working through the existing network of SBA lenders (which will also be expanded), SBA will provide loans of up to $10 million for small businesses (generally defined as fewer than 500 employees) and 501(c)(3) organizations with fewer than 500 employees. During the eight weeks following the approval of the loan, costs incurred for payroll and several other qualifying expenditures will be forgiven. In other words, a lending vehicle is being used to provide eight weeks of bridge funding to program participants.
The bill also provides $562 million to ensure that SBA has the resources to provide Economic Injury Disaster Loans (EIDL) to businesses that need financial support. SBA has signed emergency declarations for all 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands, so the EIDL program will be available to assist small businesses across the country that have been adversely impacted by COVID-19. The small business package also includes $10 billion in direct grants for businesses that do not qualify for the EIDL program and $17 billion to have SBA step in and make six months of principal and interest payments for all SBA-backed business loans. All these measures combined will relieve financial stress from struggling businesses and inject much-needed capital into the economy.
In addition to the EIDL grants and increased SBA 7(a) loans, the CARES Act establishes a third loan program for small businesses called the Paycheck Protection Program (PPP). PPP loans are designed to help small businesses avoid closure or layoffs, and can be used to cover payroll, utilities, insurance premiums, and rent and mortgage interest payments on a facility. This program concludes on June 30, 2020, and is tailored for businesses that typically would not qualify for a loan at an average local or national bank. The loans require no collateral, credit test or personal guarantees from a business; the only proof required is that the business was open and operational on Feb. 15, 2020. To attract lenders, the government is offering a 100 percent guarantee on loans through the end of 2020.
How to Access Funding: Existing SBA processes will be used. SBA disaster loan application materials related to COVID-19 are available on the agency's website. Applications can be submitted electronically or by mail. Additional SBA guidance is expected.
Unemployment Insurance (UI). Expanded UI benefits are provided in the CARES Act. Unemployed workers will be eligible for the amount of benefit determined under their state program plus an additional $600 per week.
Refundable Tax Credits. The treasury department will make payments of $1,200 to individual filers, $2,400 to joint filers and an additional $500 per dependent.
Employee Retention Credit for Employers Substantially Impacted by COVID-19. The Social Security Administration (SSA) will administer payment of 50 percent of qualifying wages (up to $10,000) per employee per calendar quarter to businesses (including nonprofits) whose operations were "fully or partially" suspended due to orders from a governmental authority limiting commerce, travel or group meetings due to COVID-19. The credit is available for any calendar quarter after Dec. 31, 2019, in which gross receipts are less than 50 percent of the amount for the prior year comparable quarter. The credit will end when gross revenues in a calendar quarter reach 80 percent of the amount in the comparable previous year quarter. It is limited to employees unable to provide services during the quarter due to the governmental order. A small business or nonprofit entity participating in the SBA program may not also participate in this credit.
How to Access Funding: UI applications are submitted through state offices. Tax credits will be sent directly by the Internal Revenue Service (IRS). The SSA will establish a process for obtaining employee retention credits.
The supplemental increases the Disaster Relief Fund by $45 billion to provide for the immediate needs of the state, local, tribal and territorial governments to protect citizens and help them recover from the overwhelming effects of COVID-19. Reimbursable activities may include medical response, PPE, National Guard deployment, coordination of logistics, safety measures and community services nationwide.
On March 13, 2020, President Donald Trump declared the COVID-19 outbreak a national emergency, retroactive to March 1, 2020. This proclamation technically invoked two separate laws: the National Emergencies Act1 and the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act),2 representing the first time that these two laws have been invoked for the same disaster at the same time.
Currently, the FEMA Disaster Relief Fund is funded at $17.863 billion in the fiscal year 2020 appropriations legislation signed into law in December 2019. This does not include previously appropriated, unspent funds, which would bring total available funding to more than $40 billion. The recently considered CARES Act in the U.S. House of Representatives and the U.S. Senate would increase supplemental appropriations to the Disaster Relief Fund by $30 billion, which would be directed through the FEMA to eligible recipients and their applicants. By law, these funds may be available until consumed. Additional information on applying for these funds may be found below.
The president invoked the National Emergencies Act (NEA) under Proclamation 9994 on March 13. This authority by the President was most recently invoked in response to the H1N1 influenza outbreak in 2009. The NEA allows the president to invoke standby authorities and expands his authority to utilize federal resources to respond to a national emergency. Several of these national emergencies under the NEA are active, including those related to actions on the U.S. southern border and those creating limitations on trade in other countries, such as Mali and Syria, and may be reauthorized annually, if needed.
Most importantly for healthcare, Proclamation 9994 also partially authorized a process to grant the secretary of HHS additional authority to waive or modify certain requirements of the Medicare, Medicaid and Children's Health Insurance Program as well as applications of the Health Insurance Portability and Accountability Act (HIPAA) under section 1135 of the SSA.3 Waivers and modifications of requirements under Section 1135 were fully authorized by HHS Secretary Alex Azar's declaration of a public health emergency pursuant to Section 319 of the Public Health Service Act on Jan. 31, 2020.
This flexibility has already been applied in numerous instances to the healthcare community, including several instances related to telehealth, provider enrollment and suspensions of CMS' enforcement discretion on survey inspections. The type of overall flexibilities and their legal justification may be found here. Flexibilities under Section 1135 on the state level may be triggered. Thirteen states have sent communications to HHS seeking and receiving flexibilities under the Section 1135 waivers. These requests may be found here.
It should be noted that national emergencies declared under the NEA do not trigger any additional dedicated or supplemental funding streams.
The president invoked sections 501(b) as well as sections 401(a), 502 and 503 of the Stafford Act on March 13 by declaration. The declaration under Section 501(b) simply triggered the responsibility for Stafford Act-authorized activities under the federal government (as opposed to Indian tribal governments). Within the Stafford Act, two separate declarations may be made: emergency declarations and major disaster declarations. Under the March 13 declaration, funding and assistance will be routed through FEMA, with additional actions or coordination requested from HHS, the treasury department and the U.S. Department of Homeland Security. Typically, individual states or territories must request assistance under the Stafford Act, which is then approved by the president in consultation with FEMA. This is a rare incident where a nationwide emergency was declared without a prompt from the states or territories.
Major disaster declarations authorize a wider range of federal assistance to states, territories, local governments and the like compared with emergency declarations outlined below. Typically, major disasters are natural catastrophes. However, the president noted in the March 13 letter that the severity of the situation made such a declaration appropriate. Typically, an emergency declaration is a prerequisite for a major disaster declaration, but in this case, both were invoked simultaneously by the president.
A major disaster declaration can allow the president to direct any federal agency to utilize its resources to mitigate the impact of a disaster. The declaration also unlocks reimbursement for public assistance, which includes assistance with state and local governments in the distribution of health and safety measures, medicine and food. More importantly, the declaration, under Section 403(a) of the Stafford Act, allows support and reimbursement for "essential assistance," or assistance "essential to meeting immediate threats to life and property resulting from a disaster." This includes:
Title IV of the Stafford Act also authorizes numerous other types of assistance that may be used to address social determinants or other wraparound services to healthcare, including:
Under both Title IV and V of the Stafford Act, reimbursement may be made for eligible emergency protective measures relevant to healthcare as a form of public assistance undertaken by eligible entities, including:
Section 403 of the Stafford Act also allows the president to tap into U.S. Department of Defense (DoD) resources, including the National Guard, to supplement any disaster relief services, which can provide much-needed resources and personnel for addressing various issues of pandemic response.
The president has the additional authority beyond these provisions to determine who and what qualifies as an "essential service provider" during this declaration. Typically, essential service providers coordinate electrical power, gas, water, etc. but this may be expanded. Under Section 427, essential service providers also include municipal entities, nonprofit entities or for-profit entities. It is unclear whether the president will provide greater specificity in this section in the coming days. Finally, major disasters open the federal tap for funds to restore damaged facilities, buildings, etc. However, these functions are not wholly relevant for healthcare entities, not experiencing a traditional major disaster such as a flood or hurricane.
Under the Stafford Act, costs associated with major disaster relief under Title IV and emergency declarations (see below) shall be shared between the federal government and the recipient, with the federal government not paying less than 75 percent of the share. The state recipient decides how the non-federal share (25 percent or less) is shared between subrecipients of any grant, such as state and local governments. The President has the authority to waive the non-federal cost-share for public assistance activities and has done so for the states of California, Washington and New York. These states are receiving at 100 percent federal cost-share for disaster-related funding due to the intensity of the outbreak in those states. National Guard has also been mobilized in these states.
Emergency declarations may be used broadly and are technically defined as "any occasion or instance for which, in the determination of the President, federal assistance is needed to supplement State and local efforts…to save lives and…public health and safety…"4 These particular declarations authorize a form of public assistance, typically to reduce threats to public health and safety and include emergency shelter and medicine. Although not currently activated, an emergency declaration may also trigger individual assistance, which may be used to help families and individuals respond to issues following a disaster.
Under Section 502 of the Stafford Act, eligible emergency protective measures (see above) may be reimbursed under the public assistance program as long as they are not duplicative with efforts undertaken by other federal agencies, such as HHS and the CDC. It should be noted that emergency declarations come with a funding limit of $5 million per declaration unless the president authorizes additional funding. Congress must be notified if the $5 million thresholds will be exceeded.
How to Access FEMA Funding: Those seeking public assistance through FEMA and in coordination with other federal agencies may apply for such assistance through a simplified federal portal after contacting the state or local emergency management agency to set up an account. It is important to reach out to your state emergency management agency. Please note that by law, applicants must seek reimbursement through a legal recipient of Stafford Act-authorized federal dollars, i.e., a state, locality or tribe. Applicants may be state, local, tribal and territorial governments as well as eligible nonprofits and facilities of public entities, including and especially state emergency management agencies. More specifically, a public facility is one that a state, the territorial, tribal or local government owns or has legal responsibility for maintaining. A private nonprofit facility is one that provides certain types of care, including emergency and medical care, and care for the aged and disabled.5
FEMA has resources and updates for most states. For instance, videos on operating the portal and submitting requests for public assistance (RPAs) may be found here. An additional fact sheet with application information may be found here. Other FEMA resources may be found here.
COVID-19 Relief Fund. Of the $150 billion, a total of $3 billion is available to the District of Columbia and the U.S. territories, and $8 billion is available for tribes. The remaining funds would be distributed based on population, but each of the 50 states is guaranteed to receive at least $1.25 billion for fiscal year 2020. These funds must be used to cover necessary expenditures incurred due to the COVID-19 that was not accounted for in the government's budget and incurred between March 1 and Dec. 20, 2020.
We stand ready to assist you. Please contact the Holland & Knight Healthcare & Life Sciences Policy team – Lisa Hawke, Rob Bradner, Miranda Franco and Ethan Jorgensen-Earp – with specific questions/opportunities.
1 50 U.S.C §§1601 et seq.
2 42 U.S.C. §§5121 et seq.
3 42 U.S.C. 1320b–5.
4 42 U.S.C. §5122(1)
5 Means "any hospital, outpatient facility, rehabilitation facility, or facility for long-term care" as defined in Section 645 of the Public Health Service Act similar facility offering diagnosis or treatment of mental or physical injury or disease, including the administrative and support facilities essential to the operation of such medical facilities even if not contiguous (44 CFR § 206.221).
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