CARES ACT 2.0: HHS Gets Another Infusion of $100 Billion

April 24, 2020

On March 27, 2020, the President signed the bipartisan CARES Act that provides $100 billion in relief funds to hospitals and other healthcare providers on the front lines of the coronavirus response. This funding will be used to support healthcare-related expenses or lost revenue attributable to COVID-19 and to ensure uninsured Americans can get testing and treatment for COVID-19.

HHS distributed an initial $30 billion on April 10, 2020. These are payments, not loans, to healthcare providers and will not need to be repaid. All facilities and providers that received Medicare fee-for-service (FFS) reimbursements in 2019 are eligible for this initial rapid distribution. Providers will be distributed a portion of the initial $30 billion based on their share of total Medicare FFS reimbursements in 2019. All relief payments will be made to the billing organization according to its Taxpayer Identification Number.

CARES ACT 1.0 funds were allocated as follows:

$50 Billion: General Allocation

Providers who receive funds from the general distribution have to sign an attestation confirming receipt of funds and agree to the terms and conditions of payment and confirm the CMS cost report. As a condition to receiving these funds, providers must agree not to seek collection of out-of-pocket payments from a presumptive or actual COVID-19 patient that are greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network provider.

Targeted Allocations

• $10 billion will be allocated for a targeted distribution to hospitals in areas that have been particularly impacted by the COVID-19 outbreak.
•  A portion of the $100 billion Provider Relief Fund will be used to reimburse healthcare providers, at Medicare rates, for COVID-related treatment of the uninsured.
• $10 billion will be allocated for rural health clinics and hospitals, most of which operate on especially thin margins and are far less likely to be profitable than their urban counterparts.
• $400 million will be allocated for Indian Health Service facilities, distributed on the basis of operating expenses.
• Some providers will receive further, separate funding, including skilled nursing facilities, dentists, and providers that solely take Medicaid.

CARES ACT 2.0 funds are to be disbursed as follows:

$75 billion is allocated for reimbursement to hospitals and healthcare providers to support the need for COVID-19 related expenses and lost revenue. The language remains the same as CARES Act. 

$25 billion is designated for necessary expenses to research, develop, validate, manufacture, purchase, administer, and expand capacity for COVID-19 tests.

• $11 billion for states, localities, territories, and tribes to develop, purchase, administer, process, and analyze COVID-19 tests, scale-up laboratory capacity, trace contacts, and support employer testing. Funds are also made available to employers for testing.
• $2 billion provided to States consistent with the Public Health Emergency Preparedness grant formula, ensuring every state receives funding;
• $4.25 billion provided to areas based on relative number of COVID-19 cases;
• $750 million provided to tribes, tribal organizations, and urban Indian health organizations in coordination with Indian Health Service.
• $1 billion provided to Centers for Disease Control and Prevention for surveillance, epidemiology, laboratory capacity expansion, contact tracing, public health data surveillance and analytics infrastructure modernization.
• $1.8 billion provided to the National Institutes of Health to develop, validate, improve, and implement testing and associated technologies; to accelerate research, development, and implementation of point-of-care and other rapid testing; and for partnerships with governmental and non-governmental entities to research, develop, and implement the activities.
• $1 billion for the Biomedical Advanced Research and Development Authority for advanced research, development, manufacturing, production, and purchase of diagnostic, serologic, or other COVID-19 tests or related supplies.
• $22 million for the Food and Drug Administration to support activities associated with diagnostic, serological, antigen, and other tests, and related administrative activities;
• $825 million for Community Health Centers and rural health clinics;
• Up to $1 billion may be used to cover costs of testing for the uninsured

 Includes $6 million for HHS Office of Inspector General for oversight activities.

CARES ACT 2.0 also lists out a series of reporting requirements that HHS must follow, including a report on COVID-19 testing no later than 21 days after the enactment of this Act. No later than 30 days, the HHS Secretary shall provide a strategic testing plan to assist States, localities, territories, tribes, tribal organizations, and urban Indian health organizations, in understanding COVID-19 testing for both active infection and prior exposure. The plan shall address how to increase domestic testing capacity and outline Federal resources that are available to support the testing plans of each State, locality, territory, tribe, tribal organization, and urban Indian health organization.