The $2.2 trillion coronavirus stimulus package, signed into law March 27, includes more than $117 billion earmarked to hospitals and other providers. The Coronavirus Aid, Relief, and Economic Security (CARES) Act is an 880-page sweeping package of grants and loans intended to keep the economy afloat and provide immediate help to frontline providers.

Last Tuesday, Centers for Medicare and Medicaid Services (CMS) announced release of $30 billion from the earmark appropriation which will go to hospitals to a broader set of providers to follow in two weeks. Here’s an overview of portions most relevant to provider organizations:

Overall Goal of the CARES Act: “To provide emergency assistance and health care response for individuals, families, and businesses affected by the 2020 coronavirus pandemic.”

Eligibility: Eligible health care providers include public entities, Medicare or Medicaid enrolled suppliers and providers “that provide diagnoses, testing, or care for individuals with possible or actual cases of COVID–19.”

Key Themes: The most prominent themes in the CARES Act are these:

Organizations that are experiencing the most direct negative financial and operational impact of the coronavirus are the immediate concern (i.e. hospitals, nursing homes, and clinics in hot spots).

Funds are available for expenses such as building or construction of temporary structures, leasing of properties, medical supplies and equipment including PPE and testing supplies, increased workforce and training, emergency operation centers, retrofitting facilities, and surge capacity.

Complete replacement of lost revenues for elective procedures and related operating losses is not sought in the CARES Act. A second stimulus package that addresses additional needs of health providers is likely.

Funds are not explicitly earmarked to medical practices in the CARES Act, but physicians are eligible to participate in the $349 billion Small Business Act Paycheck Protection Program or can be included with hospital filings.

Sources of Funding: The primary source is the Department of Health and Human Services’ (HHS)Public Health and Social Services Emergency Fund ($100 billion). Grants will be made to providers on a rolling basis through “the most efficient payment systems practicable to provide emergency payment.” Last Tuesday, CMS released of $30 billion appropriated to hospitals, on the basis of their Medicare revenues. Future disbursements will be based on other
considerations by CMS. Other sources of funding in the CARES Act are:

The Substance Abuse and Mental Health Service Administration (SAMHSA): $250 million for Certified Community Behavioral Health Clinics, $50 million for suicide prevention programs, $100 million for grants to address mental health and substance use disorders.

The Health Resources and Services Administration (HRSA): $90 million to expand services and capacity for rural hospitals, telehealth, poison control centers, and the Ryan White HIV/AIDS programs, and $185 million to rural and critical access hospitals.

The Distance Learning, Telemedicine, and Broadband Program under the Department of Agriculture’s Rural Development Programs: $25 million to facilitate distance learning and telemedicine in rural areas.

The Federal Communications Commission (FCC): $200 million to support expansion of telehealth use.

$1.32 billion in supplemental funding for community health centers.



ERDMAN TAKEAWAY: If you operate a nursing home, clinic, or hospital, you’re eligible for a grant or loan from the CARES Act, but quick action is necessary. More information about the application process can be found on the U.S. Treasury site: https://home.treasury.gov/policy-issues/cares

S.3548 “Coronavirus Aid, Relief, and Economic Security Act” https://www.congress.gov/bill/116th-congress/senate-bill/3548/text
CARES Act, U.S. Department of the Treasury,https://home.treasury.gov/policy-issues/top-priorities/cares-act

Last week, a report from the HHS’ Inspector drew attention to supply and capacity deficiencies in hospitals.
The Office of the Inspector General conducted telephone interviews with 323 hospital CEO’s asking what worried them most in handling the coronavirus in their facility. They indicated three major concerns: lack of adequate supplies (PPE, masks, ventilators) and testing, the health and safety of their frontline caregivers, and the adequacy of their physical facilities to handle surge and infection controls. All believe the coronavirus will erode revenues and margins not easily recovered.

The Kaiser Family Foundation last Tuesday indicated between 670,000 and 2 million uninsured people in the U.S. could eventually be hospitalized for COVID-19. And public health officials estimate the surge will hit hospitals this week or next.

ERDMAN is monitoring other channels to aggregate best practices in mid and long-range planning in response to COVID-19 and future pandemics. Key facility themes center on all future beds being ICU capable, advanced reverse pressure environments and strategies for flex capacity to handle surges and manage non-pandemic services in secure environments.

“Hospital Experiences Responding to the COVID-19 Pandemic: Results of a National Pulse Survey March 23–27, 2020” Office of the Inspector General, US Department of Health and Human Services oig.hhs.gov/oei/reports/oei-06-20-00300.asp

Levitt, L.; Schwartz, K.; Lopez, E. (April 7, 2020). “Estimated cost of treating the uninsured hospitalized with COVID-19.”Kaiser Family Foundation. https://www.kff.org/uninsured/issue-brief/estimated-cost-of-treating-the-uninsured-hospitalized-with-covid-19/.

For more information, contact ERDMAN at info@erdman.com

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