Following up on Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma’s statements on Tuesday, the Department of Health and Human Services (HHS) issued a press release announcing the immediate disbursement of $30 billion to Medicare hospitals and providers starting April 10. These payments have been or are already in the process of being made. The announcement states:

“Facilities and providers are allotted a portion of the $30 billion based on their share of 2019 Medicare fee-for-service (FFS) reimbursements. These are payments, not loans, to healthcare providers, and will not need to be repaid.

HHS is partnering with UnitedHealth Group (UHG) to deliver the initial $30 billion distribution to providers as quickly as possible. Providers will be paid via Automated Clearing House account information on file with UHG, UnitedHealthcare, or Optum Bank, or used for reimbursements from the Centers for Medicare & Medicaid Services (CMS). Providers who normally receive a paper check for reimbursement from CMS will receive a paper check in the mail for this payment as well, within the next few weeks.

UnitedHealth Group will donate all fees for the administration of the CARES Act provider relief fund.”

HHS further explained how Medicare FFS providers can estimate their payment:

“A [eligible] provider can estimate their payment by dividing their 2019 Medicare FFS (not including Medicare Advantage) payments they received by $484,000,000,000, and multiply that ratio by $30,000,000,000. Providers can obtain their 2019 Medicare FFS billings from their organization’s revenue management system.

As an example: A community hospital billed Medicare FFS $121 million in 2019. To determine how much they would receive, use this equation:

$121,000,000/$484,000,000,000 x $30,000,000,000 = $7,500,000”

While Administrator Verma had said these funds would have “no strings attached,” HHS’s announcement clarifies that, of course, there are some strings. Within 30 days after receiving payment, “providers must sign an attestation confirming receipt of the funds and agreeing to the terms and conditions of payment.” (A portal for signing the attestation will be open the week of April 13, 2020 and will be linked from HHS has posted the “Relief Fund Payment Terms and Conditions,” which largely track those dictated by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. They include:

  • A certification “that the Payment will only be used to prevent, prepare for, and respond to coronavirus, and shall reimburse the Recipient only for health care related expenses or lost revenues that are attributable to coronavirus.”
  • A certification that the provider “will not use the Payment to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse.”
  • Recipients are required to certify “that it will not seek to collect from the patient out-of-pocket expenses in an amount greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network Recipient.”
  • Recipients will be required to submit reports and maintain documentation, as HHS specifies to ensure compliance with the conditions imposed by the CARES Act for such payments.
  • Providers receiving more than $150,000 in total funds under the CARES Act, the Families First Coronavirus Response Act, the Coronavirus Preparedness and Response Supplemental Appropriations Act, or future laws primarily making appropriations for the coronavirus response and related activities will be required to submit a report to the HHS Secretary and the Pandemic Response Accountability Committee containing:
    • The total amount of funds received from HHS under the three laws;
    • The amount of funds received that were expended or obligated for each project or activity;
    • A detailed list of all projects or activities for which large [not defined] covered funds were expended or obligated (including an estimate of the number of jobs created or retained and a list of sub-contracts or subgrants awarded).

HHS’s announcement also confirms that the agency will follow up with additional disbursements for other providers: “HHS and the Administration are working rapidly on additional targeted distributions to providers that will focus on providers in areas particularly impacted by the COVID-19 outbreak, rural providers, and providers of services with lower shares of Medicare FFS reimbursement or who predominantly serve the Medicaid population.”

Lastly, HHS confirmed that “this supplemental funding [the remaining $70 billion] will also be used to reimburse providers for COVID-19 care for uninsured Americans.” On Friday, April 3, HHS Secretary Alex Azar announced HHS will “use a portion of [CARES Act] funding to cover providers’ costs of delivering COVID-19 care for the uninsured, sending the money to providers through the same mechanism used for testing. . . Providers will be reimbursed at Medicare rates.” The Kaiser Health Foundation has estimated that these payments could consume between $13.9 billion to $41.8 billion of the fund, depending on the severity of the pandemic-related case mix and including the 20 percent Medicare add-on included in the CARES Act for inpatient reimbursements for patients with COVID-19. HHS announced that, as a condition of receiving these payments for the uninsured at Medicare rates, “providers are obligated to abstain from ‘balance billing’ any patient for COVID-related treatment.”  Coupled with the restriction on charging out-of-network rates, HHS has essentially forbidden balance billing of COVID-19 patients for any provider receiving payment from the $100 billion emergency fund.