CMS Distributing $30 Billion Under the CARES Act, Medicare Providers/Suppliers to Automatically Receive ACH Deposits . . . but Conditions Apply

Today, the U.S. Department of Health and Human Services (“HHS”) announced that it would directly deposit $30 billion in funds into the accounts of providers/suppliers that billed Medicare fee-for-service claims last year.  This initial $30 billion is part of a $100 billion appropriation under the CARES Act that HHS will disburse through its grants from the Public Health and Social Service Emergency Fund (“PHSSEF”).  HHS has provided information about this initial $30 billion distribution here:  https://www.hhs.gov/provider-relief/index.html

According to HHS, each provider/supplier will receive funds automatically via ACH  transfer.  The amount that each provider/supplier receives will be proportional to that provider/supplier’s share of all Medicare FFS billings from 2019.

However, Providers/supplies must be aware that there are terms and conditions according to HHS guidance.  Note that this is in direct contrast to statements that CMS Administrator Verma made earlier this week (but is consistent with the language of the CARES Act).

What providers/suppliers need to know:

• Absent further guidance, the funds that each provider/supplier receives will have “strings attached.”
• Within 30 days after receiving funds, each provider supplier must either:
  • Electronically accept the following terms and conditions: https://www.hhs.gov/sites/default/files/relief-fund-payment-terms-and-conditions-04092020.pdf

OR

• Contact HHS to reject the terms and conditions and receive instructions to return the money.
  • Note that the link to accept the terms/conditions will not be active until April 13 according to HHS. Both the link to accept terms/conditions and contact information to reject the terms/conditions are supposed to be added to the following webpage in the near future: https://www.hhs.gov/provider-relief/index.html
• If accepted, the funds may only be used to prevent, prepare for, and respond to coronavirus. All funds not used for health care related expenses or lost revenues attributable to coronavirus must be returned.
• If funds are accepted, providers/suppliers will be required to submit reports related to how funds are spent. Note that further HHS guidance is still required regarding the precise information and documentation required.
• As a condition to receiving these funds, providers/suppliers must agree not to seek collection of out-of-pocket payments from an out-of-network 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.

• The terms and conditions also include a series of statutory limitations on the use of the funds (if retained). Further discussion of these statutory terms will be included in future blogs.

Again, the money will be received by providers/supplier before the terms/conditions are accepted.  The provider/supplier must accept the terms/conditions in order to retain the funds,

Finally, please note that HHS plans to disburse an additional $70 billion through the PHSSEF.  While details of additional plans have not fully been revealed, HHS has stated that is plans to disburse those funds to:  (a) providers in areas that suffered from the greatest volume of COVID-19 cases; (b) rural providers; (c) providers of services with lower shares of Medicare reimbursement or who predominantly serve the Medicaid population; and (d) providers requesting reimbursement for the treatment of uninsured Americans.

It remains to be seen whether an application process will be required for providers/suppliers that seek access to the remaining $70 billion PHSSEF funding.  However, providers/suppliers that have itemized and are ready to provide an accounting of coronavirus-related expenditures (and lost revenues related to coronavirus) will be better prepared if such information is requested as part of an application process.

For more information regarding the CMS distributions under the CARES Act or other questions, please contact your regular HLP attorney, or Partners@thehlp.com, or call (212) 734-0128 or (248) 996-8510.