Summary of Healthcare Provisions of COVID-19 Stimulus Package #3 (CARES Act)

Barry LeePartner, Manatt, Phelps & Phillips, LLP

The Big Picture

On March 27, Congress passed a third stimulus package in response to COVID-19—H.R. 748, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). This summary reviews healthcare provisions in the sweeping, $2 trillion legislation, which also includes provisions related to, for example, unemployment benefits, loans and aid to industries (e.g., airlines), tax credits for businesses that keep idled employees on their payroll during the pandemic, emergency assistance for schools, and stimulus checks (or direct deposits) to most Americans.

Many of the healthcare provisions in the CARES Act are consistent with provisions in the stimulus package that Senate Republicans offered late last week, but bipartisan negotiations this week led to some changes. For example, Senate Minority Leader Chuck Schumer (D-NY) highlighted a $55 billion increase (for a total of $100 billion) in a new program to provide direct aid to healthcare providers—hospitals, public entities, not-for-profit entities, and Medicare- and Medicaid-enrolled suppliers and institutional providers—to cover costs related to the current public health crisis. The bill also includes a new $150 billion Coronavirus Relief Fund for state, tribal and local governments.

House Democrats have also developed additional legislation (H.R. 6379) to address COVID-19, which includes significant healthcare provisions. While most of these provisions were not included in the CARES Act, they likely represent the House Democrats’ priorities for a fourth stimulus bill.

Click here to download Manatt Health’s full analysis of the CARES Act, organized in the following sections:

  • Appropriations for the Public Health and Social Service Emergency Fund—the bill provides substantial appropriations for this fund, to be administered by the Department of Health and Human Services (HHS), including $27 billion for vaccines, therapeutics, diagnostics and other preparedness needs and $275 million to increase health system capacity to respond to COVID-19. (See page 3)
    • Direct Funding for Healthcare Providers—the fund includes $100 billion to reimburse eligible healthcare providers for expenses or lost revenues attributable to COVID-19.
  • Coronavirus Relief Fund—this section establishes a $150 billion fund for the Secretary of the Treasury to make payments for COVID-19 response efforts to state, tribal and local governments. (See page 6)
  • Additional Appropriations for Federal Agencies—the bill allocates funding to HHS agencies and the Department of Defense for responding to COVID-19. (See page 4)
  • Addressing Supply Shortages—these sections include provisions aimed at increasing medical supplies, such as respirators, and establishes new reporting requirements for manufacturers of “life-saving drugs.” (See page 6)
  • Access to Testing and Treatment for COVID-19 Patients—these sections include provisions related to coverage and cost-sharing for COVID-19 testing, treatment and vaccines for Medicare, Medicaid, and individual and employer insurance programs. It also includes corrections to provisions enacted in the previous COVID-19 stimulus packages, including clarification regarding populations eligible for the new, optional Medicaid coverage category for uninsured individuals. (See page 7)
  • Significant Additional Funding/Payment Increases for Providers—in addition to the appropriations outlined above, these sections include funding such as temporarily lifting the Medicare sequester, a Medicare hospital Inpatient Prospective Payment System (IPPS) add-on payment, and several provisions impacting funding for health centers and other providers. (See page 9)
  • Telehealth Provisions—most notably, these sections include provisions to expand HHS authority to use Section 1135 waivers in a way that extends the waivers to providers of telehealth services; to permit Medicare payment for telehealth services delivered by Federally Qualified Health Centers and Rural Health Clinics during emergency periods; and to relax criteria for eligibility for telehealth network and resource center grant programs. (See page 11)
  • Home Health and Post-Acute Care Provisions—these sections include provisions to improve the care planning process for Medicare and Medicaid home health services, increase access to post-acute care during this emergency period, and provide home and community-based care services in acute care hospitals. (See page 12)
  • Other COVID-19 Provisions—these include a range of targeted provisions impacting healthcare programs and services during the state of emergency. (See page 13)

The package also includes provisions that are not directly related to responding to COVID-19, including those outlined below. Notably, the delay of Medicaid Disproportionate Share Hospital (DSH) allotment reductions and continuation of healthcare extenders through November 30, 2020, sets the next “must-pass” target for Congress to potentially tack on provisions related to healthcare priorities—such as drug pricing and surprise billing—that have fallen to the wayside as COVID-19 dominates lawmakers’ near-term focus.

  • Delay in Medicaid Disproportionate Share Hospital Allotment Reductions—the bill delays the effective date of Medicaid DSH allotment reductions through November 30, 2020. (See page 15)
  • Healthcare Extenders—the bill extends several healthcare programs through November 30, 2020 (which were otherwise set to expire on May 22); this includes community health center funding and an extension and expansion of the community mental health services demonstration program. (See page 16)
  • Privacy Provisions—these sections include changes to confidentiality and disclosure of records for patients with substance use disorder (42 CFR Part 2); while these disclosures could impact coordination of care during this state of emergency, the statutory changes would endure. (See page 14)
  • Other Provisions (See page 17)