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Healthcare Providers Must Comply with Various Terms and Conditions to Obtain (or Retain) Certain Payments Made from the CARES Act Provider Relief Fund

This article was updated on May 13, 2020. View the updated version here.

The CARES Act, which was signed into law on March 27, earmarks $100 billion for “health care related expenses or lost revenues that are attributable” to the COVID-19 pandemic.  Legislatively titled the “Public Health and Social Services Emergency Fund,” and colloquially referred to as the “CARES Act Provider Relief Fund,” the stated purpose of this $100 billion fund is to address the economic harm suffered by healthcare providers that have incurred (or will incur) additional expenses, and have lost (or will lose) significant revenue (particularly due to the cessation of elective procedures), as a result of the pandemic.  Fifty billion dollars of this Provider Relief Fund is further “allocated for general distribution to Medicare facilities and providers impacted by COVID-19”.  In order to obtain (or retain) payments made from this $50 Billion General Allocation (further described in this related blog entry and consisting of the initial $30 Billion Allocation that was distributed between April 10 and April 17 in proportion to an eligible healthcare provider’s share of Medicare fee-for-service reimbursements in 2019 and the $20 Billion Allocation that may be distributed as of April 24 based on an eligible healthcare provider’s net patient revenue in 2018), eligible healthcare providers must sign one attestation in connection with any payments received from the $30 Billion Allocation and a separate attestation in connection with any payments received from the $20 Billion Allocation. Each attestation requires a recipient healthcare provider to (a) confirm receipt of the applicable payment and (b) agree to comply with certain “Relief Fund Payment Terms and Conditions”.  Except as noted below, the Terms and Conditions for the $30 Billion Allocation and the Terms and Conditions for the $20 Billion Allocation are identical.

It is important for providers to note:

  • Attesting to (and complying with) the applicable Terms and Conditions permits a healthcare provider to obtain (or retain) payments made from the $50 Billion General Allocation, which payments are not loans, but rather grants that do not need to be repaid.
  • A healthcare provider must accept (or reject) the applicable Terms and Conditions within 30 days of receipt of a payment from the $50 Billion General Allocation and, even if not explicitly accepted, a healthcare provider will be deemed to have accepted these Terms and Conditions if the healthcare provider has not contacted HHS regarding return of such a payment within 30 days of receipt.
  • To be legally entitled to obtain (or retain) a payment made from the $50 Billion General Allocation, a healthcare provider must satisfy (and attest that it can satisfy) each of the applicable Terms and Conditions.

The Terms and Conditions for both the $30 Billion Allocation and the $20 Billion Allocation require a recipient healthcare provider to:

  • Certify that it (a) billed Medicare in 2019, (b) provides or provided after January 31, 2020, diagnoses, testing, or care for individuals with possible or actual cases of COVID-19, (c) is not currently terminated from participation in Medicare or precluded from receiving payment through Medicare Advantage or Part D, (d) is not currently excluded from participation in Medicare, Medicaid, and other Federal health care programs, and (e) does not currently have its Medicare billing privileges revoked.
    • Note: In connection with this certification, HHS first issued guidance providing that payments made from the initial $30 Billion Allocation would, among other things, provide relief to “those providers who are struggling to keep their doors open due to healthy patients delaying care and cancelled elective surgery” and subsequently issued guidance providing that: “If you ceased operation as a result of the COVID-19 pandemic, you are still eligible to receive funds so long as you provided diagnoses, testing, or care for individuals with possible or actual cases of COVID-19. Care does not have to be specific to treating COVID-19. HHS broadly views every patient as a possible case of COVID-19.”  Recently, HHS issued General Distribution Portal FAQs, which includes the following: ““Who is eligible to receive payments from the [CARES Act] Provider Relief Fund? … To be eligible for the General Distribution [consisting of both the initial $30 Billion Allocation and the subsequent $20 Billion Allocation], a provider must have billed Medicare in 2019 and provide or [have] provided after January 31, 2020 diagnoses, testing, or care for individuals with possible or actual cases of COVID-19. HHS broadly views every patient as a possible case of COVID-19. $50 billion will be disbursed in the General Distribution.”
  • Certify that the payment will only be used to prevent, prepare for, and respond to coronavirus, and shall reimburse the recipient healthcare provider only for health care related expenses or lost revenues that are attributable to coronavirus.
  • Certify that it 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.
  • Submit reports as the HHS Secretary determines are needed to ensure compliance with conditions that are imposed on the payment, and such reports shall be in such form, with such content, as specified by the HHS Secretary in future program instructions directed to all recipient healthcare providers.
  • Certify that all information it provides as part of its application for the payment as well as all information and reports relating to the payment that it provides in the future at the request of the HHS Secretary or the U.S. Inspector General, are true, accurate and complete to the best of its knowledge, and ­acknowledge that any deliberate omission, misrepresentation, or falsification of any information contained in its payment application or future reports may be punishable by criminal, civil, or administrative penalties, including but not limited to, revocation of Medicare billing privileges, exclusion from federal healthcare program, and/or the imposition of fines, civil damages, and/or imprisonment.
  • Submit a report to the HHS Secretary and the Pandemic Response Accountability Committee not later than 10 days after the end of each calendar quarter if the healthcare provider receives more than a total of $150,000 in funds under the CARES Act, the Coronavirus Preparedness and Response Supplemental Appropriations Act, the Families First Coronavirus Response Act, or any other Act primarily making appropriations for the coronavirus response and related activities.
    • Note: This report must include certain information further described in connection with this requirement, including, where applicable, information necessary to comply with the Federal Funding Accountability and Transparency Act of 2006.
  • Maintain, and upon request of the Secretary promptly submit, appropriate records and cost documentation (and other information required by future program instructions) to substantiate the reimbursement of costs, and fully cooperate in all audits the HHS Secretary, U.S. Inspector General, or Pandemic Response Accountability Committee conducts to ensure compliance with the Terms and Conditions.
    • Note: In satisfying this requirement, healthcare providers must comply with documentation requirements set forth in 45 CFR § 75.302 and record retention requirements set forth in 45 CFR § 75.361 through 75.365.
  • Certify that it will not seek to collect from a patient with a presumptive or actual case of COVID-19 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 healthcare provider.

The Terms and Conditions for only the $20 Billion Allocation also require a recipient healthcare provider to:

  • Submit general revenue data for calendar year 2018 to the HHS Secretary when applying to receive a payment, or within 30 days of having received a payment.
  • Consent to HHS publicly disclosing the payment that the recipient provider may receive from the Provider Relief Fund and acknowledge that such disclosure may allow some third parties to estimate the recipient healthcare provider’s gross receipts or sales, program service revenue, or other equivalent information.

In addition to these requirements, the Terms and Conditions for both the $30 Billion Allocation and the $20 Billion Allocation set forth numerous statutory prohibitions on the use of payments made therefrom.  Specifically, healthcare providers are statutorily prohibited from using such payments to (a) pay the salary of an individual, through a grant or other mechanism, at a rate in excess of Executive Level II, which is currently set at $197,300, (b) advocate for or promote gun control, (c) conduct lobbying activities, (d) fund abortions (subject to certain exceptions), (e) fund embryo research, (f) promote the legalization of controlled substances, (g) maintain or establish a computer network unless such network blocks pornography, (h) fund the Association of Community Organizations for Reform Now (ACORN) or any of its affiliates, (i) fund needle exchanges in connection with illegal drugs (subject to certain exceptions), (j) engage in propaganda within the United States not authorized by Congress, (k) act in contravention of the federal Privacy Act, (l) enter into an agreement with an entity that requires its agents to sign internal confidentiality agreements prohibiting them from reporting fraud, waste or abuse to an investigative or law enforcement agency, (m) enforce certain nondisclosure agreements, (n) enter into an agreement with any corporation that has certain unpaid federal tax liabilities, (o) enter into an agreement with any corporation that was convicted of a felony criminal violation under any federal law within the preceding 24 months, (p) fund any project that entails the capture or procurement of chimpanzees obtained from the wild, or (q) engage in any activity involving trafficking in persons.