On April 24, 2020, President Trump signed the Paycheck Protection Program and Health Care Enhancements Act, a supplemental stimulus bill which further funds the Paycheck Protection Program and also includes $75 billion in new relief funding for hospitals and other health care providers.  The Act provides an additional $25 billion for testing. 

COVID-19 test funding is intended to be used to test for both active infection and prior exposure, including to support and scale up workforce testing, conduct surveillance, and trace contacts.  Thus, the health care funds in the Enhancements Act aim to aid hospitals and health care providers under stress from the COVID-19 pandemic in addition to aiding other employers with workforce testing.

Like in the CARES Act, the $75 billion for eligible health care providers is restricted to:

• health care related expenses or lost revenues that are attributable to COVID-19,
• provided that the funds may not be used to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse, and
• provided further that recipients of payments must submit reports and maintain documentation to demonstrate compliance with the conditions for payment. 

“Eligible health care providers” are those that provide diagnoses, testing, or care for individuals with possible or confirmed cases of COVID-19.  While the Enhancements Act permits pre-payment, prospective payment, or retrospective payment (as determined appropriate by the Secretary of the Department of Health and Human Services (HHS) in consideration of the most efficient payment systems practicable to provide emergency payment), an application from the provider justifying the provider’s need for the payment is still required. 

Also on April 24, HHS commenced the second general distribution of payments to hospitals under the CARES Act Provider Relief Fund. This wave of $20 billion in addition to the first general distribution of $30 billion that commenced on April 10, 2020 combines to provide $50 billion of the $100 billion in relief funds to health care providers under the CARES Act. 

Pursuant to an HHS fact sheet, payment to providers from this $20 billion wave are calculated so that a provider’s allocation from the entire $50 billion general distribution will be in proportion to such provider’s 2018 net patient revenue. Total revenues of Medicare facilities and providers in 2018 is estimated to be $2.5 trillion. Providers can estimate their expected general revenue distribution through the following formula: (Individual provider 2018 revenue/$2.5 trillion) X $50 billion = expected general distribution. 

Although HHS doesn’t specify, it appears that providers or suppliers that are not cost-reporting entities may still be eligible for a share of the second wave of funds—though providers or suppliers who are reimbursed primarily or exclusively under a fee schedule would likely not see much from the second wave.  Eligible providers that do not receive an automatic payment are instructed by HHS to go to the Provider Relief portal and follow the instructions to seek payment under the second general distribution. 

All providers in the second wave of CARES Act payments, including those paid off the revenue data already submitted in CMS cost reports, are required under the Terms and Conditions to submit revenue information to the provider portal for later verification. 

Please visit our COVID-19 Toolkit for all of Taft’s COVID-19 law bulletins, including the Paycheck Protection Program and other COVID-19 financial aid and resources.