How the CARES Act Supports America’s Healthcare System in the Fight Against COVID-19

March 30, 2020 | Insights



By Kate Goodrich

On March 27, 2020, after prolonged debates in the Senate, President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. The CARES Act is the largest stimulus package of its kind in history, intended not just to stabilize the economy, but to “provide emergency assistance and health care response for individuals, families, and businesses affected by the 2020 pandemic.”

As the nation grapples with the fallout from COVID-19, businesses, individuals, and particularly the healthcare system are left to confront extraordinarily difficult decisions in a truly unprecedented time. Jackson Walker has assembled a cross-sectional team to help our clients and our communities navigate the constantly evolving legal and regulatory landscapes brought about by this crisis.

Key Healthcare-Related Takeaways in the CARES Act:
  • Allocates $130 billion in direct financial relief to the medical and hospital industries, including for medical supplies and drug and device shortages.
  • Expands telehealth services in Medicare, including services unrelated to COVID-19 treatments, and waives several face-to-face requirement regulations to allow for more flexibility in treatment options.
  • Includes a number of Medicare and Medicaid provisions intended to increase support to healthcare workers and hospitals, as well as increase healthcare access for beneficiaries for the period designated as a public health emergency.
  • Attempts to address medical supply shortages by strengthening the supply chain of medical devices, drugs, and personal protective equipment, changes which are designed to outlast this period of emergency to better prepare the nation in the future.
  • Reauthorizes and provides funding for a number of public health programs.
  • Significantly changes the regulation of over-the-counter (OTC) drugs, including by allowing the Food and Drug Administration to approve changes to OTC drugs administratively rather than through full notice and comment rulemaking.

Title III – Supporting America’s Healthcare System in the Fight Against the Coronavirus

Subtitle A: Addressing Supply Shortages

  • Establishes that, by May 26, 2020, the “National Academies” shall examine and report on the security of the country’s medical product supply chain in order to assess the United States’ dependence on critical drugs and devices sourced outside of the United States, and develop recommendations to improve resiliency of the U.S. supply chain for critical drug and devices.
  • Adds certain types of medical supplies, including personal protective equipment (PPE), to the Strategic National Stockpile.
  • Identifies respiratory protective devices as covered countermeasures for use during a public health emergency.
  • Prioritizes the review of drug applications to mitigate emergency drug shortages.

Subtitle B: Access to Healthcare for COVID-19 Patients

  • Requires group health plans and health insurers to cover and reimburse providers of diagnostic testing relating to COVID-19 at pre-emergency-period negotiated rates.
  • Requires health plans to reimburse the provider of a COVID-19 diagnostic test at either: (1) the pre-negotiated rate between the health plan or issuer and provider; or (2) the cash price for such service as listed by the provider on a public internet website, unless the plan or issuer negotiates a rate with such provider for less than the listed cash price. The bill requires providers of diagnostic tests for COVID-19 to make the cash price for tests public on a website. Failure to comply with these requirements could result in HHS assessing a civil monetary penalty of up to $300 per day.
  • Requires health plans and issuers to rapidly cover “qualifying coronavirus preventative services,” which includes any item, service, or immunization intended to prevent or mitigate coronavirus, as well as vaccines for coronavirus, within 15 business days of their recommendation.
  • Authorizes and appropriates $1.32 billion for FY 2020 for supplemental awards to community health care centers for the prevention, diagnosis, and treatment of COVID-19.
  • The bill provides $29 million for each fiscal year 2021 through 2025 for Health Resources and Services Administration (HRSA) grant programs that promote the use of telehealth technologies for healthcare delivery, education, and health information services, with no less than 50 percent of the funds awarded for projects in rural areas. The bill requires the Secretary of HHS to report to Congress on the “activities and outcomes of the grant programs” no later than four years after enactment and every five years thereafter.
  • Amends Section 330I of the Public Health Service Act, relating to Telehealth Network and Telehealth Resource Centers Grant Programs, and Section 330A of the Public Health Service Act, relating to the Rural Health Care Services Outreach, Rural Health Network Development, and Small Healthcare Provider Quality Improvement Grant Programs.
  • Establishes a Ready Reserve Corps of doctors and nurses to be available “for service in time of public health or national emergency.”
  • Places limits on potential state and federal liability for health care volunteers or for harm caused to patients relating to the diagnosis, prevention, or treatment of COVID-19. This provision expressly preempts any inconsistent state or local law, unless that law offers greater protection from liability.
  • Amends certain federal regulations governing the confidentiality and disclosure of substance use disorder patient records.
  • Permits a state agency or Area Agency on Aging to transfer, without prior approval, not more than 100% of the funds received by the agency to meet the needs of the state or area served under the Older Americans Act, and provides that the same meaning shall be given to an individual unable to obtain nutrition due to social distancing as one who is homebound due to illness. During the COVID-19 public health emergency, this bill waives the typical dietary guidelines requirements under the Older Americans Act.
  • Mandates that the Secretary of HHS shall issue guidance on the sharing of patients’ protected health information within 180 days of the passage of the Act, including guidance on compliance with HIPAA regulations and applicable policies.
  • Directs that the Secretary of HHS shall carry out a national campaign that will improve awareness of the importance and safety of blood donation, and the need for donations for the blood supply during a public health emergency.

Subtitle C: Innovation

  • Directs that during a public health emergency, the Secretary of HHS must use competitive procedures, to the greatest extent possible, to enter into transactions to carry out public-health emergency health related projects and prohibits canceling those contracts solely because the emergency ends.
  • Expedites the development and approval of new animal drugs to prevent or treat diseases in animals that could have serious health consequences for humans.

Subtitle D: Finance Committee

  • Allows high-deductible health plans to cover “telehealth and other remote care services” prior to a patient’s reaching the deductible through 2021—effective immediately upon enactment of this bill.
  • Includes certain over-the-counter medical products (such as menstrual care products) as “qualified medical expenses” for increased flexibility of purchasing purposes.
  • Increases Medicare telehealth flexibilities and enhances Medicare telehealth services for Federally Qualified Health Centers and Rural Health Clinics during the COVID-19 emergency period.
  • Temporarily waives the requirements for face-to-face visits with physicians for dialysis patients.
  • Allows certain providers other than physicians (e.g., nurse practitioners, physician assistants, clinical nurse specialists) to certify that an individual is confined to his or her home in an attempt to improve care planning for Medicare Home Health Services recipients.
  • Temporarily suspends the 2% Medicare sequestration payment reduction from May 1, 2020 through December 31, 2020. The bill extends the Medicare sequestration period reduction through fiscal year 2030, instead of fiscal year 2029. This will increase payments to Medicare providers through the end of this period.
  • For discharges of Medicare beneficiaries who have been diagnosed with COVID-19 during this emergency time, the weighting factor of the diagnosis-related group to which the discharge is assigned will be increased by 20%.
  • Revises payment rates for Durable Medical Equipment (DME) under the Medicare program through the duration of this period of emergency.
  • Provides home and community-based services in acute care hospitals.
  • Treats technology-enabled collaborative learning and capacity building models as “medical assistance.”
  • Encourages the development and use of antimicrobial drugs.
  • Covers the COVID-19 vaccine (once developed and approved) under Part B of the Medicare Program, enabling beneficiaries to receive the vaccine without any cost-sharing. Similarly, all Medicare Part B beneficiaries may receive COVID-19 tests at no cost to them.
  • The legislation authorizes a temporary increase in Federal Medical Assistance Percentages (FMAP) funds to states and territories by increasing the FMAP percentage for each state and territory by 6.2%. The period for the increase begins in the calendar quarter of the emergency period and ends in the quarter when the emergency period ends. The legislation delays the application of the requirement that restricted states from increasing premiums as a condition of receiving the temporary FMAP increase.

Meet Kate

Kate Goodrich is a governmental affairs consultant in Jackson Walker’s Austin office. She started her career as a federally registered lobbyist in Washington, D.C., and grew to become a senior advisor to legislators at the Texas Capitol. Kate’s background in state and federal government gives her an in-depth and practical knowledge of the legislative and appropriations processes. She is a respected member of the governmental affairs community and has forged deep relationships at the Capitol and beyond. Kate graduated from the University of Texas School of Law and is licensed to practice law in the state of Texas.

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Please note: This article and any resources presented on the Jackson Walker Coronavirus microsite do not constitute legal or medical advice.