$30 Billion Under CARES Act Comes With Strings Attached – What Do You Need To Know?

Under the CARES Act that was signed into law on March 27, 2020, $100 billion was allocated to “eligible health care providers” to provide financial relief for health care organizations in relation to the COVID-19 public health emergency. Many health care providers who have been struggling financially have been anxiously awaiting these funds, and on Tuesday, April 7, 2020, CMA Administrator Seema Verma announced that the first $30 billion of the $100 billion would be distributed this week.  Administrator Verma stated that this first round of distributions would be based on Medicare revenues and that there would be “no strings attached.”

Today, those funds were distributed, and thousands of health care providers have had monies automatically deposited into their bank accounts. At the same time, the Department of Health and Human Services (“HHS”) posted official guidance relating to these funds for the first time on its website. Suffice it to say: There are a number of strings attached, and many health care organizations are confused about what the terms and conditions related to the receipt of these funds means for them. For instance, the HHS website expressly states that “[t]hese are payments, not loans, to health care providers, and will not need to be repaid.” However, within 30 days of receiving the payment, providers must sign an attestation agreeing to 10 pages worth of Terms and Conditions. If a provider is not willing, or not able, to comply with the Terms and Conditions, then the provider must contact HHS within 30 days of receipt of the funds and remit the full payment in accordance with instructions provided by HHS. As with any situation where an entity is agreeing to terms and conditions in exchange for remuneration, health care organizations should review the terms and conditions closely to ensure that they can comply with them. Many questions have already arisen around eligibility for the funds and whether providers must be involved in the care and treatment of COVID-19 patients to be able to receive the monies.

Dinsmore attorneys will be monitoring this situation closely, and we will provide more information as it becomes available. With as fluid as this situation has been, it is quite possible that further guidance could be forthcoming. In light of the uncertainties around the permitted uses of these funds, Dinsmore suggests that the monies be held in reserve until the recipient has closely evaluated whether it will satisfy the requirements established by HHS.

Please see our FAQs for more information on CARES Act Provider Relief Fund, and contact your Dinsmore attorney if you have more questions.