COVID-19: Providers to see CARES Act money soon, partly earmarked for uninsured care

Crystal Yednak Senior Manager, Health Research Institute, PwC US April 10, 2020

Providers treating uninsured COVID-19 patients will receive funding from the federal government to cover those costs, HHS Secretary Alex Azar said during an April 3 White House Coronavirus Task Force briefing, adding that HHS would use a portion of the $100 billion set aside for healthcare providers in the CARES Act to do so.

CMS this week also announced it would start sending part of the fund—$30 billion—to providers based on Medicare billing, according to Modern Healthcare. CMS Administrator Seema Verma said the money would arrive with “no strings attached,” according to Politico.

Verma also said money would eventually flow to providers that do not serve a lot of Medicare patients, such as pediatricians and children’s hospitals, according to Politico. Thirty-four billion dollars in loans also are being expedited, she said.

For uninsured COVID-19 care, CMS said it would reimburse providers at Medicare rates, which are less than hospitals receive from private insurers. “As a condition of receiving funds under this program, providers will be forbidden from balance billing the uninsured for the cost of their care,” Azar said, adding that the agency would release specifics soon. As of Wednesday, CMS had not published further guidance.

HRI impact analysis

Healthcare providers, in particular, have been challenged financially even as they scramble to prepare for surges in COVID-19 patients. In recent weeks, hospitals from Massachusetts to Oregon, have announced furloughs, pay cuts, layoffs and cuts in executive pay. Some rural hospitals, with less than two months’ cash on hand, fear they may have to close their doors before the pandemic peak hits their communities. Modern Healthcare reported this week that a quarter of rural hospitals may be at risk of closing.

Facing a liquidity crisis, some hospitals have raised concerns about how the $100 billion fund would be distributed. Industry groups have called for the immediate release of the $100 billion to help hospitals struggling from the pandemic’s impact now, and asked for the administration to consider other options for covering the uninsured, such as opening up the ACA marketplaces for special enrollment, expanding Medicaid or creating a separate fund.

A Kaiser Family Foundation issue brief released this week estimated that the cost for the federal government to pay hospitals for treating the uninsured could take up a significant amount of the $100 billion fund, ranging from $13.9 billion to $41.8 billion, depending on how the pandemic eventually rolls out across the country.

Providers fear that if the fund is used to pay for both care for the uninsured and for hospitals’ emergency responses to purchase supplies and build facilities, neither will be properly addressed.

“The emergency relief fund in the CARES Act was intended to provide hospitals with an infusion of emergency relief as providers incur substantial expenses in preparing and dealing with fighting this battle against COVID-19,” said Rick Pollack, president and CEO of the American Hospital Association, in a statement. “Because hospitals and health systems, and our dedicated caregivers, are on the front lines of this pandemic, we continue to urge the release of the CARES Act emergency relief funds as soon as possible. This critical funding will help ensure that our health care providers can continue to be there for everyone and have the support and resources that are needed to deliver care to their patients and communities.” 

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Trine K. Tsouderos

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Crystal Yednak

Senior Manager, Health Research Institute, PwC US

Erin McCallister

Senior Manager, Health Research Institute, PwC US

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