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Stimulus 2020: Health Care Sector Highlights

By Christopher LaPage

The federal government has passed four phases of stimulus packages to address the impact of the Coronavirus pandemic. The four laws appropriate over $2.7 trillion in federal funds, with the CARES Act doing most of the heavy lifting at $2.2 million. The stimulus programs are pumping hundreds of billions of dollars into existing grant programs and new funding streams to compensate for the incredible financial losses providers are experiencing with the cancellation of non-elective procedures and lower patient volume as people steer clear of health facilities during the pandemic. The following is a brief summary of the grants and funding currently available and coming down the pipeline for health care entities.

Legislation Logistics

Known as Phase I, the Coronavirus Preparedness Response Supplemental Appropriations Act was signed into law on March 6, 2020.

Known as Phase II, the Families First Coronavirus Act was signed into law on March 18, 2020.

Known as Phase III or the CARES Act, the Coronavirus Aid, Relief, and Economic Security Act was signed into law on March 27, 2020.

Known as Phase IV, the Paycheck Protection Program and Health Care Enhancement Act was signed into law on April 24, 2020.[CL1] 

Public Health Emergency Preparedness (PHEP) Grants

Phase I Allocation: $950 million

CARES Act Allocation: $1.5 billion

PHEP grants are provided to states on a formula basis and much of the funding is passed through to local public health departments for emergency preparedness and disaster planning activities. Between Phases I and III of the stimulus funding, states and localities are receiving nearly $2.5 billion in PHEP funding, on top $675 million that is allocated through the annual federal budget. The CARES Act includes a carve out of $125 million specifically to fund tribal public health efforts. These funds can be used by state and local public health entities to boost information and communication systems, public emergency warning systems and conduct any other activities necessary to prepare for, respond or mitigate the impact of the Coronavirus pandemic.  A total of $720 million has already been allocated and made available to states.

Provider Relief Fund

CARES Act Allocation: $100 billion

Phase IV Allocation: $75 billion

The CARES Act provided an initial allocation of $100 billion to provide direct payments to hospitals and other health care providers to overcome the financial losses many are experiencing during the Coronavirus pandemic. The initial $30 billion was direct-deposited into health care provider bank accounts based on their share of total Medicare fee-for-service reimbursements in 2019. Another $20 billion is being distributed to providers based on their share of 2018 net patient revenue. $10 billion will be sent out in a targeted distribution to providers that have been particularly impacted by COVID-19 outbreak, such as those serving patients in New York City. $10 billion is also being reserved for rural health clinics and critical access hospitals that operate on especially thin margins in rural areas. $400 million will be provided to the Indian Health Service (IHS) to support their facilities. The remaining funds from the initial CARES Act allocation will be used to reimburse health care providers for treating uninsured COVID-19 patients. HHS is still determining how to best allocate the $75 billion in funding included in Phase IV legislation.

Grants to Federally Qualified Health Centers (FQHCs)

CARES Act Allocation: $1.32 billion

Phase IV Allocation: $600 million

Community health centers, also known as federally qualified health centers or section 330 facilities, provide critical medical services to underserved populations regardless of the ability of the patient to pay. They are supported annually through federal allocations made to the Health Resource and Service Administration’s (HRSA) Bureau of Primary Health Care. The $1.32 billion was doled out to 1,400 health centers in over 13,000 communities across the United States to directly test and treat COVID-19 as well as maintain adequate staffing and capacity during the public health crisis. The $600 million included in Phase IV legislation is specifically intended to support COVID-19 testing and related expenses as FQHCs.

Grants for Telemedicine and Virtual Health Care Delivery

FCC COVID-19 Telehealth Program

CARES Act Allocation: $200 million

The CARES Act includes $200 million for a new program administered by the Federal Communications Commission (FCC) to fund telecommunication and information services as well as devices necessary to support exponential growth in the telemedicine needs of health care providers. The program is intended to support telemedicine initiatives that treat both patients with and without COVID-19. Treating non-COVID patients is supported insofar as it frees up resources to treat COVID patients and reduces the spread of Coronavirus. The FCC program is making funding commitments (up to $1 million) to health care providers on a first come, first served basis. The FCC has already awarded nearly $15 million to 17 applicants. 

Distance Learning & Telemedicine Program (DLT)

CARES ACT Allocation: $25 million

The DLT program received $71.7 million in funding through the annual federal appropriations process that resulted in a grant competition that closed on April 10, 2020. As a result of the CARES Act, however, the United States Department of Agriculture opened a second application window to allocate $25 million included in the legislation for the program. The programs support distance learning and telemedicine projects that provide such services to facilities located in Census-designated rural areas. There is a preference in the program to providing services to sites in rural opportunity zone sites as well as projects that primarily address opioid treatment and recovery. Applications are due July 13, 2020.