The United States Department of Health and Human Services (HHS) has announced that a total of $50 billion of the $100 billion Public Health and Social Services Emergency Fund provided under the CARES Act will be allocated for general distribution to eligible health care providers (the “General Allocation”). As previously discussed in our Client Alert dated April 14, 2020,the initial $30 billion portion of the General Allocation was distributed to eligible providers between April 10 and April 17, automatically and without the need for any application, based on each provider’s pro rata share of total Medicare Fee-For-Services reimbursements during 2019.

On April 24, HHS announced its plan for distributing the remaining $20 billion of the General Allocation (the “Second Allocation”). Specifically, HHS acknowledged that the initial $30 billion was distributed in a manner that did not adequately take into consideration providers who, by the nature of the services they provide (e.g. a children’s hospital) have a relatively small share of Medicare Fee-For-Service revenue. Therefore, although the exact methodology has not been fully explained, the intent is to distribute the Second Allocation in such a manner as to cause the entire $50 billion General Allocation to be distributed in proportion to the overall 2018 (not 2019) net patient revenue of each eligible provider.

The eligibility criteria for the Second Allocation include that the provider:

• billed Medicare in 2019;

• provides, or did provide after January 31, 2020, diagnoses, testing or care for individuals with possible or actual cases of COVID-19;

• is not terminated from participating in Medicare or precluded from receiving payment from Medicare Advantage or Medicare Part D;

• is not currently excluded from participation in Medicare, Medicaid or another federal health care program; and

• does not currently have Medicare billing privileges revoked.

On April 24, a portion of the Second Allocation was distributed automatically to Medicare providers who previously submitted CMS cost reports containing adequate revenue data. Eligible providers who did not receive such automatic distributions must submit an application using the General Distribution Portal, established by HHS at https://covid19.linkhealth.com/docusign/#/step/1, in order to receive funds from the Second Allocation. Even providers who did receive their distribution automatically based on their cost reports must nevertheless submit an application on the General Distribution Portal to verify their revenue information.

HHS has indicated that all applications received through the portal will be reviewed in batches every Wednesday at 12:00pm (ET). These funds will not be disbursed on a first come, first served basis. Applicants will be given equal consideration regardless of when they apply before each processing deadline. The following information will be collected via the General Distribution Portal:

• a provider’s “Gross Receipts or Sales” or “Program Service Revenue” as submitted on its federal income tax return;

• the provider’s estimated revenue losses in March 2020 and April 2020 due to COVID-19;

• a copy of the provider’s most recently filed federal income tax return; and

• a listing of the federal tax identification numbers of any of the provider’s subsidiary organizations that have received relief funds but that do not file separate tax returns.

Providers who receive a share of the Second Allocation will be required to submit an attestation confirming receipt of the funds and agreeing to updated terms and conditions within thirty (30) days after receipt of payment. Failure to return the payment within thirty (30) days of receipt will be deemed an acceptance of the Terms and Conditions. Key elements of the updated terms and conditions that differ from the original terms and conditions include the following:

• consent to HHS publicly disclosing payments that the provider received from the Relief Fund, including an acknowledgment that such disclosure may allow some third parties to estimate the provider’s gross receipts, program revenue or other information.

• certification that all information provided in its application for payment, and any information provided in the future at the request of HHS, is, or will be, true, accurate and complete to the best of its knowledge.

In addition, the updated terms and conditions clarify the scope of the agreement not to seek payment from a patient for certain out-of-pocket expenses greater than what the patient would be required to pay to an in-network provider. The original terms and conditions that were posted when the initial $30 billion was distributed referred to the covered care as care for a “possible or actual case of COVID-19.” The updated terms and conditions, which apply to both the original $30 billion allocation and the $20 billion Second Allocation, now provide that that the limitation on patient responsibility applies to care for a “presumptive or actual case of COVID-19.”