Article

CARES Act funding programs: An overview

By André Query | April 30, 2020

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Since the Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed on March 27, 2020, many healthcare providers have had difficulty navigating all the monetary resources made available by this new legislation. We have compiled summaries of each of the programs available to help healthcare organizations understand which options may be available to them.

Each summary covers an overview of the program, including the type of practice(s) that can apply, certain funding details, how payment is issued, and where you can apply or find out more. Our goal is to help you get a better understanding of the resources available so you can identify the support that’s right for you.

1. Public Health Fund for Providers (Provider Relief Fund): $50 billion general allocation

The CARES Act has allocated $100 billion to the Public Health and Social Services Emergency Fund. This money is being given to eligible hospitals, physician practices, and other healthcare providers on the front lines of the coronavirus response. It is intended to cover healthcare-related expenses, reimburse revenue lost due to the pandemic, and to help uninsured Americans get the necessary testing and treatment for COVID-19. View website. 

The $100 billion total was allocated for several different purposes, the largest being a $50 billion general allocation. The general allocation breaks down as follows:

  • $30 billion was distributed automatically from April 10, 2020, through April 17, 2020, to eligible hospitals, physician practices, and other healthcare providers on the front lines of the coronavirus response
  • $20 billion will be automatically distributed starting April 24, 2020 to certain providers based on revenue data in CMS cost reports. 

Note that providers who do not receive these automatic distributions will be able to apply for funding from HHS.

Who’s eligible? 

The initial $30 billion was automatically disbursed to hospitals and physician practices that billed Medicare Fee-For-Service (FFS) in 2019.

The remaining $20 billion will be automatically distributed to other hospitals and physician practices based on the revenue data they submit in CMS cost reports.  Providers who submitted claims to Medicare in 2019, who do not receive the automatic distribution can apply directly.

Please note that providers who directly apply for the remaining $20 billion must have filed an income tax return for 2017, 2018, and 2019. HHS intends to use this tax information to verify the self-reported financial information.

How funds will be received 

The U.S. Department of Health and Human Services (HHS) has partnered with UnitedHealth Group (UHG) to deliver the initial $30 billion in stimulus payments. Where possible, providers will be paid electronically via Optum Bank with “HHSPAYMENT” as the description. If your practice has not set up direct deposit through CMS or UHG’s Optum Pay, you will receive a paper check at a later date. It is expected that payments associated with the remaining $50 billion will be delivered in the same manner.  

Please note that these are grants, not loans, and do not have to be repaid.

How to apply

Physicians who have received a payment as part of this fund must sign an attestation within 30 days of receiving the payment confirming receipt of the funds and agreeing to the terms and conditions of payment. 

Physicians who have not received a payment and believe that it’s an error should contact UHG’s Provider Relations at (866) 569-3522 about eligibility.

2. Public Health Fund for Providers (Provider Relief Fund): Other allocations

The CARES Act has allocated $100 billion to the Public Health and Social Services Emergency Fund. This money is being given to eligible hospitals, physician practices, and other healthcare providers on the front lines of the coronavirus response. It is intended to cover healthcare-related expenses, reimburse revenue lost due to the pandemic, and to help uninsured Americans get the necessary testing and treatment for COVID-19. View website.

The $100 billion total was allocated for several different purposes.  Allocations outside of the $50 billion general allocation described above include:

  • $10 billion will be distributed to hospitals in high-impact areas.
  • A percentage has been allocated to reimburse healthcare providers for COVID related treatment of uninsured patients.
  • $10 billion will be distributed to rural health clinics and hospitals.
  • $400 million will be distributed as early as April 27, 2020 to Indian Health Service facilities.
  • A percentage has been allocated to Medicaid-only providers, SNFs, and dentists.

Who’s eligible?

For details on what uninsured patient claims are eligible to receive funding, visit the HRSA COVID uninsured page. Details are currently limited on the eligibility for the other programs. Updates will follow as information is shared.

How funds will be received

Details are currently limited. But as several of these are automatically issued, it is likely that these funds will continue to be tied to HHS related enrollment information. Updates will follow as details are shared.

How to apply

In many cases, payments are automatic. It is likely that providers who receive payment as part of this funding will need to attest to program terms within a certain period of time.

3. Supplemental grants for Community Health Centers (CHCs)

The Health Resources & Services Administration (HRSA) has appropriated $1.3 billion to support health centers in preventing, preparing for, diagnosing, and treating COVID-19. This includes maintaining or increasing health center capacity and staffing levels during a coronavirus-related public emergency. These one-time grants have already been awarded and were calculated based on a base value plus an amount determined by patient metrics reported to the Uniform Data System (UDS) in 2018. View website.

Who’s eligible?

These grants are being awarded to health centers funded under the Health Centers Program.

How funds will be received

HRSA funds are immediately available and sent to the health center’s operating account. Please note that these are grants, not loans, and do not have to be repaid.

How to apply

For more information on the grant, review the Supplemental Funding Guidance.

4. Small Business Administration(SBA) 7(a) loans

SBA loans are loans of up to $5 million guaranteed by the SBA and funded by participating banks. These loans provide immediate debt and economic relief to small businesses with non-disaster SBA loans. The money can be used for payroll support, employee salaries, mortgage payments, insurance premiums, and other debt obligations. Under this program, SBA will cover all payments on these loans, including principal, interest, and fees, for six months. View website.

Who’s eligible?

Small businesses with fewer than 500 employees that meet SBA size standards. You must also:

  • be a for-profit business
  • do business in the U.S.
  • have invested ownership equity and time into the business
  • not get funds from any other financial lender

How funds will be received

The loan comes from an SBA accredited lender (of which US Bank is one).

Also, note that SBA 7(a) loans may be eligible for loan forgiveness.

How to apply

Organizations can apply on a rolling basis through the standard 7(a) loan application process with an SBA accredited lender. For more information, review the SBA Coronavirus Relief Options. Or apply using SBA Debt Relief or an SBA Standard Loan Note (Form 147).

5. Economic Injury Disaster Loan (EIDL)

*Note: The SBA is currently unable to accept new applications for the EIDL based on available appropriations.

The EIDL program is an SBA loan program that offers low-interest disaster loans to small businesses going through economic hardship caused by a disaster, including pandemics like COVID-19. EIDLs have longer, more favorable borrowing terms and can be as large as $2 million. They can be used for payroll, to pay off debt, and other bills caused by the disaster.

The CARES Act has expanded the EIDL window of eligibility from January 31, 2020, to December 31, 2020. It also allows applicants to request an advance of up to $10,000 paid within three days of an EIDL application to SBA. View website

Who’s eligible?

Small businesses with fewer than 500 employees that meet the SBA size standards are eligible for EIDLs. To qualify, you must have suffered “substantial economic injury” from COVID-19.

How funds will be received

Under the CARES Act, EIDLs are based on a company’s actual economic injury and financial needs, as demonstrated through their application. The loan will come from an SBA accredited lender (of which US Bank is one). Please note that this loan is eligible for loan forgiveness.

How to apply

Organizations can apply on a rolling basis through the SBA COVID-19 EIDL application. For more information, review the SBA Coronavirus Relief Options. Or apply using the EIDL Application.

6. Paycheck Protection Program (PPP) loans*

*Note: The SBA is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations.

PPP loans are designed to provide cash-flow assistance through 100 percent federally guaranteed loans to small businesses. They’re meant to help companies avoid closure or layoffs, and can be used to cover payroll, utilities, insurance premiums, and rent or mortgage interest payments on a facility. The maximum loan size is $10 million, and individual loan amounts are calculated based on the dates a business was active, and whether an EIDL was received. View website

Who’s eligible?

To be eligible, a business must have been in operation on February 15, 2020, and meet the following standards:

  • any business including 501(c)(3) nonprofit organizations, 501(c)(19) veterans organizations, or tribal business concern that meets SBA size standards
  • any business with an NAICS code that begins with 72 and has more than one physical location but less than 500 employees per physical location
  • be a sole proprietor, independent contractor, or self-employed individual

How funds will be received

The PPP loan amount is determined by calculating the average monthly payroll costs for the 12 months preceding the application and multiplying it by 2.5. The loan will be distributed by an SBA accredited lender (of which US Bank is one).

Note that this loan is eligible for loan forgiveness up to the full amount subject to proper documentation.

How to apply*

*Please note that the SBA has announced that it is currently unable to accept new applications for PPP loans based on available appropriations.

Organizations can apply on a rolling basis. The PPP will be available through June 30, 2020. If you have specific questions about the PPP program, you can also call 1-800-377-3053 for assistance. For more information, review the SBA Coronavirus Relief Options and the FAQ for Lenders and Borrowers. Or apply using the PPP Borrower Application Form.

7. SBA Express Bridge Loans 

The Express Bridge Loan Pilot Program (EBL) provides expedited bridge loan financing for businesses affected by COVID-19. Small businesses can quickly borrow up to $25,000 for disaster-related expenses, including temporary loss of revenue. EBLs are intended to act as a term loan or to bridge the gap while applying for an EIDL loan. Typically, they are only distributed for up to six months after the date of a disaster declaration, but the CARES Act has extended that window through March 13, 2021. View website

Who’s eligible?

Any U.S.-based small business that:

  • has an existing banking relationship
  • meets all the SBA 7(a) loan requirements
  • was operational when the virus was declared an emergency
  • can prove it was adversely affected by COVID-19

How funds will be received

Businesses can get a quick turnaround loan from an SBA Express Lender of up to $25,000 payable over a maximum of seven years. The loan can be repaid in full or in part by proceeds from an EIDL loan.

How to apply

Organizations can apply on a rolling basis through SBA Express Lenders or by contacting your local SBA district office. For more information, review the SBA Coronavirus Relief Options, or the Express Bridge Loan Pilot Program Guide.

8. The Centers for Medicare & Medicaid Accelerated and Advance Payment Program (CMS AAP)*

*Note: CMS has announced an immediate suspension of AAP to Part B Providers as of 4/26/2020. It is also re-evaluating the amounts that will be paid to providers (including hospitals) under AAP.

AAPs provide emergency funding to Medicare providers and suppliers who experience disruptions to claims submission and or processing as a result of a natural disaster or national emergency. Under the CARES Act, the CMS has expanded its AAP program to include all Medicare providers and suppliers throughout the country during the COVID-19 public health emergency. The expansion also reduced AAP request processing times from three to four weeks down to between four to six days.

Qualified providers/suppliers must request a specific amount of money using an AAP request form. Most providers/suppliers will be able to request up to 100 percent of the Medicare payment amount for three months. Critical access hospitals (CAH) will be able to request up to 125 percent of their payment amount for six months. View website

Who’s eligible?

To qualify for an AAP, the provider or supplier must:

  • have billed Medicare for claims within 180 days immediately before the date of request
  • not be in bankruptcy
  • not be under active medical review or integrity investigation, and
  • not have outstanding delinquent Medicare overpayments

How funds will be received

Payment will come through Automated Clearing House (ACH) or paper check to the provider information on file with CMS.

AAPs are loans that must be repaid. Repayment typically begins 120 days after the funds are issued, with most hospitals having up to one year to repay the balance interest free. Interest rates will apply beginning 210 days after funds are issued for most providers.

How to apply*

*Please note: CMS will not accept any new applications for AAP from Part B Providers.

AAP request forms vary by contractor and can be found on your Medicare Administrative Contractor’s (MAC) website. You can locate your designated MAC through CMS ResourcesFor additional information, please refer to this Fact Sheet.

9. SAMHSA Discretionary Grants

The Substance Abuse and Mental Health Services Administration’s (SAMHSA) discretionary grant program supports grantees providing crisis intervention services, mental and substance use disorder treatment, and related recovery supports for children and adults. In response to the COVID-19 crisis, SAMHSA is allowing flexibility for grant recipients specifically to address unforeseen costs related to COVID-19. View website

Who’s eligible?

Providers that receive SAMHSA grants (e.g., addiction recovery centers, behavioral health departments) can request additional flexibility related to re-budgeting for COVID-19 associated increased costs, or loss of operational capacity.

How funds will be received

Discretionary grant funding is issued to providers through SAMHSA’s channels.

How to apply

For more information, please refer to this SAMHSA FAQ.

10. Federal Communications Commission (FCC) – COVID-19 – Telehealth Program

The COVID-19 Telehealth Program is using $200 million in funding (provided by the CARES Act) to support healthcare providers offering connected care services to patients at their homes or mobile locations during the coronavirus pandemic. Funding is going towards telecommunications services, information services, and devices necessary to provide critical connected care services until the program’s funds have been expended, or the emergency period is over. While the FCC does not specify a limit on the amount that may be awarded, it does not anticipate awarding more than $1 million to any single applicant. View website

Who’s eligible?

This program is limited to nonprofit and public healthcare providers that fall within the category of healthcare providers, as defined within section 254(h)(7)(B) of the 1996 Act. Eligible healthcare providers that have purchased telecommunications services, information services, and or devices in response to the COVID-19 pandemic after March 13, 2020, can apply to receive funding support. COVID-19 Telehealth Program support will also be available to eligible healthcare providers for services that require monthly recurring charges, such as broadband connectivity or remote patient monitoring services, through September 30, 2020.

How funds will be received

Funding is issued via Electronic Funds Transfer (EFT) as registered by the applicant in the System for Award Management (SAM).

How to apply

For more information, read the FCC FAQ, or apply using the FCC Application.

11. Main Street Lending Program (MSLP)

On April 9, 2020, the Federal Reserve (FR) established the MSLP to provide up to $2.3 trillion in loans to small and mid-sized businesses struggling to survive the COVID-19 pandemic. The MSLP assists companies that were in good financial standing before the crisis through four-year loans of at least $1 million. These are awarded to companies that employ up to 10,000 workers or with revenues of less than $2.5 billion. View website.

Who’s eligible?

Practices that employ up to 10,000 people and generate less than $2.5 billion in revenue are eligible. These businesses must attest to extreme circumstances as a result of the COVID-19 pandemic.

How funds will be received

Applicants must apply through an FR-identified eligible lender, who will then work with the FR. Loans span up to four years at an adjustable-rate with principal and interest payments deferrable for one year. Businesses that receive funds must make a reasonable effort to maintain payroll and retain employees for the term of the loan. These funds cannot be used to pay down other loans.

Also note that Main Street loans are not forgivable, regardless of how the funds are spent.

Review this Term Sheet or Extended Loan Term Sheet for more information.

How to apply

For more information, read this MSLP fact sheet.

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Current as of April 30, 2020

The information provided in this overview is for informational purposes only. You should not construe any such information or other material as legal, financial, or other advice. Information in this overview is of a general nature and does not address the circumstances of any particular individual or entity. This overview may not contain the most up-to-date legal, financial, or other information. You assume the responsibility of evaluating the merits and the risks associated with any use of information contained in this overview.