Passed on March 27, 2020, the CARES Act provides an estimated $2 trillion in fiscal stimulus to combat the economic impact of COVID-19 and provides the healthcare industry the financial support, equipment and protection it needs to combat the virus.
Below, review some of the major provisions in the CARES Act related to the healthcare industry, education funding and banks.
The act takes aim to combat the public health impact that could drain medical resources and have serious repercussions for medical institutions. Included are funds to help offset costs to hospitals and other providers. Other funds are dedicated to assist state and local response measures for detection, diagnostics, prevention and treatment of COVID-19, and provide for an increase to the national stockpile for drugs, protective equipment, medical supplies and additional funding for FEMA’s Disaster Relief Fund.
Medicare usually pays 80% of the fee for services. Generally, the provider does not receive the full 80%, as Medicare has a fee that reduces the payments to providers by 2%, called the 2% sequestration. The CARES Act eliminates this 2% fee through the end of 2020. Medicare will also increase payments by 20% to the diagnosis-related group rate for patients with COVID-19 and eliminate Part B cost-sharing for COVID-19 testing and any future vaccines. It also allows states to offer COVID-19 testing and related services through Medicaid regardless of eligibility without cost-sharing. These changes allow needed funds for service providers and more access to testing for people without insurance.
The act expands and encourages telehealth services by lessening the requirements to make these services available to more people during the emergency. It reauthorizes programs such as telehealth network and telehealth resource centers grants, several rural health grant programs, provides for modernization of the Public Health Service, and several health workforce development programs.
Included in the bill is a provision that prioritizes reviews of drug applications for drugs that may face a shortage.
Another allows the FDA to regulate certain non-prescription drugs that are marketed without an approved drug application. It reforms the regulatory process for OTC drug approvals, permitting the FDA more flexibility and providing incentives for pharmaceutical companies to research and manufacture innovative drugs.
As educational facilities have had to close to keep students and staff safe, $30 billion is allocated for instructional continuity. The act appropriates funds to institutions of higher education to prevent, prepare and respond to COVID-19. Funds may be used for lost revenue, technology costs associated with the transition to distance learning, and grants to students for food, housing, course material technology, healthcare and child care.
As financial institutions are a vital part of the economy and an essential middleman to distribute funds to individuals and businesses, the bill provides a provision to reduce regulatory requirements on financial institutions to increase the speed and amount of funds into the hands of the people who need them.
Your financial advisor and tax professional can provide more information about how the CARES Act affects you directly.
Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.