A Look at the $100 Billion for Hospitals in the CARES Act

The $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act contains a vast array of spending provisions, including an additional $100 billion for the Public Health and Social Services Emergency Fund.  This new funding is designed to provide an influx of money to hospitals and other health care entities responding to the coronavirus pandemic. This $100 billion averages out to about $108,000 per hospital bed in the United States.

Hospitals across the country clearly need additional resources as they struggle to treat the surge of COVID-19 patients and prepare for a spike in patient load.  The $100 billion fund was established to help hospitals ramp up quickly, in response to new demands, giving the Secretary of Health and Human Services broad discretion over how the $100 billion fund will be distributed, although it is not yet clear how these funds will be allocated.

Here’s what we do know.  The Secretary is to provide funding as quickly as possible, and hospitals can apply for money for a range of coronavirus-related expenses, including construction of temporary structures and medical supplies.  Hospitals cannot use this funding for expenses for which they will receive or are seeking other reimbursement.  Non-profit and for-profit hospitals may be eligible for funds, and potentially other entities may receive funding, if they diagnose, test or provide care for COVID-19 patients.

But there are many important unanswered questions worth thinking about.

• What criteria will the Secretary use to distribute these dollars across hospitals? Will it be based on current demand or anticipated COVID-19 caseload?
• How will the Secretary weigh the need for large-scale projects (such as temporary structures) against the need for ventilators or basic equipment?
• How quickly can money be distributed? What steps will be taken to help rural and small hospitals that may not have as much bandwidth to work through the application process as larger institutions and systems?
• In addition to hospitals, what other health care entities will be eligible to receive funding for treating COVID-19 patients?
• Will certain types of hospitals, such as public hospitals, which are a key part of the health care safety net, receive special consideration for funding?
• Can states, cities or counties apply on behalf of hospitals in their jurisdiction?
• Can hospitals use some of these new funds to offset care for the uninsured, as long as these costs are not otherwise covered by other payers? Will HHS require hospitals that receive funds establish policies that protect uninsured patients with COVID-19 from facing large medical bills?
• If all funds are not expended, what happens to the remaining dollars?
• Will politically powerful states or institutions be able to influence the distribution of funding?

Some of these questions may be answered in reports the Secretary must submit to Congress starting in 60 days, although the reports are only required to include state-level totals of how money was distributed.

The only additional required oversight for the $100 billion hospital fund is an audit three years after the Fund is exhausted. In contrast, the CARES Act requires regular, detailed reporting to monitor the $500 billion going to the Treasury’s Exchange Stabilization Fund through a new oversight panel and a new special inspector general.

The coronavirus is straining many hospitals and this $100 billion fund could provide crucial and timely support.  Unlike other federal hospital funding–such as disproportionate share payments by Medicare and Medicaid that compensate hospitals serving a large share of low-income or uninsured patients–there are no formulas, eligibility criteria or geographic distribution requirements dictating how to allocate this money.  With the stakes high and the amount of funding available large, the hospital industry will be very focused on how this money is distributed. Less clear is how much the public will know.