April 14, 2020


Prepared by Michael Foster, Esq. of K&K.  Contact Micheal at MFoster@kirschenbaumesq.com with questions. 

     You may have noticed an unanticipated deposit from Medicare in your account!  The U.S. Department of Health and Human Services (HHS) is depositing funds to Medicare-enrolled providers through direct deposit disbursements totaling $30 billion. The $30 billion is part of the $100 billion Public Health and Emergency Fund created by the Coronavirus Aid, Relief and Economic Security Act (CARES Act) to provide financial assistance to physician practices, hospitals and other providers negatively impacted by the COVID-19 pandemic. 

     The fund payments are grants, not loans, and HHS will not require repayment (with certain caveats, detailed below).  The funds will go to each physician organization's TIN that normally receives Medicare payments, not to each individual physician. The funds may be used either for health care related expenses or for lost revenues that are attributable to coronavirus. According to HHS, “providers will be distributed a portion of the initial $30 billion based on their share of total Medicare [fee-for-service (FFS)] reimbursements in 2019.” 

     Each organization receiving grants will need to attest to certain HHS terms and conditions within 30 days of receiving the grant.  While the grants were advertised as having "no strings", allowing healthcare providers receiving these funds to “spend that in any way that they see fit,” providers should note there are important terms and conditions that providers will have to submit an attestation with respect to as described further below. Key restrictions most likely to impact certain providers include:

•    The recipient of these funds is obligated to abstain from "balance billing" any patient for COVID-19-related treatment. HHS explains that due to the COVID-19 public health emergency, patients are more limited in their healthcare choices and may be forced to receive treatment from out-of-network providers. Therefore, providers may not seek collection of out-of-pocket payments from a COVID-19 patient that are greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network provider.

•    The recipient must certify that the payment will only be used to prevent, prepare for, and respond to COVID-19, which includes healthcare-related expenses and lost revenues attributable to COVID-19. HHS has not yet provided further details regarding this condition. In other cases like the blanket Stark Law waivers, COVID-19 purposes were broadly defined.

•    The recipient must certify that it is (i) currently providing diagnoses, testing or care for individuals with possible or actual cases of COVID-19; (ii) is not currently terminated from participation in Medicare; (iii) is not currently excluded from participation in Medicare, Medicaid, and other federal healthcare programs; and (iv) does not currently have Medicare billing privileges revoked. HHS has not issued guidance about these restrictions. It is unknown what these restrictions will mean for providers that would not typically be testing COVID-19 patients or for providers that limited their current operations due to stay-at-home orders or orders delaying elective procedures. The funding of these grants does not appear to have distinguished between such providers.

•    The recipient must certify that it will not use the payment to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse. Further guidance will determine how this limitation interacts with other financial support opportunities available for healthcare companies during the COVID-19 crisis and whether receipt of these funds will limit participation in other programs, including loan forgiveness and tax treatments available to providers. 

•    The recipient must submit reports to ensure compliance with these conditions, with additional quarterly reporting requirements for recipients receiving more than $150,000 total in funds under the CARES Act, the Families First Coronavirus Response Act (FFCRA), and any other COVID-19 appropriated funds. The secretary of HHS will provide further guidance regarding the reports and documentation needed to support providers’ requests for funding. Providers should prepare and maintain the necessary records, reports and documentation required by the fund.

•    The recipient must maintain records and cost documentation information to substantiate the reimbursement of costs under this award. The recipient must submit copies of these records, cost documentation, and fully cooperate in all audits to ensure compliance with the terms and conditions.

•    In addition, the general statutory provisions in FY 2020 Consolidated Appropriation also apply to these payments. For example, none of the funds may be used to pay the salary of an individual at a rate in excess of Executive Level II ($197,300). Though we are awaiting further guidance from the secretary of HHS, this may limit providers from using the fund payments to pay physicians who receive production-based compensation if their annual compensation may exceed $197,300. 

•    Some of the other restrictions on how to spend the money include prohibiting spending on: (i) gun control advocacy; (ii) lobbying; (iii) abortion services; (iv) embryo research; (v) the promotion of legalization of controlled substances; (vi) pornography services; (vii) the execution of confidentiality agreements or NDA’s; or (viii) unpaid federal tax liability.


     Providers will have 30 days to sign an attestation through an online portal confirming receipt of the funds and agreeing to the terms and conditions as a condition of payment.  The online portal for the attestation is expected to be operational this week. If the terms and conditions are not accepted by the provider within 30 days, the applicable provider will be required to refund the full payment to HHS.

     HHS said it is working to disperse additional funding to providers with lower shares of Medicare reimbursement (such as pediatricians, allergists and OB-GYNs) and Medicaid providers, and for COVID-19 treatment for the uninsured. 


For more information please visit the following webpages:



Join Jennifer Tomorrow for a discussion on Financing, Third Party and Associate Contracts - Navigating COVID-19 Contractual Complications
Date:  Wednesday, April 15, 2020
Time:  12:30PM-1:15PM EST

Email questions in advance to Jennifer here:  Jennifer@Kirschenbaumesq.com to ensure we cover your concern. 

 Join Jennifer Kirschenbaum, Esq. for a discussion on lender relationships (financing options, in general), Third party contracts (equipment lenders, landlords, vendor agreements) and Associate Contracts in our COVID-19 world.   For answers to your specific questions, email Jennifer in advance at Jennifer@Kirschenbaumesq.com.  


•    Avoiding Lender Default

•    Negotiating with Landlords

•    Tips for Vendor relationships

•    Associate Contracts - What now?  (discussing post termination, pre-reboot; repairing potential contractual breach on both sides)


COVID-19 Resources 

 To view all of K&K's COVID-19 Practice Related Webinars visit our Resource Center by clicking here.