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$100 Billion-Plus in CARES Act for Healthcare: 3 Ways to Get It

Analysis  |  By Jim Molpus  
   March 29, 2020

Recent versions of legislation recognize the existential financial threat many healthcare organizations are under as they fight the COVID-19 outbreak.

The $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act has more than $100 billion in aid for healthcare organizations, but in some cases, leaders had better act fast to get it.

While previous versions of the legislation contained less assistance for providers large or small, recent versions recognized the existential financial threat many healthcare organizations are under as they fight the COVID-19 outbreak.

"The intent of the CARES Act is to deliver relief to providers who face the double whammy of the loss of elective procedure revenue and the costs of preparation for the pandemic," says Martie Ross, managing principal, Kansas City Office of Knoxville, Tennessee­–based PYA, P.C.

The bill contains provisions that range from payroll-based loans under a Small Business Administration (SBA) Act provision, as well as Medicare payment acceleration for providers already losing elective volume revenue. In certain cases, the funding remains unallocated, so finance teams may need to act fast to get first in line.

According to Ross and David McMillan, CFO and managing principal of PYA’s consulting practice, there are three provisions of the CARES Act that healthcare providers should analyze immediately for their direct financial impact:

1. "Paycheck Protection Program" Loan and Forgiveness Provisions

The SBA has underwritten loans for years to provide relief for companies to meet working capital obligations after a natural disaster. The "Paycheck Protection Program" is an expansion of the SBA Act that may provide up to $10 million in loans at 4% interest for business (including 501(c)(3)s) with fewer than 500 employees. The largest benefit, however, may be the provision that allows borrowers to apply to have all or a portion of the loan forgiven.

"It’s a way to protect and help businesses continue to employ their workforce," McMillan says.

The loan amount is based on a formula that takes the average monthly payroll expenditure for the previous 12 months and multiplies that by a factor of 2.5. Businesses receive loan amounts equal to the lesser of that amount or the $10 million limit, McMillan says.

The unforgiven portions of the loan are repayable over 10 years. While repayment deferrals ranging from six to 12 months are also available, the unique aspect of the program is its forgiveness provision. For businesses that maintain their workforce for an eight-week period after the funds are received, a portion or all the loan may be forgiven. And whatever portion is forgiven is tax free, McMillan says.

2. Public Health and Social Services Emergency Fund

The CARES Act adds $100 billion to the Public Health and Social Services Emergency Fund to reimburse providers for expenses and lost revenue attributable to COVID-19. Presently, this fund is administered by the Assistant Secretary for Preparedness and Response (ASPR) under the U.S. Department of Health and Human Services (HHS). In a single act, this agency goes from administering an annual budget of $2.6 billion to a $100 billion program.

Guidance is still pending, much of it may be on whether parts of the fund are allocated for rural hospitals, or cancer hospitals, or other specific providers, or whether the program is "first-come, first-served," Ross says.

"At this point, my advice would be first to file, until they say something differently," Ross says. "The language in the statute is that there's just no categorization. It's just a hundred billion dollars." The provisions cover not only lost revenue, but also certain capital expenditures that may result from COVID preparedness, Ross says.

As it stands, the program is not rolled out under the usual regulatory review and time frame, but guidance is soon expected from HHS on how the program is to be administered, Ross says. But don’t wait. Get your numbers ready, Ross says.

"The sooner your team can come up with a reliable calculation of the loss you are experiencing because of declining electives or lower ER volume, the better. Also be prepared to quantify any additional expenses incurred due to the pandemic. You will want to have these numbers ready to plug into whatever formula they provide," Ross says.

3. Medicare

There are three key provisions of the act that relate to Medicare, Ross and McMillan say:

  • Medicare advance payments.
  • Medicare sequestration relief.
  • Delaying Medicaid Disproportionate Share Hospital reductions.
  • Expanded Medicare coverage for telehealth.

"The first two are really game changers," Ross says. "Advance payments will allow providers that are losing revenue to apply to CMS to accelerate Medicare payments, essentially as an advance payment on future Medicare billing," Ross says. A more direct boost will be a temporary elimination of the 2% sequestration cut that will go into effect in May and continue for the rest of the year.

Both Ross and McMillan will be featured in a webinar, "The CARES Act: Your Piece of the $2 Trillion Pie" Monday, March 30 at 1 p.m. (ET). For more information, go to

“At this point, my advice would be first to file, until they say something differently.”

Jim Molpus is the director of the HealthLeaders Exchange.


Fewer than 500 employees? An SBA program could cover your payroll for 2.5 months.

A small agency within HHS will administer the $100 billion fund for expenses and lost revenue but get your numbers ready now.

Advance payments and no sequester are quick boosts to Medicare streams.

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