The CARES Act: Health Care Summary and Analysis
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The CARES Act: Health Care Summary and Analysis

Brownstein Client Alert, March 26, 2020

The Coronavirus Aid, Relief, and Economic Security (CARES) Act passed the Senate late in the evening on Wednesday, March 25, 2020, and is expected to pass the House on Friday, March 27, 2020. In addition to an economic rescue package that includes trillions of dollars in loans for companies and direct payments to workers, the bill allocates $330 billion to the broader health care industry and makes important policy changes to give patients and providers flexibility and additional treatment options.

Funding – Appropriations

In acknowledgement that health care workers will be on the front lines of addressing this pandemic, the bill allocates $100 billion for a new program to provide direct aid to health care institutions such as hospitals and Medicare and Medicaid enrolled suppliers and providers to cover coronavirus-related costs. It also provides $27 billion for the Biomedical Advanced Research and Development Authority (BARDA) to support research and development of vaccines, therapeutics and diagnostics to prevent or treat the effects of coronavirus. This fund includes $16 billion to replenish the Strategic National Stockpile for pharmaceutical supplies, personal protective equipment and other supplies to distribute to states and hospitals facing shortages. It also provides $3.5 billion to advance construction, manufacturing, and purchase of vaccines and therapeutics, as well as $1 billion for the Defense Production Act to bolster domestic supply chains and ramp up the production of personal protective equipment, ventilators, and other needed supplies.

The federal government also allocated billions in funding to be granted to states to assist in their responses. This includes $45 billion for the Federal Emergency Management Agency's (FEMA) Disaster Relief Fund to provide for the immediate needs of states, including medical response, personal protective equipment, National Guard deployment, coordination of logistics, safety measures, and community services nationwide. Congress also allocated $4.3 billion to the Centers for Disease Control and Prevention (CDC), including $1.5 billion to support states for infection control and testing, and $1.5 billion in “flexible” funding to support quarantine efforts, purchase and distribution of diagnostic test kits, and support for laboratory testing.

Policy Changes – Title III: Supporting America’s Health Care System in the Fight against the Coronavirus

The CARES Act makes several changes intended to address supply shortages, including increasing manufacturer reporting requirements when there is an interruption in the supply chain. It also mandates that manufacturers maintain contingency plans to ensure back up supply of products, and compels the Food and Drug Administration (FDA) to prioritize and expedite review of drug applications and inspections in order to prevent or mitigate a drug shortage. The bill requires medical device makers to submit information about device shortages or device component shortages upon the FDA’s request during a public health emergency.

The legislation also requires health insurance plans to provide coverage of a COVID-19 vaccine, when developed, at no cost to the patient. The bill requires the Department of Health and Human Services (HHS) to issue guidance around protected health information during a public health emergency, and requires HHS to establish a national campaign to raise awareness around the importance of donating blood. It reauthorizes a number of grant programs that provide resources for telehealth, food assistance, and increased access to health services. Finally, it makes a change to align rules governing the disclosure of substance abuse disorder treatment records with the Health Insurance Portability and Accountability Act (HIPAA).

The CARES Act also includes a number of Medicare and Medicaid provisions intended to increase support to hospitals and health care workers, as well as increase health care access for beneficiaries during the public health emergency. The Act increases payments to hospitals by temporarily lifting the 2% Medicare sequester, and increases Medicare payments for treating COVID-19 patients by 20%. The Act expands the number of Medicare providers who can provide telehealth services, and waives numerous face-to-face requirements between providers and patients. Acknowledging that routine access to prescription medication may be challenging during the public health emergency, the Act requires that Part D plans provide a 90-day supply of prescription medication when requested.

The Act reauthorizes and provides funding for a number of public health programs through Nov. 30, 2020.  This includes funding for Community Health Centers, the National Health Services Corps, the Temporary Assistance for Needy Families Program and programs that award grants to fund HIV/STD prevention, teen pregnancy prevention, and youth development. It also extends Medicaid programs that help patients transition from nursing home settings to home settings. The Act also delays cuts to Medicaid Disproportionate Share Hospital (DSH) payments through Nov. 30, 2020. By delaying the expiration of these public health programs, Congress sets up a must-pass legislative vehicle before the end of the year to ensure those programs do not expire.

Lastly, the Act makes significant changes to the regulation of over-the-counter (OTC) drugs, notably allowing the FDA to approve changes to OTC drugs administratively rather than through full notice and comment rulemaking. It creates an 18-month exclusivity period as an incentive for companies to bring innovative OTC products to market, and establishes a user fee program to support the new administrative process.

Click here for a full section by section analysis. 

Information is changing daily and some of the content included in this alert may have changed or been updated since publication.

Click here to read more Brownstein alerts on the legal issues the coronavirus threat raises for businesses.


This document is intended to provide you with general information regarding health care provisions in the CARES Act. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions.

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