Kimberly Leonard BUSINESS INSIDER MAY 23/2020
A CVS store in Spring, Texas. Associated Press
CVS Health, DaVita, Cigna, and Encompass are among the healthcare companies that are returning federal relief dollars intended to help healthcare providers weather the coronavirus pandemic.
CVS Health, DaVita, Cigna, and Encompass are among the healthcare companies that are returning federal relief dollars intended to help healthcare providers weather the coronavirus pandemic.
The funding automatically went to healthcare providers based on a formula that looked at how much they bill Medicare.
Doctor's offices, clinics, and hospitals were among the recipients of the aid, but so were larger companies that provide healthcare in addition to other services.
The Trump administration said the funding came with "no strings attached" but later released guidance that suggested providers should consider returning the cash if they didn't really need it.
Healthcare companies are refunding millions of dollars of coronavirus relief money from the Trump administration that was intended to help struggling hospitals and medical practices.
Walmart, CVS Health, DaVita, Cigna, and Encompass are among the companies who are returning funding, company spokespeople confirmed to Business Insider.
The companies were among more than 500,000 providers who received the earliest influx of coronavirus rescue cash. The money came from funds Congress set aside for healthcare providers through two bills President Donald Trump signed into law.
To get the money out quickly, Trump administration officials decided to automatically deposit $30 billion of the funds into the accounts of all the providers who recently billed Medicare, the government program that covers seniors and some people with disabilities. In all, the coronavirus relief money provided at least $175 billion to healthcare providers.
When she announced the plans for the fund on April 7, Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, said the money would come with "no strings attached," unlike another program the agency had set up that healthcare providers had to apply for and pay back.
Seema Verma, the Centers for Medicare and Medicaid Services administrator.
Jim Watson/AFP via Getty Images
Then, health agencies released guidelines about how healthcare providers could formally accept the funding, including by agreeing to a set of terms and conditions that show they're not accepting money they don't need. They're required to show that they used the money to handle increased expenses or cover lost revenue from the coronavirus.
Many providers, from doctor's offices to hospitals, will have to make a decision by this weekend about whether to keep the funds.
The provider fund isn't alone in getting another look when it comes to federal rescue cash. In the past couple of months, more than a dozen major corporations came under scrutiny and returned funding from another part of the government coronavirus package known as the Paycheck Protection Fund.
The fund for providers was different: Healthcare providers didn't apply for the funding — it just landed in their bank accounts.
Still, Allen Miller, the principal and CEO at the healthcare consulting firm Cope Health Solutions, said providers would make calculations about the funding based on not only financial expenses and losses but also appearances.
"Some large corporations may decide that even though they can document the need for the money, the public-relations and political drivers overcome the financial drivers, and they decide that it's better for them to simply give back the funding," he said.
The deadline is ahead as doctors, clinics, and hospitals weigh whether to keep the money
The first deposit to healthcare providers went out between April 10 and 17, and health officials gave them 45 days to decide whether to accept the funding through a website. As of May 14, a total of 179,305 providers had accepted the money, according to a list the Trump administration made public. For some, the money received is as little as $1.
Because of the timeline, many providers face a Sunday deadline to make a decision about whether to keep the money.
Then, health agencies released guidelines about how healthcare providers could formally accept the funding, including by agreeing to a set of terms and conditions that show they're not accepting money they don't need. They're required to show that they used the money to handle increased expenses or cover lost revenue from the coronavirus.
Many providers, from doctor's offices to hospitals, will have to make a decision by this weekend about whether to keep the funds.
The provider fund isn't alone in getting another look when it comes to federal rescue cash. In the past couple of months, more than a dozen major corporations came under scrutiny and returned funding from another part of the government coronavirus package known as the Paycheck Protection Fund.
The fund for providers was different: Healthcare providers didn't apply for the funding — it just landed in their bank accounts.
Still, Allen Miller, the principal and CEO at the healthcare consulting firm Cope Health Solutions, said providers would make calculations about the funding based on not only financial expenses and losses but also appearances.
"Some large corporations may decide that even though they can document the need for the money, the public-relations and political drivers overcome the financial drivers, and they decide that it's better for them to simply give back the funding," he said.
The deadline is ahead as doctors, clinics, and hospitals weigh whether to keep the money
The first deposit to healthcare providers went out between April 10 and 17, and health officials gave them 45 days to decide whether to accept the funding through a website. As of May 14, a total of 179,305 providers had accepted the money, according to a list the Trump administration made public. For some, the money received is as little as $1.
Because of the timeline, many providers face a Sunday deadline to make a decision about whether to keep the money.
CVS Health CEO Larry Merlo. Courtesy Forbes
Some didn't wait that long. In a letter to the Trump administration sent Tuesday, CVS Health CEO Larry Merlo said the company would return $43.3 million.
"In my view, returning these funds is part of CVS Health's overall plan to do everything we can to help the communities we serve respond to the pandemic," Merlo wrote in the letter, first obtained by Business Insider.
Encompass — a company that provides in-home healthcare, rehabilitation, and hospice care — announced in a regulatory filing on May 7 that it wouldn't accept the $237 million in relief funds it received. The company declined to comment further when contacted by Business Insider.
The health insurer Cigna, which also owns businesses that provide healthcare, confirmed it returned all the funding it received. The government had given the company's Accredo business, which provides pharmaceuticals to patients, $41 million, according to an earlier iteration of the government database.
It's not yet clear how many healthcare providers will follow suit. A spokesperson at the Department of Health and Human Services said the agency didn't plan to name companies who return the funding.
"In my view, returning these funds is part of CVS Health's overall plan to do everything we can to help the communities we serve respond to the pandemic," Merlo wrote in the letter, first obtained by Business Insider.
Encompass — a company that provides in-home healthcare, rehabilitation, and hospice care — announced in a regulatory filing on May 7 that it wouldn't accept the $237 million in relief funds it received. The company declined to comment further when contacted by Business Insider.
The health insurer Cigna, which also owns businesses that provide healthcare, confirmed it returned all the funding it received. The government had given the company's Accredo business, which provides pharmaceuticals to patients, $41 million, according to an earlier iteration of the government database.
It's not yet clear how many healthcare providers will follow suit. A spokesperson at the Department of Health and Human Services said the agency didn't plan to name companies who return the funding.
Dialysis giants take opposite approaches on relief cash
DaVita CEO Javier Rodriguez. RJ Sangosti/The Denver Post via Getty Images
Hospitals, healthcare clinics, and health systems are unlikely to give the money back in droves because they had to end nonemergency procedures and delay checkups, which badly bruised their finances.
In contrast, a company like DaVita, which provides dialysis for 200,000 people, continued operating. Dialysis needs to be performed on patients about three times a week so that they can survive.
DaVita said it still faced losses when it hired more people, compensated workers for overtime, and purchased more protective equipment. Nevertheless, it decided to return the $240 million it received from the relief fund.
DaVita CEO Javier Rodriguez said during the company's first-quarter earnings call that he didn't think the fund had been intended to "help companies make their earnings target." Instead, he said, the company saw the fund as a safety net "to be used for people that needed that money because the economic damage was so severe that they couldn't keep their doors open."
Fresenius Medical Care, a dialysis giant like DaVita, opted to retain its funding, but the amount isn't yet posted on the government website.
"It's reimbursement for the extraordinary expenses that we've incurred, no more, no less," Rice Powell, Fresenius' chairman and CEO, said during the company's earnings call.
Walgreens, a CVS competitor, was another company that opted to keep the $27 million it received in relief funds, according to the government's online database. The company didn't respond to questions from Business Insider.
In contrast, a company like DaVita, which provides dialysis for 200,000 people, continued operating. Dialysis needs to be performed on patients about three times a week so that they can survive.
DaVita said it still faced losses when it hired more people, compensated workers for overtime, and purchased more protective equipment. Nevertheless, it decided to return the $240 million it received from the relief fund.
DaVita CEO Javier Rodriguez said during the company's first-quarter earnings call that he didn't think the fund had been intended to "help companies make their earnings target." Instead, he said, the company saw the fund as a safety net "to be used for people that needed that money because the economic damage was so severe that they couldn't keep their doors open."
Fresenius Medical Care, a dialysis giant like DaVita, opted to retain its funding, but the amount isn't yet posted on the government website.
"It's reimbursement for the extraordinary expenses that we've incurred, no more, no less," Rice Powell, Fresenius' chairman and CEO, said during the company's earnings call.
Walgreens, a CVS competitor, was another company that opted to keep the $27 million it received in relief funds, according to the government's online database. The company didn't respond to questions from Business Insider.
Healthcare providers should document the damage they incurred from the coronavirus
Miller of Cope Health Solutions advised his clients to place the funds into a separate account if possible and hold them until some of the federal rules become more clear. As is often true with disasters, he said, governments tend to allocate money quickly but then work to make sure the money went to the right places.
"We are dealing with the government, and the government has the ability and the historical track record of sometimes changing the rules retroactively," Miller said.
He also advises providers to document all of their losses and expenses related to COVID-19, the disease caused by the coronavirus. He said providers shouldn't accept more money than their documented losses and expenses.
"If your losses and expenses do not exceed the money you received, you should expect that you will likely be asked to pay some of the money back," he added.
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