Understanding FEMA’s Expanded Coverage for Medical Care During the COVID-19 Public Health Emergency
As the response to the COVID-19 pandemic continues to evolve, hospitals and healthcare providers across the country are facing unprecedented financial challenges in managing the triage, testing, and treatment of COVID-19 patients. For those looking to the Federal Emergency Management Agency (FEMA) for funding and support through the Public Assistance (PA) program, additional relief has been granted through the expansion and clarification of eligible costs related to the provision of medical care of suspected and confirmed cases of COVID-19.
Expanding coverage for COVID-19 Medical Care
Published on May 9th, 2020, FEMA’s expanded policy (FEMA Policy FP 104-010-04) on the eligibility of medical care is specific to the COVID-19 pandemic. The policy includes the following key changes for public and private non-profit healthcare applicants:
- Expanded eligible medical care activities to meet the reality of healthcare facilities providing COVID-19 care, including inpatient care.
Historically, FEMA has limited the eligibility of costs related to medical care to emergencies only. This meant that once a patient was past triage and emergency care, additional costs associated with inpatient care were not eligible under the FEMA PA program. For many infected patients, or patients suspected of being infected, emergency room treatment is insufficient, and patients may require inpatient hospitalization and long-term care. This policy supersedes a previously issued FEMA fact sheet that described inpatient care for COVID-19 patients as ineligible (now removed from FEMA’s site). This is a significant expansion of eligibility under the FEMA PA program, but also brings with it additional requirements for healthcare and hospital applicants to track and document their costs.
Photo by Jair Lázaro: Source
- Established cost reasonableness thresholds for medical care.
FEMA will utilize pre-disaster Medicare rates as the basis to determine reasonable costs for eligible clinical care, so long as those costs are not duplicated by another source, such as patient or insurance payments.
- Suspected COVID-19 patients, not just confirmed cases, included as eligible.
In this policy, FEMA acknowledges that hospitals and healthcare providers are incurring costs for suspected COVID-19 patients, not just for confirmed cases. Therefore, costs associated with the triage and testing of COVID-19 suspected patients are also eligible.
- Expanded the definition of primary healthcare facilities.
FEMA’s definition of Primary Medical Facilities generally captures all pre-disaster, existing medical care facilities – hospitals, clinics, outpatient facilities – recognizing the distinct line between emergency, primary, secondary, and tertiary care have been blurred by COVID-19. The policy delineates primary care facilities from temporary facilities and alternate care facilities. Temporary facilities may be existing facilities retrofitted to meet COVID care needs, like changing an existing inpatient facility to a COVID-19 critical care unit, or they may be transforming a hospital parking lot to a testing facility using tents and temporary structures. Alternate care facilities are a specific type of temporary facility that transforms a non-medical facility, like a convention center or a school gymnasium, into a healthcare facility.
- Clarified eligibility of temporary and alternate care facilities, including operationally ready but unused sites.
As many pre-existing medical care facilities have been overwhelmed and required to add or expand capacity, costs associated with preparing, renting, maintaining, and operating those sites may be eligible. This includes preparing and maintaining temporary or alternate care facilities to meet an anticipated surge in COVID-19 cases, even if they end up not being utilized. This will be especially true for communities that established alternate care sites to stand ready for new cases of COVID-19, as keeping these sites operational lessens threats to lives and public safety while public health officials and epidemiological data continue to indicate a risk of a second wave.
- Clarified the eligibility of wraparound services, such as cleaning, security, and some operational expenses.
In this expanded policy, FEMA recognizes that adequate treatment and control of the spread of COVID-19 within healthcare facilities goes beyond medical care – it requires cleaning and custodial services, laundry services, and public safety and security services, and limited administrative services. These wraparound services, consistent with the U.S. Department of Health and Human Services’ definition, are included in this policy as eligible costs, even for temporary and alternate care sites.
Limitations of the New Medical Care Policy
While the expansion of this policy will be critical for healthcare providers and communities recovering from the pandemic, there are some limitations and risks that applicants should continue to monitor:
- Reliance on data and modeling to establish eligibility.
FEMA reiterates throughout this policy that for costs to be determined necessary and reasonable – a cornerstone of the FEMA PA program – applicants will need to justify operations and costs through specific data. Whether that is through coordination with local public health officials, capturing local data, or use of predictive modeling, an applicant’s ability to forecast, document, and justify continuing their operations will be critical in advocating for eligibility under this new policy.
- Complexity in navigating (and avoiding) duplication of benefits.
Expansion of eligible activities under this policy brings additional funding sources to consider for duplication of benefits that are unusual to disaster recovery for healthcare providers. This includes not only patient insurance, billing, Medicaid and Medicare, but also funding from the Coronavirus Aid, Relief, and Economic Security (CARES) Act that covers similar response and recovery costs. As the public continues their outpouring of philanthropic support to healthcare providers, financial or material donations will have to be diligently tracked, too. While FEMA will be reviewing for duplication of benefits, the risk will fall on applicants to document and ensure that their FEMA claims are not covered by some other source.
- Time limit on recovery activities.
The policy identifies that eligible medical care costs are limited to those incurred within six months of the date of declaration or until the end of the public health emergency, whichever comes first. Additionally, FEMA determined that all damages must be identified within 60 days from the end of the public health emergency or from an applicant’s approved Request for PA, whichever comes later. While this timeline may be extended under standard FEMA PA procedures, applicants should monitor this timeline closely and ensure that they have strong evidentiary support should an extension be necessary.
The response to and recovery from the impacts of COVID-19 present many challenges, and the expansion of eligible costs under this policy has brought FEMA into a realm of work that they are less familiar with. With that, additional burden will be placed on applicants to prove that their actions and costs are necessary, reasonable, and prudent in the scope of their response to and recovery from COVID-19. Applicants will need to be strong advocates for themselves to ensure that this policy is applied consistently and appropriately.
For hospitals and healthcare systems seeking to leverage federal funding opportunities, Hagerty can provide expert advice and assist your organization with short-term liquidity and long-term recovery funding guidance. To learn more about COVID-19 recovery funding opportunities and to learn more about Hagerty’s cost recovery practice, visit our Recovery Page.