Connect with us

Politics

CVS, DaVita, Walmart return money from CARES Act coronavirus stimulus

Published

on

  • 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 stimulus, but so were larger companies that provide healthcare in addition to other services. 
  • The Trump administration said the funding came with “no strings attached. Later, it released guidance that suggested providers should consider returning the cash if they didn’t really need it. 
  • Visit Business Insider’s homepage for more stories.

Healthcare companies are refunding millions of dollars of coronavirus bailout 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 to all providers who recently billed Medicare, the government program that covers seniors and some people with disabilities. In all, the coronavirus stimulus provided at least $175 billion for healthcare providers.

In announcing the plans for the fund on April 7, Seema Verma, administrator of the Centers for Medicare and Medicaid Services, said that the money would come with “no strings attached.”

Seema Verma, Centers for Medicare and Medicaid Services Administrator

Seema Verma, 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 to 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 stimulus cash. In the last couple of months, more than a dozen major corporations came under fire and returned funding from another part of the government coronavirus stimulus, 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, said Allen Miller, principal and CEO at healthcare consulting firm COPE Health Solutions, providers will make calculations about the funding not only based on financial expenses and losses, but on 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. 

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 April 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 accepted the money, shows 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. 

Larry Merlo at Forbes Healthcare Summit

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 be returning $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, obtained first by Business Insider

Encompass — a company that provides in-home healthcare, rehabilitation, and hospice — announced in a regulatory filing May 7 that it wouldn’t be accepting the $237 million in relief funds it received. When contacted by Business Insider, the company declined to comment further.

Health insurer Cigna, which also owns businesses that provide healthcare, confirmed it returned all 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 doesn’t plan to name companies who return the funding. 

Javier Rodriguez, DaVita CEO

Javier Rodriguez, DaVita CEO

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 non-emergency 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 they will survive. 

DaVita said it still faced loses when it hired more people, compensated workers for overtime, and purchased more protective equipment. Nevertheless, it decided to return $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.

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 lossses 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.

If you are a healthcare provider who returned funding to the federal government from the CARES Act, and want to share your story with Business Insider, please email senior healthcare reporter Kimberly Leonard at [email protected]

LoadingSomething is loading.
Continue Reading
Advertisement Find your dream job

Trending