Protecting the Rights of Providers in Extraordinary Times (And the Ordinary Times that May Follow)

This is Part 3 in our series on Covid-19: "Welcome to the New Normal, California"


Individuals and business entities operating in the United States have a Constitutional right against arbitrary and capricious actions by governmental agencies. Compliance with procedural requirements is an important safeguard against unreasonable agency action. These requirements can take the form of formal notice and comment rulemaking, or of a notice of adverse findings and an opportunity to appeal.

These procedures take time and are not conducive to a crisis situation like COVID-19. Over the past four months, many agencies, including the Centers for Medicare and Medicaid Services (CMS), the California Department of Public Health and the California Department of Health Care Services have taken emergency action without undergoing formal rulemaking in order to provide healthcare providers flexibility so that they can quickly respond to the urgent needs of COVID-19 patients. Indeed, all of the distributions from the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act to healthcare providers have been implemented without formal agency action.


Unfortunately, providers should view these actions with caution, as moving quickly and without proper regulatory procedure, such as taking in comments from stakeholders, can sometimes result in ambiguities and unintended negative results. For example, some providers have struggled with how to submit applications for funding from the Provider Relief Fund where the materials from CMS have not clearly addressed those issues. In addition, the actual form, content, and timing of reporting continues to evolve. We are cautiously optimistic that CMS will determine in a consistent manner that providers have complied with the terms and conditions for their receipt of this funding.


The reason for caution is that pre-COVID-19, regulatory agencies had sought to roll back grant-like funding provided to hospitals during the last economic downturn to incentivize those providers to invest in certified electronic health record systems. By applying rules that were never announced to California providers nor applied in calculating the incentive payments, the State of California has sought to recoup tens of millions of federal-only dollars to the detriment of providers that complied with the published funding rules by adopting certified electronic health systems. Athene Law is currently representing numerous providers on challenging such action to recoup funds to hospitals that find themselves needing every dollar to combat the current pandemic.


While providers have relied on the quick action of regulatory agencies to respond to the pandemic and receive necessary relief funding, the lack of protections associated with sub-regulatory actions continue to be a concern. Athene Law will continue to monitor agency action in the future to ensure that the promises hurriedly made in the midst of a pandemic are kept.


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