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CARES Act Includes Provisions Regarding Telecommunications, Telehealth

April 01, 2020

The Coronavirus Air, Relief, and Economic Security (CARES) Act includes provisions to assist small business customer payroll and payment of telephone and internet bills and, in addition to other recently passed acts, aims to expand access to telehealth.

Phase 3 of the coronavirus (COVID-19) legislative response package, the CARES Act includes emergency loans to distressed businesses, funds to individuals, limits on the requirement for employers to provide paid leave, and authorization for the US Department of the Treasury to temporarily guarantee money market funds and other healthcare, tax, and education sector measures, among other provisions. Several provisions in the CARES Act focus on telecommunications, and previous COVID-19 legislative actions also could increase demand for telehealth services and impact certain telecommunications providers in their capacity as employers.

CARES Act

Telecommunications Provisions

The CARES Act allocates $200 million to the Federal Communications Commission (FCC) to support telehealth services and $125 million to the US Department of Agriculture’s Rural Utilities Service to expand an existing distance learning, telehealth, and broadband initiative. The CARES Act also takes several steps to expand access to telemedicine services. The provisions regarding telehealth and loan forgiveness for utility payments that could assist both companies providing broadband and communications services and their customers are summarized below.

  • FCC telehealth: $200 million is allocated to the FCC to support telehealth services. The FCC’s funds are to be used “to prevent, prepare for, and respond to coronavirus, domestically or internationally, including to support efforts of health care providers to address coronavirus by providing telecommunications services, information services, and devices necessary to enable the provision of telehealth services during an emergency period.” The FCC may use its authority under the Universal Service Funds (Part 54) regulations to administer the funds if the FCC determines “such administration is in the public interest.”
  • RUS broadband program: The CARES Act allocates an additional $125 million to the Rural Utilities Service (RUS), a division of the Department of Agriculture, for the Distance Learning, Telemedicine, and Broadband Program established with a $600 million appropriation in FY 2018. $100 million is to remain available until September 30, 2021, provided it be used in rural areas without sufficient access to broadband (defined as 10 Mbps downstream and 1 Mbps upstream, with the definition to be updated annually by the secretary of Agriculture). Grants through this program may not be used to “overbuild or duplicate” broadband expansion efforts made by any entity that has received a broadband load from the RUS. Priority consideration for grants will be given to previous applicants who are now eligible as a result of adjusted eligibility requirements. Under Section 11004 of the CARES Act, $25 million of the additional allocation is to remain available until expended and used “to prevent, prepare for, and respond to coronavirus, domestically or internationally, for telemedicine and distance learning services in rural areas.”
  • Emergency loans for small businesses: Under the CARES Act’s Paycheck Protection Program (PPP), small businesses, nonprofits, and other specified businesses that have been operational since February 15, 2020 are eligible for PPP loans through the Small Business Administration’s 7(a) program for payroll, benefits, rent/mortgage, and utility payments including internet and telephone services. The PPP also allows small businesses that access loans through the CARES Act to be forgiven for amounts used for eligible expenses including payroll, rent/mortgage, and utility payments including telephone and internet access services that began before February 15, 2020. Loan forgiveness is available for payments made during the “covered period,” meaning eight weeks from the time of the loan origination. The forgiveness program contains certain limits, reductions based on downsizing the workforce or reducing salaries during the covered period, and exemptions for certain rehires. Businesses that receive forgiveness on their loans are not eligible for the delay of certain payroll taxes implemented by Section 2302 of the CARES Act.
  • Telemedicine: Many other provisions of the CARES Act support the use and growth of telehealth applications. Congress eases restrictions on healthcare providers and insurance companies to encourage the use of telemedicine, which will in turn drive demand for telecommunications services. One such provision is Section 3704 that provides that the government will now reimburse for telehealth services “that are furnished via a telecommunications system by a federally qualified health center or a rural health clinic” to eligible seniors enrolled in Social Security. Additionally, Section 20004 provides that the secretary of Veterans Affairs “may enter into short-term agreements or contracts with telecommunications companies to provide temporary, complimentary or subsidized, fixed and mobile broadband services for the purposes of providing expanded mental health services to isolated veterans through telehealth or VA Video Connect” during the public health emergency. This provision prioritizes rural and high-risk veterans.

Families First Coronavirus Response Act (FFCRA)

Requires Employers to Provide Paid Sick Leave, Eases Telemedicine Restrictions

The Families First Coronavirus Response Act (FFCRA) became law on March 18. The FFCRA eases restrictions on the use of telemedicine applications for Medicare reimbursement and COVID-19 testing, which will drive up demand for telecommunications services.

The law also requires certain employers to provide 14 days of paid sick leave in the event of a public health emergency, including the current coronavirus crisis, if an employee becomes quarantined or sick, needs to care for family member, or is unable to work due to school closures. For more details on the workforce implications of the FFCRA, see our recent presentation.

Coronavirus Preparedness and Response Supplemental Appropriations Act

Provides Funding for and Eases Regulations on Telehealth

The Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, became law on March 6. The law allows the US Department of Health and Human Services (HHS) to temporarily waive certain Medicare restrictions and requirements regarding telehealth services during the coronavirus public health emergency, and provides initial funding for other federal agencies in response to COVID-19.

Coronavirus COVID-19 Task Force

For our clients, we have formed a multidisciplinary Coronavirus COVID-19 Task Force to help guide you through the broad scope of legal issues brought on by this public health challenge. We also have launched a resource page to help keep you on top of developments as they unfold. If you would like to receive a daily digest of all new updates to the page, please subscribe now to receive our COVID-19 alerts.

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Washington, DC
Andrew Lipman
Tamar Finn