FEMA Public Assistance Program: COVID-19 Update

As described in our recent article setting forth the Basics of FEMA Public Assistance Program Funding for the COVID-19 Pandemic, national emergency and disaster declarations have made federal Disaster Relief Funds available for “Emergency Protective Measures” taken to protect the public health and save lives. However, the unique and long-standing expenses resulting from the pandemic, past experience with extended time frames to obtain FEMA funding, and interplay with other funding sources have raised a number of questions among eligible applicants.

This article provides an overview of the steps FEMA has taken to streamline the Public Assistance (PA) Program process, new guidance that FEMA has issued in response to the ongoing needs of communities created by the COVID-19 pandemic, and additional relief that may be on the horizon as a result of developing federal policy and legislative action.

How is the process for obtaining Public Assistance Program funding different from the process for other disasters?

Due to the nature of this emergency, FEMA has implemented a number of COVID-19 process changes in order to help eligible applicants respond to the emergency. As set forth in its Public Assistance Application Quick Guide and Public Assistance FEMA Job Aid, FEMA has streamlined the application by:

• Enabling Applicants to Apply Directly to FEMA. Eligible applicants (which include states, local governments and other types of eligible providers) have the option to work with the designated state agency to submit a Public Assistance Program request. However, applicants now also have the opportunity to submit their Request for Public Assistance (RPA) directly through the FEMA grants portal, without involving the designated state agency.
• Providing a COVID-19 Streamlined Application. All applicants will apply for assistance using the COVID-19 Streamlined Project Application. The streamlined application includes specific instructions and schedules based on project-specific circumstances, including an “EZ” schedule for small projects (under $131,000), a simplified schedule for expedited funding requests, eligibility and cost schedules for large projects (over $131,000), and a simplified Environmental and Historic Preservation schedule for certain types of activities.
• Reducing Documentation Requirements for Small Projects (under $131,000). FEMA will process all Small Projects with limited documentation and Applicant certifications.
• Providing an Expedited Process for Large Projects (over $131,000). For Large Projects, applicants may request approval for expedited funding if they have an immediate need for funding to continue lifesaving emergency protective measures. If approved, the Applicant will be awarded 50% of the FEMA-confirmed project cost based on initial documentation. However, the applicant will then be required to provide all information, including all documentation to support actual incurred costs, to support the initial 50% of funding before receiving any additional funding. Applicants will be required to return any funds that were not spent in compliance with the program’s terms and conditions.

What new policy and guidance has FEMA developed in response to the unique needs of this disaster?

Since early March, following the COVID-19 Emergency Declaration, FEMA has developed Fact Sheets and Policy Guidance to help applicants better understand the eligibility and parameters regarding PA funding for expenses. These include, but are not limited to, guidance relating to Eligible Emergency Protective Measures, Federal Support to Expand National Testing Capabilities, Medical Care Costs Eligible for Public Assistance and Alternate Care Sites (ASC) “Warm Sites,” as described below.

Eligible Emergency Protective Measures. On March 19, FEMA released a Fact Sheet providing guidance regarding emergency protective measures including, but not limited to, the following, if not funded by the HHS/CDC or other federal agency. This includes:

✔   Management, control and reduction of immediate threats to public health and safety:

      •   Emergency Operation Center costs

      •   Training specific to the declared event

      •   Disinfection of eligible public facilities

      •   Technical assistance to state, tribal, territorial or local governments on emergency management and control of            immediate threats to public health and safety

✔   Emergency medical care, including:

      •   Nondeferrable medical treatment of infected persons in a shelter or temporary medical facility

      •   Related medical facility services and supplies

      •   Temporary medical facilities and/or enhanced medical/hospital capacity (for treatment when existing facilities are            reasonably forecast to become overloaded in the near term and cannot accommodate the patient load or to            quarantine potentially infected persons)

      •   Use of specialized medical equipment

      •   Medical waste disposal

      •   Emergency medical transport

✔   Medical sheltering (e.g., when existing facilities are reasonably forecast to become overloaded in the near future         and cannot accommodate needs).

✔   Household pet sheltering and containment actions related to household pets in accordance with CDC guidelines.

✔   Purchase and distribution of food, water, ice, medicine and other consumable supplies, to include personal         protective equipment and hazardous material suits, as well as the movement of supplies and persons.

✔   Security and law enforcement.

✔   Communications of general health and safety information to the public.

✔   Search and rescue to locate and recover members of the population requiring assistance.

✔   Reimbursement for state, tribe, territory and/or local government force account overtime costs.

FEMA funding under the PA Program is considered to be a “payer of last resort,” which means that any FEMA dollars will be reduced if another source of federal funding is available to fund an otherwise eligible expense. In this policy, FEMA notes that while some activities may be eligible for funding through Health & Human Services/Center for Disease Control, final reimbursement determinations will be coordinated by HHS and FEMA. FEMA will not duplicate any assistance provided by HHS/CDC. For this reason, eligible applicants and providers should prioritize allocating dollars to expenses that are not FEMA eligible first, leaving less to offset FEMA funding.

Federal Support to Expand National Testing Capabilities. On May 5, FEMA issued a Fact Sheet identifying sources of federal reimbursement of testing. Since that time, the Department of Health & Human Services (HHS) announced that it is delivering $11 billion in new funding to support testing for COVID-19 through the Centers for Disease Control and Prevention (CDC). The Fact Sheet indicates that states, territories, tribes and local governments may seek reimbursement for eligible expenses associated with coronavirus testing through FEMA’s PA Program. However, the extent to which expenses for testing will be made available for expenses unrelated to medical care costs (described further below) for the cost of testing as states and communities reopen to trace and prevent the spread of the virus is unclear at this time.

Medical Care Costs Eligible for Public Assistance. FEMA has recently issued a new policy setting forth the requirements for determining eligibility of medical care costs under the PA Program, which includes important clarifications that signal expanded eligibility of expenses. This guidance includes important clarifications and information regarding eligible expenses for Primary Medical Care Facilities (defined to include any licensed hospital, outpatient facility, rehabilitation facility or facility for long-term care) and temporary and expanded medical facilities.

• Primary Medical Care Facilities. For Primary Medical Care Facilities, FEMA is allowing both emergency and inpatient clinical care costs for COVID-19 patients to be eligible for FEMA reimbursement (to the extent they are not covered by another funding source) and includes both confirmed and suspected cases of COVID-19. This includes emergency medical transport, triage and medically necessary tests (which we were aware would be covered) and also medical treatment of COVID-19 patients (now expanded beyond emergency treatment) and prescription costs related to COVID-19 treatment. Again, it’s important to note that to the extent patients have other health coverage for these services, costs cannot be duplicated and will not be reimbursed by FEMA. The guidance also indicates that for COVID-19 declarations, FEMA will use Medicare rates as the basis to determine reasonable costs for eligible clinical care not covered by another funding source. (FEMA will use standard Medicare rates that do not include the 20% increase in COVID-19 Medicare DRG rates implemented by the CARES Act). Both patient payments and insurance payments are considered another funding source; clinical care for which providers have received or will receive payments from patients or insurance is not eligible.
• Temporary and Expanded Medical Facilities. The guidance provides that FEMA may approve work and costs associated with temporary medical facilities when necessary in response to the COVID-19 emergency, and the facilities may be used to treat COVID-19 patients, non-COVID-19 patients or both, as necessary. The description of eligible costs appears to be more expansive than anticipated, including:
  • Medical care costs (as above), and applicable to both COVID-19 and non-COVID-19 patients.
  • Lease, purchase or construction costs, as reasonable and necessary, of a temporary facility as well as reasonable alterations to a facility necessary to provide medical care services.
  • Mobilization and demobilization costs associated with setting up and closing the temporary or expanded medical facility.
  • Operating costs including equipment, supplies, staffing, wraparound services and clinical care not covered by another funding source.
  • Maintenance of a temporary or expanded medical facility in an operationally ready but unused status available for surge capacity for COVID-19 readiness and response when necessary to eliminate or lessen an immediate threat to public health and safety, based on public health guidance, location of areas expected to be impacted and local/state hospital bed/ICU capacity.
  • For temporary and expanded medical facilities, and the specific type of temporary medical facilities known as Alternate Care Sites, administrative activities and associated costs necessary for the provision of essential medical services are eligible.

Alternate Care Site (ACS) “Warm Sites.” On May 12, FEMA issued a Fact Sheet advising that in order to address immediate and projected needs from the coronavirus (COVID-19) pandemic, and the potential public health threat of a second wave of the COVID-19 virus, state, local, tribal and territorial (SLTT) governments may, under certain conditions, be reimbursed through FEMA’s Public Assistance (PA) Program for costs associated with keeping Alternate Care Sites (ACS), including temporary and expanded medical facilities, minimally operational when COVID- 19 cases diminish and the facilities are no longer in use.

What additional Public Assistance Program relief is on the horizon?

As FEMA continues to issue new guidance regarding evolving FEMA policy for the PA Program, questions remain regarding what, if any, additional relief will be made available through waivers and statutory changes that would allow the PA Program to better address the needs of communities. For example, the emergency declaration for states includes a 75% federal cost share, which is the minimum federal cost share¹ required for Public Assistance Program funding, leaving the remaining 25% nonfederal share to be funded by states and/or applicants. Many states, including New York, have applied for a waiver of the 25% nonfederal share, and there is precedent for approving such waivers.

In addition, the House-passed Health and Economic Recovery Omnibus Emergency Solutions Act (the Heroes Act) includes provision that would address these and other state requests. Although the Senate is not expected to take up the Heroes Act, the House legislation provides a roadmap to FEMA changes that Congress could consider in its next stimulus package, including provisions that would:

Adjust the FEMA Cost Share (Section 200005). The bill includes a provision that would statutorily adjust the FEMA PA Program cost share from 75% federal-25% nonfederal split to 100% federal share. If enacted, this bill would eliminate the need for federal waiver of the current nonfederal cost-sharing requirement for eligible applicants and provide significant relief to both states and applicants to participate in the PA Program without obligating applicant funds.

Clarification of PA Program (Section 200006). The legislation would expand and clarify in statute FEMA’s previous list of eligible expenses for assistance under the March 13, 2020, Stafford Act Emergency Declaration. Eligible expenses would be expanded/clarified to include:

• Backfill costs for first responders and other essential employees who are ill or quarantined;
• Increased operating costs for essential government services;
• Costs of providing public guidance and information to the public;
• Costs for establishing virtual services and operating remote test sites;
• Training provided in anticipation of, or response to, to the next emergency declaration;
• Personal protective equipment for first responders and other essential employees;
• Medical equipment, regardless of whether such equipment is used for emergency or inpatient care;
• Public health costs;
• Costs associated with maintaining alternate care facilities;
• Costs of establishing and operating shelters;
• Costs of procuring and distributing food to individuals affected by the pandemic through networks established by state, local or tribal governments or other organizations, including restaurants and farms; and
• Funeral benefits.

In addition, FEMA would be authorized to provide advance assistance to an eligible applicant (rather than reimbursement for incurred expenses) if a failure to do so would prevent the applicant from carrying out such activities.

It is important to note that while some of these provisions, such as backfill costs for employees who are quarantined and costs for establishing virtual services (e.g., telehealth), would offer states assistance beyond the current FEMA Public Assistance Program Policy, the extent to which federal legislation is needed to accomplish these policy changes is unclear, especially given recent guidance, described above, which permits the expansion of the PA Program due to the unique nature of the COVID-19 pandemic.

If you believe your organization may be eligible for FEMA PA Program funding, we would encourage you to visit FEMA’s website (http://www.fema.gov/disaster) to determine the local agency responsible for working with applicants to submit grants to confirm eligibility and begin the RPA process.

Please contact Meghan McNamara at mmcnamara@manatt.com with any questions about FEMA funding. FEMA is one of many resources available to help mitigate the financial impact of COVID-19. Manatt’s cross-disciplinary healthcare, corporate and finance team can guide you in identifying, applying for and accessing the funds for which your organization is eligible.

_{¹ 42 U.S.C. 5172(b).}