DEPARTMENT OF HEALTH AND HUMAN SERVICES  
Centers for Medicare &  Medicaid  
Services 7500 Security Boulevard,  
Mail Stop S2-26-12   C!NTER> FOR MEDICARE 6< MEDICAID SERVIC!S 
CENTER FOR MEDICAID & CHIP SERVICE~ 
Baltimore, MD 21244-1850 
 
 CMCS Informational Bulletin  
 
 
DATE:   August 24, 2020  
 
FROM:   Anne Marie C ostello 
    Acting  Center Director   
 
SUBJECT:   Nursing Home Strategies for COVID-19 Only Isolation of COVID-19 
Residents   
 
 
This Center for Medicaid  & CHIP Services  Informational Bulletin (CIB) identifies flexibilities  
available to state Medicaid agencies to enhance payment  for nursing facilities  (also referred to  
as nursing homes throughout this CIB) during the  COVID-19 public health emergency to 
account for potentially increased resident acuity levels and to support  any necessary actions  
that facilities are implementing to mitigate the further spread of COVID-19, such as isolation 
or quarantine of residents and adherence to Federal infection control  guidelines.  This CIB also 
highlights specific actions that certain states  have already taken to better support the nursing  
facilities ability to safely  care  for  all residents, including  COVID-19 positive residents, during  
this public health emergency, and how enhanced nursing facility  payment supported those  
efforts.  With this CIB, the Centers for Medicare & Medicaid Services  (CMS)  is encouraging  
states to  utilize these flexibilities to  improve care for Medicaid beneficiaries  residing in nursing  
facilities. 
 
Background  
 
Since the outset of the COVID-19 public health emergency the Federal government made it a 
priority to offer assistance to providers of Americas healthcare system, including $100 billion  
to establish a provider relief fund, which Congress subsequently  augmented with an additional  
$75 billion.  In March 2020, CMS created a Medicaid  Disaster Relief State Plan Amendment 
(SPA) template1  to assist states in responding to the COVID-19 public health emergency. This  
streamlined SPA template combines multiple, time-limited state plan options into  a  single  
template, eliminating the  need to submit multiple  SPA  requests.  States have utilized this new  
SPA template to implement temporary  changes to eligibility, enrollment, benefits, premiums, 
cost sharing, and provider payments including:  coverage of the new eligibility  group for  
COVID-19-testing, temporary elimination of cost  sharing, expansion of telehealth for  covered 
Medicaid services and temporary rate increases to providers to recognize higher costs related to 
                                                      
1  https://www.medicaid.gov/resources-for-states/disaster-response-toolkit/state-plan-flexibilities/index.html  
 
The contents of this  document do not  have the force  and effect of  law and are not  meant to bind the  
public in any way, unless specifically incorporated into a contract.  This document is  intended only to  
provide clarity to the public regarding existing requirements under  the law.   Page 2    
 
COVID-19 treatment.  One of the key  authorities approved through the use of the Medicaid 
Disaster Relief SPA  template  has been  to increase nursing facility  payment  rates.    
 
States generally have significant  flexibility  in modifying state plan payment rates and  
methodologies for nursing facilities  consistent with Section 1902(a)(30)(A) of the Social  
Security Act.  States can  increase payments to recognize additional  costs  incurred in delivering  
Medicaid services, including additional  labor  costs and  supply costs such as costs for personal  
protective equipment.  States can further target payment  increases  to nursing facilities that  are  
treating residents diagnosed with COVID-19, or to nursing facilities in geographic areas that are  
experiencing an outbreak. Through the Medicaid Disaster Relief SPA process, CMS has  
prioritized the review and approval of  state proposals to enhance payment  to nursing facilities  
so that they may  be better able to provide quality  care to all residents during the public health 
emergency.   CMS has already approved numerous  Medicaid disaster relief  SPAs that provide 
for  increases or  add-ons to nursing facility  payment  rates  to account for the impact  of the  
public health emergency, including increased costs of operation and higher resident acuity.  
 
Examples of nursing facility  payment  enhancements  available to states  
 
   Per diem dollar increases or  percentage increases to existing base rates    some states  
have increased  payment  rates across-the-board, while others are targeted  for facilities  
with  residents who are diagnosed with COVID-19.   
 
   Establishment of  new payment  methodologies  for nursing facilities serving as isolation  
centers.    
 
   Temporarily  modifying existing rate setting methodologies (such as allowing  
additional costs to be considered), removing certain  state plan-established  payment  
penalties  (for example,  penalties  for not filing cost reports timely,  or  for not meeting  
state-determined metrics), or creating  an option for facilities to apply  for  specialized  
payment  adjustments  under extraordinary  circumstances.    
 
   Creation of  new targeted  supplemental payments or modified existing supplemental 
payments to accelerate the timing of the payments.  
 
   Modifications  to state bed hold policies  under 42 C.F.R.  447.40, to adjust the  
maximum number of reimbursable leave of absence days or other policy limitations  
established in their state  plans, or to increase the payment rate  for bed hold days.  
 
Flexibilities available in  managed care   
 
In states that have a managed care  delivery  system, states can direct specific payments made 
by managed care plans to providers through a state-directed payment. Under 42 C.F.R.  
438.6(c), states  can include contractual requirements for their managed care plans to pay a  
specific minimum fee schedule or a specific uniform dollar or percentage increase for  a class of  
providers, including nursing facilities. While the actuarial soundness and rate development  
requirements under 42 C.F.R.  438.6(c)(2), 438.4, and 438.5 still apply to these payment  
arrangements, CMS has implemented an expedited review and  approval process for states  
The contents of this  document do not  have the force  and effect of  law and are not  meant to bind the  
public in any way, unless specifically incorporated into a contract.  This document is intended only to 
provide  clarity to the public regarding existing requirements under  the law.   Page 3    
 
seeking to implement these state directed payments. Additional details on CMS approval  
framework and an example preprint are available in the May 14, 2020 CMCS Informational  
Bulletin.2 
 
Consistent with previously  published FAQs3, states can  also consider paying for services  
outside of the managed  care capitation rates  as a non-risk payment  arrangement. This  
arrangement can  be structured as either  a separate non-risk contract with the managed  care 
plans (see the definition of non-risk contract  at  42 C.F.R.  438.2) or as  an amendment to 
existing managed care plan contracts to include a  non-risk payment. The state will need to be  
able to identify  relevant costs and/or beneficiaries  accurately within the managed care plan  
contracts. The state would  then  need to amend their contracts to clearly define the benefits the 
plans must cover on a risk  basis and the benefits that are  excluded from the capitation rates and 
will be covered on a non-risk basis. The state and its actuary will also need to determine if a 
rate amendment is necessary (i.e., to address any services previously included in capitation rate  
development that now need to be removed and paid on a non-risk basis).  If a state chooses to  
amend its existing contracts to include a non-risk payment, the state would need to comply  
with the upper payment limits  specified in  42 C.F.R.  447.362 for non-risk contracts.  
 
Examples of  flexibilities  states have implemented:  
 
  Ohio provides tiered payments, based on  an  individual  resident's level of COVID-19
quarantine or isolation, to nursing facility health care isolation centers (HCIC)  for 
COVID-19  (see https://www.medicaid.gov/State-resource-center/Medicaid-State-Plan-
Amendments/Downloads/OH/OH-20-0012.pdf).   These payments differ  for quarantine 
($250 per patient day) or  level of isolation needed (from  $300 per patient day,  to $984
per patient day if mechanical ventilation is needed).  Although Ohio  originally 
submitted a state directed payment proposal to operationalize this payment 
arrangement  in its managed care contracts,  they have decided to implement  a non-risk 
payment arrangement for these payments.  Rather than designating  certain facilities as 
COVID-19 only, Ohio developed policies and practices based around designating 
specific sections of a facility  for quarantine or isolation, which many facilities were 
already  equipped for, and would allow  residents  to remain in their home facility.  In  a 
case where there is a primary payer other than Medicaid, the provider bills the primary
payer first,  and then the state Medicaid agency reimburses the difference between that 
payment  and the COVID-19 enhanced rate. 
 
  Michigan implemented  increased payment rates for nursing  facilities that are
designated by the state as a COVID-19 Regional  Hub  (see
https://www.medicaid.gov/State-resource-center/Medicaid-State-Plan-
Amendments/Downloads/MI/MI-20-0005.pdf). These nursing facilities receive an 
initial $5000 per bed payment  in the first month to address staffing needs  and
infrastructure changes required to assure the facilities are able to meet the patient 
safety protocols necessary  with higher level of care.  Nursing facilities were required to 
demonstrate the ability to physically separate patients by submitting their floor plans 
                                                      
2  https://www.medicaid.gov/sites/default/files/Federal-Policy-Guidance/Downloads/cib051420.pdf.  
3  https://www.medicaid.gov/state-resource-center/downloads/covid-19-faqs.pdf.  
The contents of this  document do not  have the force  and effect of  law and are not  meant to bind the  
public in any way, unless specifically incorporated into a contract.  This document is intended only to 
provide  clarity to the public regarding existing requirements under  the law.   Page 4    
 
for state review.  After the first month, a supplemental payment  of $200 per  resident  
per day  will be built into the per diem rates for these nursing  facilities.  In order to 
qualify  for admission into a regional hub bed, patients had to either be discharged 
from a hospital or transferred from another nursing facility that was unable to safely  
isolate the patient.  Like  Ohio, Michigan utilized the fact that many  facilities already  
had isolation and quarantine areas to create areas  within a facility  for COVID-19 
quarantine and isolation with enhanced procedures and requirements such as dedicated 
staff for that unit. Michigan is also piloting in 11 counties  a long-term care emergency  
support staffing  initiative, to assist long-term care  facilities experiencing staffing  
shortages due to COVID-19 (see https://www.michigan.gov/coronavirus/0,9753,7-
406-98158-533608--,00.html).   
 
   Iowa  will provide COVID-19 Relief Rate  (CRR)  payments to nursing facilities that 
either have  a designated isolation unit for COVID-19 treatment or have been 
designated in their entirety  for COVID-19 treatment  (see 
https://www.medicaid.gov/State-resource-center/Medicaid-State-Plan-
Amendments/Downloads/IA/IA-20-0013.pdf).   CRR payments are an add-on payment  
of $300 per day to eligible  nursing facilities  for each  resident  in one of the  designated 
units who is discharged from a hospital to the  nursing facility, is pending test results  
for COVID-19, or has  received a positive COVID-19 result.  Iowa submitted a state  
directed payment proposal to operationalize this payment arrangement in its managed 
care contracts.   
 
Additional Resources for  nursing  facilities  
 
Through the Coronavirus Aid, Relief, and Economic Security  (CARES) Act and the  Paycheck  
Protection Program and  Health Care Enhancement Act (PPPCHE), the federal  government has  
allocated $175 billion in payments to be distributed through the Provider Relief  Fund  to 
support healthcare-related expenses or lost revenue attributable to the COVID-19 pandemic. 
These payments do not need to be repaid to the US government if providers comply with the  
terms and conditions. The funds are being distributed to eligible providers through a series of  
distributions that include:  
   $50 billion general distribution for providers that  bill Medicare fee-for-service (Parts  
A or B);   
   $15 billion general distribution for providers that  participate in state Medicaid/CHIP  
programs, Medicaid managed care plans, or provide dental care, that did not qualify  
for $50  billion general distribution for Medicare fee-for-service providers;   
   $4.9 billion targeted distribution for Medicare- and Medicaid-certified skilled nursing  
facilities with at least six  beds; and  
   $5  billion  targeted distribution  for nursing  facilities and long-term care facilities, 
including $2.5 billion  to support increased testing, staffing, and PPE needs  and $2.5 
billion based on performance with minimizing the spread of  COVID and COVID-
related fatalities among  the facilitys  residents.  
 
A portion of  the Provider Relief  Fund  funds  are  also being distributed  to healthcare providers  
who have provided treatment for uninsured COVID-19 patients on or  after February 4, 2020. 
Providers can request claims reimbursement and  will be reimbursed at Medicare rates, subject  
The contents of this  document do not  have the force  and effect of  law and are not  meant to bind the  
public in any way, unless specifically incorporated into a contract.  This document is intended only to 
provide  clarity to the public regarding existing requirements under  the law.   Page 5    
 
to available funding.  Nursing facilities may  also be eligible  for future allocations of the  
Provider Relief Fund.  Additional information on future distributions will be made available on 
HHS Provider Relief  Fund webpage  at  www.hhs.gov/providerrelief.  
 
Previously, CMS had issued a toolkit for states to  mitigate COVID-19 prevalence in nursing  
facilities (https://www.cms.gov/files/document/covid-toolkit-states-mitigate-covid-19-nursing-
homes.pdf).  Additionally, in July, HHS announced an initiative to distribute rapid point-of-
care testing devices to nursing homes in COVID-19 hotspot geographic areas in the United 
States (https://www.hhs.gov/about/news/2020/07/14/trump-administration-announces-
initiative-more-faster-covid-19-testing-nursing-homes.html).  CMS  has also provided guidance  
for other congregate setting provider types  to mitigate the spread of COVID-19.4 
 
Conclusion  
 
CMS encourages states to utilize the flexibilities available to  support the nursing facilities  
ability to safely  care for  all  residents, including COVID-19 positive residents, during this  
public health emergency. CMS encourages states to do so through close alignment with 
applicable CDC  guidance and in close coordination with the state agency  responsible for  
survey and certification of nursing  facilities.   
 
If states have questions about this informational bulletin or need technical  assistance regarding  
these flexibilities, please contact Todd McMillion, Director of the Division of Reimbursement 
Review, at  Todd.McMillion@cms.hhs.gov  or John Giles, Director of the Division of Managed 
Care Policy,  at  John.Giles1@cms.hhs.gov.  
 
 
 
 
 
 
 
 
 
 
 
                                                      
4  See https://www.cms.gov/files/document/qso-20-20-allpdf.pdf  and  https://www.cms.gov/files/document/covid-
faqs-non-long-term-care-facilities-and-intermediate-care-facilities-individuals-intellectual.pdf.  
The contents of this  document do not  have the force  and effect of  law and are not  meant to bind the  
public in any way, unless specifically incorporated into a contract.  This document is intended only to 
provide  clarity to the public regarding existing requirements under  the law.