Hospitals are receiving $30 billion in CARES Act funding by direct deposit

"@HHSGov is beginning the immediate distribution of $30 billion to hospitals and healthcare providers ..." HHS Sec. Alex Azar tweeted.

The Centers for Medicare and Medicaid Services has announced the release of $30 billion of the $100 billion earmarked for hospitals in the Coronavirus Aid, Relief and Economic Security Act.

This money is separate from $34 billion in advance payment loans to providers announced last week. CMS later increased the amount in the Accelerated and Advance Payment Program to $51 billion.

Hospital and provider groups are calling for the release of all of the funding, and those representing essential hospitals and research organizations are concerned the money does not target these needs.

The CARES Act funds began their distribution to providers via direct deposit on April 10. All facilities and providers that received Medicare fee-for-service reimbursements in 2019 are eligible for the distribution.

Providers will be distributed a portion of the initial $30 billion based on their share of total Medicare fee-for-service reimbursements in 2019. Total FFS payments were approximately $484 billion in 2019, HHS said.

Providers can estimate their payment by dividing their 2019 Medicare FFS (not including Medicare Advantage) payments by $484 billion and multiplying that ratio by $30 billion.

For example, a community hospital that billed Medicare fee-for-service $121 million in 2019 would divide $121 million by $484 million, and then multiply that amount by $30 million, for a result of $7,500,000.

Even those providers which have ceased operations as a result of the COVID-19 pandemic are eligible to receive funds so long as they provided diagnoses, testing or care for individuals with possible or actual cases of COVID-19. The Department of Health and Human Services broadly views every patient as a possible case of COVID-19, HHS said.

Payments to practices that are part of larger medical groups will be sent to the group's central billing office.

As a condition to receiving these funds, providers must agree not to seek collection of out-of-pocket payments from a COVID-19 patient that are greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network provider.

HHS has partnered with UnitedHealth Group to provide the rapid payment via Automated Clearing House account information on file with UHG or CMS.

The automatic payments will come to providers via Optum Bank with "HHSPAYMENT" as the payment description.

Providers who normally receive a paper check for reimbursement from CMS, will receive a paper check in the mail within the next few weeks.

WHY THIS MATTERS

The CARES Act funds do not have to be repaid. Hospitals need immediate funding to make up for lost revenue from money spent in responding to the coronavirus pandemic and from the loss of elective surgeries.

The American Hospital Association has been calling for an immediate influx of funds as hospitals have cut expenses by such measures as furloughing staff and reducing physician salaries.

THE LARGER TREND

On March 27, President Trump signed the bipartisan CARES Act that provides $100 billion in relief funds to hospitals and other healthcare providers on the front lines of the coronavirus response.

This funding will be used to support healthcare-related expenses or lost revenue attributable to COVID-19 and to ensure uninsured Americans can get testing and treatment for COVID-19.

ON THE RECORD

While providers applauded the release of the funds, the response has varied.

The American Hospital Association urged HHS to release the remaining CARES Act funds. "In particular, additional targeted relief for hospitals in hot spots, children's hospitals, rural hospitals and hospitals with a high percentage of payments under Medicare Advantage need immediate relief,"  said Rick Pollack, president and CEO of the American Hospital Association. "In addition, hospitals that received funds today will clearly need additional assistance."

America's Essential Hospitals said the Medicare fee-for-service allocation formula will leave many essential hospitals behind. "Our hospitals are struggling now to manage surging patient volume, staff and supply shortages, and other severe challenges as their limited cash reserves dwindle. By their mission, these hospitals care for large numbers of uninsured and Medicaid patients in communities where COVID-19 has exposed persistent disparities in health and healthcare. So, a distribution formula based on Medicare fee-for-service revenue misses the mark for many of our members and their patients," said Dr. Bruce Siegel, president and CEO.

Privia Health CEO Shawn Morris said, "Though the CARES Act Provider Relief funding is greatly appreciated and helpful, many physician practices will remain on the edge of a significant financial cliff related to decreases in volumes of 40% to 60%, or even more for some specialties, leading to dramatically reduced revenue. Across the nation, providers have had to make extremely difficult decisions to furlough staff and reduce hours in an effort to remain open and available to their patients."

The Association of American Colleges told House and Senate leaders that teaching hospitals and practices continue to struggle financially. "As you negotiate an interim relief package, we strongly support the inclusion of at least an additional $100 billion to the Provider Relief Fund authorized in the Coronavirus Aid, Relief, and Economic Security Act and urge you to also provide $26 billion in emergency appropriations to support the research workforce during this national emergency."

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com