HHS issues $25.5B in COVID-19 relief funding aimed at rural, small providers

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Another round of COVID-19 relief funding is set to go out to healthcare providers, this time totaling $25.5 billion, the Department of Health and Human Services announced last week.

The funding includes $8.5 billion from the American Rescue Plan (ARP) that will go to rural providers. The remaining $17 billion comes from the Provider Relief Fund's (PRF) Phase 4 distribution and will be sent to providers who can prove revenue losses associated with the pandemic.

Funds from the PRF Phase 4 distribution will be based on hospitals' margins between July 1, 2020, and March 31, 2021 – a period of time that includes the country's peak in COVID-19 cases.

HHS Secretary Xavier Becerra said the funds will be sent out "with an eye towards equity," and as such, the PRF payments will be distributed at a higher rate to smaller providers who tend to operate on thinner margins than their larger competitors. The Phase 4 payments will also include bonuses based on Medicare reimbursement rates for providers who serve disproportionate numbers of Medicaid, CHIP, and/or Medicare patients, according to the announcement.

Similar to the PRF payments, the ARP payments to rural providers will be distributed according to the amount of Medicaid, CHIP and/or Medicare patients they serve and will be based on Medicare rates.

With a goal of getting funds into the hands of providers as efficiently as possible, HHS will allow providers to apply for both programs in a single application that opens on September 29. The agency will use existing Medicaid, CHIP and Medicare claim data when calculating payments to speed up the process even more.

"We know that this funding is critical for health care providers across the country, especially as they confront new coronavirus-related challenges and respond to natural disasters," Acting HRSA Administrator Diana Espinosa said in a statement. "We are committed to distributing this funding as equitably and transparently as possible to help providers respond to and ultimately defeat this pandemic."

In addition to the new payments, HHS released insights into how it calculated PRF Phase 3 payments. It did so to let providers who believe their payments were incorrect request a recalculation – details of which are forthcoming, the agency said.

Further, HHS is granting a final 60-day grace period for the first PRF reporting deadline of September 30. It's doing so in light of recent natural disasters and the continued spread of the Delta variant. Specifically, while the deadlines to use funds and the reporting time period will not change, HHS said that it will not initiate collection activities or similar enforcement actions for non-compliant providers during the grace period.

WHY THIS MATTERS

Congress has allocated $178 billion to aid healthcare providers through the Provider Relief Fund. With the passing of the ARP, it designated an additional $8.5 billion through the Rural Relief Fund.

But not all of those funds have been distributed, leading hospital and provider groups to call on HHS to release the remaining money.

One of those organizations, the American Hospital Association (AHA), applauded HHS' recent announcement, calling it a "lifeline to America's hospitals, health systems and caregivers," in a statement.

THE LARGER TREND

The newly announced $25.5 billion represents the first relief allocation since last December and is the first to be overseen by the Biden administration.

In addition to urging HHS to release the remaining money in the PRF, the AHA has been adamant in requesting a longer time frame for providers to use their relief funds. Although the deadline was June 30, the AHA sent letters in May, June and July asking for more time.

Last week, the US hit a milestone by administering at least one round of vaccines to 75% of adults. The numbers should come as some encouragement to the nation's hospitals and health systems, which have been dealing with an influx of coronavirus patients, driven in large part by the highly transmissible Delta variant.

ON THE RECORD

"This funding critically helps health care providers who have endured demanding workloads and significant financial strains amidst the pandemic," HHS Secretary Xavier Becerra said in a statement. "The funding will be distributed with an eye towards equity, to ensure providers who serve our most vulnerable communities will receive the support they need."

"The AHA appreciates the Administration for announcing plans to get additional critical relief funding for providers out the door. Virus cases and hospitalizations continue to climb across the country so providers will continue to need support," Rick Pollack, the president and CEO of the AHA, said in a statement. "We look forward to reviewing today's announcement in more detail and continuing to work with HHS on providing further much-needed support to hospitals and health systems, especially as this announcement doesn't account for the spring and summer surges across the country due to the Delta variant."

Twitter: @HackettMallory
Email the writer: mhackett@himss.org