HHS distributing $9 billion in COVID-19 relief funds to providers this week

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The U.S. Department of Health and Human Services, through the Health Resources and Services Administration (HRSA), said it's distributing about $9 billion in Provider Relief Fund payments to providers, with a particular focus on smaller providers.

This is with an eye toward helping them address some of the financial challenges stemming from the COVID-19 pandemic.

The average payment being announced today for small providers is $58,000, $289,000 for medium providers, and $1.7 million for larger providers. 

More than 69,000 providers in all 50 states, Washington, D.C., and eight territories will receive Phase 4 payments. Payments will start to be made later this week.

The payments – in addition to the $8.5 billion in American Rescue Plan Rural payments to providers and suppliers who serve rural Medicaid, Children's Health Insurance Program and Medicare beneficiaries – are part of the $25.5 billion the Biden Administration is releasing to healthcare providers to recruit and retain staff, purchase masks and other supplies and modernize facilities.

WHAT'S THE IMPACT

In a bid for greater transparency regarding the PRF, HRSA publicly released the Phase 4 payment methodology in September, making it available to providers during the application period. 

About 75% of Phase 4 funding is being distributed based on expenses and decreased revenues from July 1, 2020 to March 31, 2021, HHS said.

HRSA is reimbursing a higher percentage of losses and expenses for smaller providers – which generally entered into the COVID-19 pandemic on worse financial footing, have historically operated on slimmer financial margins, and typically care for vulnerable populations.

And in a push to advance health equity, HRSA is distributing 25% of Phase 4 funding as "bonus" payments based on the amount and type of services provided to Medicare, Medicaid or CHIP patients. Similar to the American Rescue Plan Rural payments announced last month, HRSA is using Medicare reimbursement rates in calculating these payments to mitigate disparities due to varying Medicaid rates.

HHS has also updated the terms and conditions for Phase 4 and ARP Rural payments to ensure relief funds are being used to address the financial impact of COVID-19. Recipients whose payments exceed $10,000 are required to notify HHS of a merger or acquisition with any other healthcare provider. Providers who report a merger or acquisition may be more likely to be audited to ensure compliant use of funds.

HRSA is currently reviewing the remaining Phase 4 applications and will make the remainder of Phase 4 payments in 2022.

THE LARGER TREND

The $25.5 billion in ARP funding, with a sizable chunk earmarked for rural providers, was announced by HHS back in September. At the time, 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.

In three weeks, HRSA processed nearly 96% of the more than 55,000 ARP Rural applications submitted.

ON THE RECORD

"As we continue to fight the pandemic, the Biden-Harris Administration remains committed to supporting our healthcare providers on the front lines," said Becerra. "This vital funding will ensure critical healthcare services are delivered to communities across the country – including to those who are disproportionately impacted by the pandemic and medically underserved. We will continue to make healthcare accessible for everyone who needs it and reach people where they are."

"While we have made over half a million relief payments to healthcare providers throughout this pandemic, we know that many continue to face COVID-19 related financial challenges," said Acting HRSA Administrator Diana Espinosa. "HRSA is committed to providing as much support as we can through the Provider Relief Fund to healthcare providers as they continue responding to and recovering from this crisis."
 

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com