April 21, 2020

HHS Announces Over $40 Billion in Additional Distributions From the Provider Relief Fund

The Coronavirus Aid, Relief and Economic Security Act (CARES Act) makes $100 billion in funds available to hospitals and other health care providers for health care-related expenses or lost revenues that are attributable to COVID-19 through the Public Health and Social Services Emergency Fund (Provider Relief Fund). Earlier this month, the Department of Health and Human Services (HHS) distributed an initial $30 billion general allocation from the Provider Relief Fund based on the providers’ or suppliers’ (collectively providers) share of the Medicare fee-for-service payments to all providers in 2019.

HHS announced on April 22 that it will be distributing over $40 billion in additional aid from the Provider Relief Fund. The new distribution includes the following:

  • A $20 billion additional general allocation to providers such as children’s hospitals that receive a relatively small share of their revenue from Medicare fee-for-service
  • A $10 billion targeted allocation for hospitals in areas that have been particularly impacted by the COVID-19 outbreak
  • A $10 billion targeted allocation for rural health clinics and hospitals
  • A $400 million targeted allocation to Indian Health Service facilities
  • An unspecified allocation for COVID-19-related treatment of the uninsured
  • An unspecified allocation for some other providers such as skilled nursing facilities, dentists and providers that solely take Medicaid

The General Allocation

According to HHS, $50 billion of the Provider Relief Fund is being allocated for general distribution to Medicare facilities and providers impacted by COVID-19. This $50 billion allocation consists of (i) the initial $30 billion allocation based on providers’ shares of 2019 Medicare fee-for-service payments, and (ii) an additional $20 billion allocation that HHS will distribute on a rolling basis beginning on April 24, 2020 to providers such as children’s hospitals that receive a relatively small share of their revenue from Medicare fee-for-service. According to HHS, the $20 billion additional allocation will augment the initial $30 billion allocation so that the entire $50 billion general allocation is distributed proportionately to providers based on each provider’s share of 2018 net patient revenue. The use of the 2018 net patient revenue should provide for a more accurate allocation for providers who file cost reports.

A portion of providers will be sent an advanced payment in connection with the $20 billion allocation based off the revenue data they submit in Centers for Medicare & Medicaid Services (CMS) cost reports. Providers who receive their payments automatically will be required to submit their revenue information so that it can be verified. Providers who submit cost reports but do not have adequate cost report data on file will need to submit their revenue information to a portal that HHS will open this week. It is not clear whether suppliers who do not submit cost reports will be required to submit revenue information via the portal in order to obtain payment. Payments will go out weekly, on a rolling basis, as information is validated, with the first wave of payments being delivered by April 24, 2020.

Providers receiving funds from the $20 billion general allocation must sign an attestation confirming receipt of funds, agree to abide by the Relief Fund Payment Terms and Conditions, and confirm the accuracy of their CMS cost report (if applicable). The HHS website states that all recipients of these funds will be required to submit documents to ensure that the funds were used for health care-related expenses or lost revenues attributable to coronavirus and that recipients will be prohibited from balance billing in connection with presumptive or actual COVID-19 patients. However, there are other significant terms and conditions, including certifications for eligibility and reporting requirements, that must be met as well. (See our previous client alert detailing key requirements of the Relief Fund Payment Terms and Conditions in connection with the initial $30 billion general allocation of funds.) HHS stated further that “[t]here will be significant anti-fraud and auditing work done by HHS, including the work of the Office of the Inspector General.”

Key Terms Related to the Targeted Allocations

COVID-19 High Impact Areas

HHS will allocate $10 billion for hospitals in areas that have been particularly impacted by COVID-19. HHS does not specify what areas it considers to have been “particularly impacted by COVID-19.” HHS does note, by way of example, that hospitals serving COVID-19 patients in New York, which has a high percentage of total confirmed COVID-19 cases, are expected to receive a large share of the funds. HHS states that hospitals have already been directly contacted to provide information in order to apply for these COVID-19 High Impact Area funds. It is unclear whether hospitals who have not been directly contacted by HHS are eligible for COVID-19 High Impact Area funds. HHS has set a deadline of 3 p.m. Eastern Standard Time, April 25, 2020 for hospitals to apply for COVID-19 High Impact Area funds through an authentication portal.

Given this tight deadline, we would recommend that hospitals who believe they are in a high impact area – whether they have been contacted directly by HHS or not – attempt to provide the following information to HHS through the authentication portal:

  • Tax Identification Number
  • National Provider Identifier
  • Total number of intensive care unit beds as of April 10, 2020
  • Total number of admissions with a positive diagnosis for COVID-19 from January 1, 2020 to April 10, 2020

HHS will use this information to distribute the targeted funds to areas most significantly impacted by COVID-19. In determining the distribution, the HHS will consider the Medicare Disproportionate Share Hospital (DSH) Adjustment. HHS has stated that no applicant is guaranteed funding from the COVID-19 High Impact Area distribution.

Allocation for Rural Providers

HHS will allocate $10 billion for a targeted distribution to rural health clinics and hospitals. These funds will be distributed as early as next week on the basis of operating expenses on file with HHS, using a methodology that distributes payments proportionately to each facility and clinic. There is no application process required to receive these funds, but HHS’ guidance does not state whether providers will be required to execute an attestation or agree to the Relief Fund Payment Terms and Conditions.

Allocation for Treatment of Uninsured

Some portion of the remaining funds will reimburse providers at Medicare rates for treatment of uninsured patients. The Trump administration has not released the total allocation for the treatment of the uninsured. Subject to available funding, any health care provider who treated uninsured COVID-19 patients on or after February 4, 2020 can request claims reimbursement by enrolling with the Human Resources & Services Administration (HRSA) as a provider participant, checking patient eligibility and benefits, submitting patient information and submitting claims. According to HRSA, COVID-19 must be listed as the primary diagnosis, except for pregnancy when COVID-19 may be the secondary diagnosis. Registration for the program will open on April 27, 2020 and providers can begin to submit claims in early May 2020. Providers will receive payment via direct deposit. Recipients of these funds are obligated to make certain attestations, including an attestation that the recipient will abstain from balance billing any patient for COVID-19-related treatment.

Allocation for Indian Health Service

HHS will allocate $400 million for a targeted distribution to the Indian Health Service. These distributions are expected as early as next week and are being distributed on the basis of operating expenses on file with HHS. There is no application process required to receive these funds, but HHS’ guidance does not state whether Tribes will be required to execute an attestation or agree to the Relief Fund Payment Terms and Conditions.

Additional Allocations

HHS has noted that some providers, including skilled nursing facilities, dentists and providers that solely take Medicaid, will receive further and separate funding. Details about such additional allocations have not yet been released.

As the number of cases around the world grows, Faegre Drinker’s Coronavirus Resource Center is available to help you understand and assess the legal, regulatory and commercial implications of COVID-19.

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