May 07, 2020

HHS Begins Distribution of Provider Relief Funds to Hospitals With High COVID-19 Admissions and to Rural Providers

The Coronavirus Aid, Relief and Economic Security (CARES) Act makes $100 billion in funds available to hospitals and other health care providers for health care-related expenses or lost revenues attributable to COVID-19. The Department of Health and Human Services (HHS) announced on May 1 that it is paying $12 billion from the Public Health and Social Services Emergency Relief Fund (Provider Relief Fund) to hospitals with 100 or more COVID-19 inpatient admissions through April 10, 2020 (COVID-19 High Impact Funds) and is paying an additional $10 billion from the Provider Relief Fund to rural providers. This table identifies the distribution of COVID-19 High Impact Funds and the distribution of funds to rural providers by state. The $12 billion COVID-19 High Impact Funds distribution is $2 billion more than HHS originally planned to make available to hospitals that have been highly impacted by COVID-19. (See the initial announcement for this distribution).

COVID-19 High Impact Fund Distributions

HHS will distribute $12 billion to 395 hospitals that provided inpatient care for 100 or more COVID-19 patients through April 10, 2020. According to HHS, these 395 hospitals accounted for 71 percent of COVID-19 inpatient admissions reported to HHS from nearly 6,000 hospitals around the United States. The $12 billion distribution is being allocated so that $10 billion is paid to these hospitals based on a fixed amount per COVID-19 inpatient admission, and $2 billion is paid to these hospitals taking into account their Medicare and Medicaid disproportionate share and uncompensated-care payments. The deadline to apply for these funds was April 25, 2020. These funds will be sent via direct deposit soon.

The HHS announcement does not specify the fixed amount to be paid per COVID-19 inpatient admission, how the fixed amount was calculated and what it is designed to cover, or state the formula used to allocate the $2 billion disproportionate share/uncompensated care payments.

It appears from the HHS announcement that hospitals providing inpatient care for fewer than 100 COVID-19 patients through April 10, 2020, will not be eligible to receive COVID-19 High Impact Funds. One potential source of funds for hospitals that are not eligible for the COVID-19 High Impact Funds is the COVID-19 Claims Reimbursement to Health Care Providers and Facilities for Testing and Treatment of the Uninsured Program (which provides funds for testing and treating the uninsured and which is discussed in more detail here).

We note that the High Impact Fund Distribution Payment is in addition to the $50 billion general distribution from the Provider Relief Fund, which is intended to replace a percentage of a provider’s gross receipts, sales or program service revenue. (More information about the General Distributions is available here and here).

Rural Distribution

HHS also announced that it will distribute $10 billion to rural acute care general hospitals, rural critical access hospitals (CAHs), rural health clinics (RHCs), and rural community health centers (CHCs). According to HHS, eligibility for these funds will be based on the physical address of the facilities as reported to the Centers for Medicare and Medicaid Services (CMS) and the Health Resources and Services Administration (HRSA). Providers in rural locations are eligible for funds regardless of whether they are affiliated with organizations located in urban areas. Providers will receive these funds via direct deposit soon.

According to HHS, rural hospitals (which presumably means both rural acute-care general hospitals and rural CAHs) and RHCs will each receive a minimum base payment plus a percent of their annual expenses. This base payment will ensure that (i) rural acute care general hospitals and CAHs will receive a minimum level of support of at least $1 million with an additional payment based on operating expenses; and (ii) RHCs, including those with no reported Medicare claims such as pediatric RHCs will receive a minimum level of support of at least $100,000 with an additional payment based on operating expenses. The HHS announcement does not specifically state that CHCs will also receive a base payment plus a percent of their annual expenses; however, this appears to be implied by HHS’s comment that the “base payment” will account for “CHCs lacking expense data” by ensuring that all clinical, nonhospital sites will receive a minimum level of support of at least $100,000 plus an additional payment based on operating expenses. The HHS announcement does not specify what percentage of annual operating expenses will be used to calculate distributions to rural providers.

Attestation and Agreement

HHS has published terms and conditions for the COVID-19 High Impact Funds and rural distributions. These terms and conditions are similar to the terms and conditions that apply to other previous allocations HHS made from the Provider Relief Fund. As of the publication date, the HHS attestation portal that providers are expected to use refers only to the initial $30 billion tranche of funds that HHS allocated from the Provider Relief Fund. We anticipate that HHS will clarify the attestation process in the coming days.

Other Targeted Distributions

HHS continues to work on targeted distributions to certain other providers, such as skilled nursing facilities, dentists, and providers that exclusively serve Medicaid patients.

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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