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Analysis

$50B in CARES Act Provider Relief: Where'd It Go? Where's It Going?

By John Commins  
   April 23, 2020

Federal officials say the object of the initial $30 billion blunderbuss distribution of funding was to get money to providers as fast as possible.

The federal government on Friday will begin doling out the remaining $20 million from a $50 billion CARES Act Provider Relief Fund dedicated to helping caregivers pay for the cost of the COVID-19 pandemic and related costs.

Here's a recap of where the money went, and where it's going.

The first $30B

The first $30 billion was distributed with a blunderbuss starting with $26 billion on April 10 via direct deposits to any healthcare facilities and providers who got Medicare fee-for-service reimbursements in 2019. The remaining $4 billion of the expedited $30 billion distribution was sent on April 17.

Centers for Medicare & Medicaid Services Administrator Seema Verma told reporters this week that the object of the initial funding was to get money to providers as soon as possible.

"From a broad level, the first tranche of dollars was put out with the aim of getting dollars out very quickly into the healthcare system," she said. "That's something that we heard from providers across the board. They wanted to make sure we got this out quickly," she said.

Even caregivers who shut their doors because of the pandemic were eligible for the funds if they provided diagnoses, testing, or care to patients with possible or actual COVID-19. The kicker is that HHS says it "broadly views every patient as a possible case of COVID-19."

Under the dispersal formula, providers were given a share of the money based on their total Medicare FFS reimbursement in 2019, which totaled $484 million last year.

Using the HHS formula, a provider can estimate their relief payment by dividing their 2019 Medicare FFS (not including Medicare Advantage) payments by $484 million and then multiplying that ratio by $30 billion. For example, a hospital that billed Medicare for $121 million in 2019 would get $7.5 million in relief. ($121,000,000/$484,000,000,000 x $30,000,000,000 = $7,500,000)

The funding scheme for the initial $30 billion payout irked safety net hospitals, community health centers and rural providers who said the formula didn’t necessarily get money into the hands of the pandemic's front-line providers, and didn't do much to help providers whose businesses were all but shuttered because of the virus.

America's Essential Hospitals said it appreciates the money, but urged the federal government remove red tape and focus "on ensuring funds reach the essential hospitals on the front lines of this public health emergency and caring for many low-income and uninsured patients."

The safety net hospital association also asked for more time to acquire data requested by the Department of Health and Human Services.

"We call on the department to extend its data submission deadline until it has resolved these technical issues and clearly and publicly communicated how it will use this information," AEH said. "We also urge the administration to streamline access to the various COVID-19 funding sources by minimizing application processes and requirements that create administrative burden."

The Remaining $20B

Starting Friday, CMS will issue more-targeted distribution of the remaining $20 million, augmenting allocations so that the entire $50 billion general distribution is meted out proportionally to providers' share of 2018 net patient revenue.

Ten billion dollars will be given to hospitals in "hot spot" COVID-19 areas, such as in New York, New Jersey, and areas of California.

However, hospitals applying for this money must apply before midnight Thursday, April 23 and provide: a tax ID number; national provider identifier; Total number of ICU beds as of April 10; and total admissions for COVID-19  positive diagnoses from Jan. 1 through April 10.

In distributing the money, HHS says it will consider other factors such as patient mix, reflected in Medicare disproportionate share payments.  

The remaining $10 billion will go to rural hospitals and health clinics, which have been in financial straits long before the coronavirus was around.

The distribution will be based on operating expenses, using a methodology that distributes payments proportionately to each facility and clinic, which CMS has acknowledged "are more financially exposed to significant declines in revenue or increases in expenses related to COVID-19 than their urban counterparts."

"NRHA is grateful to President Trump for relief provided today to the rural health care safety net," National Rural Health Association CEO Alan Morgan said. "Hundreds of rural providers were on the brink of closure, and this relief is absolutely critical."

An additional $400 million will be allocated to the Indian Health Service, starting next week and based on operating expenses.

“The first tranche of dollars was put out with the aim of getting dollars out very quickly into the healthcare system.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

About $26 billion was distributed on April 10 via direct deposits to any healthcare facilities and providers who got Medicare fee-for-service reimbursements in 2019.

The remaining $4 billion of that expedited $30 billion distribution was sent out on April 17.

Providers in COVID-19 "hot spots" and rural providers will split the remaining $20 billion, with distribution of the funds beginning on April 24.

An additional $400 million will be allocated to the Indian Health Service, starting next week and based on operating expenses.


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