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2nd round of hospital CARES funding tied to patient revenue

Dive Brief:

  • The federal government is trying a more targeted approach in sending financial relief to hospitals in the second wave of funding as part of the Coronavirus Aid, Relief, and Economic Security Act. Hospitals can expect to start receiving payments Friday. About $20 billion in funds will be dispersed proportional to a hospital’s 2018 net patient service revenue based off the revenue data from CMS cost reports. In other words, hospitals with larger net patient service will receive a bigger allotment than a hospital with a smaller share of patient revenue.
  • An additional $10 billion will be funneled into hard hit areas such as New York and places that have a high share of confirmed COVID-19 cases. Hospitals will have to apply for a portion of these funds by supplying information including number of ICU beds and the total number of confirmed cases that were admitted to the facility. The information is due before midnight Thursday.
  • Federal regulators also are earmarking funds for rural providers, treatment of those without coverage and the Indian Health Service.

Dive Insight:

The second round of funding comes as hospitals and health systems report increasing dire financial strain from the pandemic spurred by the novel coronavirus. To alleviate financial woes, Congress in March passed a $100 billion relief package for providers as they battle the virus.

This second round seeks to address criticisms of the first $30 billion that was released initially, which distributed money based on a facility’s share of Medicare fee-for-service. That put places with a small slice of Medicare fee-for service business, such as children’s hospitals, at a disadvantage. Regulators have previously acknowledged the issue and said the first round of $30 billion was about getting financial relief to hospitals fast.

“Our goal in all of the decisions we’re making is to get the money from the Provider Relief Fund out the door as quickly as possible while targeting it to those suffering the most from the pandemic,” HHS Secretary Alex Azar said Wednesday in a statement outlining the plan for the second installment of funds.

Here’s the HHS breakdown for the second phase of funding:

  • $20 billion to providers based on 2018 patient revenue
  • $10 billion for hard-hit areas
  • $10 billion for rural providers
  • $400 million for the Indian Health Service

However, there are strings attached. As a condition of receiving the funds, providers must agree “not to seek collection” of out-of-pocket payments from COVID-19 patients that exceed what the patient would have paid at an in-network provider, essentially an attempt to quash potential surprise billing issues.

Providers will have to sign an attestation confirming the funds were received, agree to the terms and conditions and confirm the accuracy of the CMS cost reports.

HHS warns that there will be “significant” anti-fraud and auditing work being conducted by both HHS and the Office of the Inspector General.

As previously announced, some of the funding will be directed toward paying providers to treat uninsured COVID-19 patients. CMS said Wednesday providers will need to request claims reimbursement and will be paid at Medicare rates, subject to available funding.

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