$2B in Provider Relief Fund Payments Heading to Providers

HHS, through the Health Resources and Services Administration (HRSA), is doling out another $2 billion in Provider Relief Fund payments to healthcare providers impacted by the COVID-19 pandemic. More than 7,600 providers across the country will get the payments this week as part of the Phase 4 General Distribution announced in December, HHS said in a Jan. 25th announcement.

The funding announcement comes days after the American Hospital Association (AHA) called on Congress and the Biden Administration to distribute the remaining Provider Relief Fund money and allocate another $25 billion to the fund.

Provider Relief Fund payments have been critical to supporting healthcare providers as they respond to and try to prevent the spread of COVID-19, HHS stated.

“Provider Relief Fund payments have served as a lifeline for our nation’s heroic [healthcare] providers throughout the pandemic, helping them to continue to recruit and retain staff and deliver care to their communities,” HHS Secretary Xavier Becerra said in the announcement.

HHS reported that providers have used the funds to “remain in operation and to continue supporting patient care by covering a variety of costs including personnel, recruitment and retention initiatives, medical supplies, information technology, and many other functions.”

“The COVID-19 pandemic is an unprecedented challenge for [healthcare] providers and the communities they serve,” added HRSA Administrator Carole Johnson. “The Provider Relief Fund remains an important tool in helping to sustain the critical [healthcare] services communities need and support the [healthcare] workforce that is delivering on the frontlines every day.”

Many providers, however, continue to report financial and operational challenges due to COVID-19, especially as new variants increase hospitalizations.

“The lack of [Provider Relief Fund] dollars to address issues wrought by the delta and omicron surges has left many hospitals facing overwhelming financial and operational challenges,” the AHA wrote earlier this month to Congressional leaders. “Compounding this issue has been uncertainty and confusion around the federal rules for previously allotted [Provider Relief Fund] funding that have hindered many providers from using the funds within the allotted timeframe.”

Hospital margins continue to be down compared to pre-pandemic levels as facilities face rising expenses and nationwide labor shortages all while treating another surge of COVID-19 hospitalizations, according to the latest hospital financial performance data from Kaufman Hall.

Notably, the data indicated that federal aid from the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which established the Provider Relief Fund, is helping. Without accounting for CARES Act funding, the median Kaufman Hall Operating Margin Index was 2.7 percent in November 2020. With the funding, the median Index jumped to 4.1 percent.

AHA has called on the government to bolster the Provider Relief Fund and relax spending rules to enable providers to use the funds to support their efforts to combat the Delta and Omicron surges, including extra security measures and training hospitals have implemented in response to the latest variants.

Terms and conditions on the payments stipulate that providers who accept the payments can only spend money on efforts to “prevent, prepare for, and respond to coronavirus, and for related expenses or lost revenues attributable to coronavirus.” They must also spend the money within a certain timeframe or repay the government.

HHS Secretary Becerra said the latest funding announcement is another “example of the Biden-Harris administration’s dedication to ensuring that providers continue to have the resources they need to meet the evolving challenges presented by COVID-19 and keep providing critical services to the American people.”

The $2 billion in Provider Relief Fund payments bring total Phase 4 General Distribution payments to nearly $11 billion. HRSA distributed the funds to more than 74,000 providers in all 50 states, Washington DC, and five territories. The payments were also on top of another $7.5 billion sent specifically to rural providers as part of American Rescue Plan implementation.

The federal department reported that the Phase 4 General Distribution payments have an “increased focus on equity,” which has led to more reimbursement for a higher percentage of losses for smaller providers. Bonus payments will also be made to providers who serve Medicaid, Children's Health Insurance Program (CHIP), and Medicare beneficiaries.