HHS Announces Plan to Distribute $25.5B in COVID-19 Provider Relief

HHS will distribute $25.5 billion in COVID-19 provider funding, including $8.5 billion from the American Rescue Plan for rural providers and a fourth round of general Provider Relief Fund distribution totaling $17 billion. Disbursement through the Health Resources and Services Administration (HRSA) will start Sept. 29.

“This funding critically helps health care providers who have endured demanding workloads and significant financial strains amidst the pandemic,” HHS Secretary Xavier Becerra said in an announcement on Friday. “The funding will be distributed with an eye towards equity, to ensure providers who serve our most vulnerable communities will receive the support they need.”

To support equity, HHS said in the announcement that Phase 4 Provider Relief Funds will go to smaller providers “who tend to operate on thin margins and often serve vulnerable or isolated communities.” But providers will have to demonstrate revenue losses and expenses associated with the COVID-19 pandemic between July 1, 2020, and March 31, 2021, per the Coronavirus Response and Relief Supplemental Appropriations Act of 2020.

Additionally, Phase 4 will include bonus payments for providers who serve Medicaid, Children's Health Insurance Program (CHIP), or Medicare patients. These patients tend to have lower incomes and have greater and more complex medical needs, explained HHS. To offset the losses, the bonus payments will be “generally higher” than Medicare reimbursement rates.

Similarly, funds from the American Rescue Act will go to rural providers who serve the same populations—Medicaid, CHIP, and Medicare patients—except they must live in rural areas as defined by the HHS Federal Office of Rural Health Policy. The COVID-19 provider funding will also be based on Medicare reimbursement rates.

“We know that this funding is critical for health care providers across the country, especially as they confront new coronavirus-related challenges and respond to natural disasters,” said Acting HRSA Administrator Diana Espinosa. “We are committed to distributing this funding as equitably and transparently as possible to help providers respond to and ultimately defeat this pandemic.”

The announcement comes on the heels of several calls for additional COVID-19 provider funding. Just last week, the American Hospital Association (AHA) released a special bulletin highlighting its efforts to get HHS “to expeditiously distribute the billions of dollars remaining in the Provider Relief Fund,” as well as the funding from the American Rescue Plan.

The bulletin was in response to a Sept. 1 article published in The Washington Post that reported about $44 billion in remaining Provider Relief Funds.

A July 2021 report from the Government Accountability Office (GAO) found that HHS had no concrete plans to distribute the remaining money in the Provider Relief Fund.

“Of the unobligated funds, according to HHS’s October 2020 spend plan, HRSA reserved a portion of the provider relief funds to respond to needs not identified in the spend plan, and in May 2021 HHS officials told us that the reserved funds were approximately $24 billion,” GAO stated at the time.

“HHS has not specified time frames for obligating these reserved funds or for the other $29.1 billion in unobligated provider relief funds. In addition, ARPA [American Rescue Plan Act] appropriated an additional $8.5 billion for rural providers, and as of May 31, 2021, all these funds remained unobligated.”

HHS told the federal watchdog that it would “aim to incorporate some time frames on planned spending where such information may be available, such as time frames for select grants to states.”

According to the latest announcement from HHS, providers can apply for a piece of the $25.5 billion in available COVID-19 provider funding using a single application that will open Sept. 29, 2021.

The announcement also stated that providers who received funds via Phase 3 distribution can verify they received the right amount and, if they did not, request reconsideration. HHS will provide additional information on that process later.

Finally, HHS also announced a 60-day grace period to help providers come into compliance with Provider Relief Fund reporting requirements if they fail to meet the upcoming Sept. 30, 2021, deadline for the first reporting period.

AHA president and CEO Rick Pollack said in response to the announcement, “The Provider Relief Fund has been a lifeline to America’s hospitals, health systems and caregivers, helping us keep our doors open during COVID-19 so we can continue providing essential services and care to patients and communities. That’s why Congress designated these funds to providers on the front lines of this battle.”

“The AHA appreciates the Administration for announcing plans to get additional critical relief funding for providers out the door,” Pollack’s statement continued. “Virus cases and hospitalizations continue to climb across the country so providers will continue to need support.”

However, Pollack pointed out that the funding does not account for the spring and summer surges of COVID-19 as a result of the Delta variant, which warrants more “much-needed support to hospitals and health systems.”