HHS Gives $22B to Hospitals in COVID-19 Hotspots, Rural Areas

HHS is distributing $22 billion in payments to hospitals with large numbers of COVID-19 inpatient admissions and rural providers, according to a recent announcement.

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“These new payments are being distributed to healthcare providers who have been hardest hit by the virus: $12 billion to facilities admitting large numbers of COVID-19 patients and $10 billion to providers in rural areas, who are already working on narrow margins,” said HHS Secretary Alex Azar in the May 1 announcement.

The billions of dollars in emergency payments are from the Provider Relief Fund, a pot created by the Coronavirus Aid, Relief and Economic Security (CARES) Act to support healthcare providers combating COVID-19. The CARES Act allotted more than $100 billion to the Provider Relief Fund, which was first distributed to hospitals based on their Medicare billings from last year.

A second coronavirus relief package, the Paycheck Protection Program and Health Care Enhancement Act, passed by Congress in late April allocated another $75 billion to the fund.

“HHS has put these funds out as quickly as possible, after gathering data to ensure that they are going to the providers who need them the most. With another $75 billion recently appropriated by Congress, the Trump Administration will continue doing everything we can to support America's heroic healthcare providers on the frontlines of this war on the virus,” Secretary Azar stated.

As part of the next wave of Provider Relief Fund distribution, HHS is supporting 395 hospitals that provided inpatient care for 100 or more COVID-19 patients through April 10, 2020. These hospitals represented nearly three-quarters (71 percent) of the COVID-19 inpatient admissions reported to HHS from nearly 6,000 hospitals nationwide, HHS reported.

The hospitals are largely concentrated in COVID-19 hotspots, like New York, and will get payments from the Provider Relief Fund based on a fixed amount per COVID-19 inpatient admission, with an additional amount taking into account Medicare and Medicaid disproportionate share and uncompensated care payments.

About $2 billion of the $12 billion going to these hospitals is based on disproportionate share and uncompensated care payments, HHS stated.

Rural hospitals will receive emergency payments from HHS based on their expenses, the federal department added in the announcement. The hospitals and rural health clinics will receive a minimum based payment plus a percent of their annual expenses, HHS announced.

According to the department, this method accounts for operating costs and lost revenue incurred by the provides for providing both inpatient and outpatient services during the pandemic, and the base payment will account for rural health clinics with no reported Medicare claims, such as rural pediatric providers and community health centers without expense data.

Rural acute care general hospitals and critical access hospitals will get a minimum of $1 million, with additional payment based on operating expenses, HHS stated.

HHS has received criticism for not targeting funding to these hospitals. The federal department started distributing $30 billion in payments from the Provider Relief Fund based on Medicare billings from 2019.

Later, the department announced plans to allocate $10 billion to hospitals in COVID-19 hotspots, as well as another $20 billion to hospitals based on net patient revenue from 2018.

Hospital groups welcomed the additional funds for hospitals in COVID-19 hotspots and rural providers. But the job is not done, according to the Federation of American Hospitals (FAH).

“The latest GDP decline in health care and hospital spending shows that this critical part of the economy, which is the lifeblood of America, remains deeply stressed,” FAH president and CEO Chip Kahn stated on the association’s website. “Looking forward to the next distributions from the Provider Relief Fund, we hope HHS will target the significant losses experienced by providers in lower impact COVID-19 areas.”

America’s Essential Hospitals also called on HHS to provide more support to hospitals providing care for the most vulnerable patient populations, saying on its website that these hospitals are “stretched to the breaking point by the disproportionate burden COVID-19 has on the vulnerable people they serve.”