Many dermatologists, urologists, orthopedists and other specialists were shocked on Friday to find that thousands of dollars had unexpectedly been deposited in their bank accounts from the federal government for COVID-19 relief.
"It definitely seemed like manna from heaven," said Dr. George Hruza, who serves on the American Academy of Dermatology's COVID-19 task force.
Provider relief funds in the Coronavirus Aid, Relief, and Economic Security Act were originally touted as intended for hospitals and providers directly treating COVID-19 patients. But HHS interpreted the law broadly in its first, $30 billion tranche of grants to allow providers hard hit by elective procedure cancellations to qualify for relief. Specialty providers are now scrambling to make sure they are ready to meet requirements to keep the money.
The CARES Act says that providers are eligible for grants if they "provide diagnoses, testing, or care for individuals with possible or actual cases of COVID-19." The terms and conditions of the grants also specify that the grants are supposed to be used to "prevent, prepare for, and respond to coronavirus."
Healthcare consultants said their phones began ringing off the hook when providers found they had received money, but weren't sure if they qualified. A former HHS official who now advises providers said the confusion and worry bubbled up because providers aren't used to getting big infusions of cash from the government.
"I've never seen so many people so nervous about essentially free money," the consultant said.
HHS on Tuesday clarified that the diagnoses, testing and care don't have to be specific to COVID-19, and that any patient that walked through a practice's doors since January 31 essentially counted as a potential COVID-19 patient, according to an email from HHS to providers obtained by Modern Healthcare."HHS broadly views every patient as a possible case of COVID-19," the HHS website says.
The initial chaos stemmed from the reality that HHS is stretching the limits of a bureaucracy not built for speed, said Mara McDermott, vice president of McDermott+Consulting.
"We're having the same conversations about small business loans. SBA loans are not built for this circumstance, and so we are overlaying a crisis on the SBA program. It's frustrating to everyone," McDermott said.
Providers are now sorting through the terms and conditions to ensure they can comply to keep the money. One area of concern is internal accounting, as the grants come with reporting requirements and practices are prohibited from double-dipping expenses reimbursed by other sources. The funding is also subject to inspection by government watchdogs.
The accounting likely won't be an issue for large hospitals and health systems, but smaller providers could have more difficulty, said Polsinelli practice chair Colleen Faddick.
Lawmakers initially touted the grants as relief specifically for hospitals, but in reality the funds have so far gone to a much wider swath of providers. RSM US partner Rick Kes said it's difficult to estimate how much money went to providers not directly treating COVID-19 patients, but hospitals still got a big chunk of the first round of grants.
Hospital lobbying groups didn't object to the initial $30 billion distribution.
American Academy of Medical Colleges Chief Healthcare officer Dr. Janis Orlowski said providers in different areas of the country are bearing different burdens. While some in hotspots like New York are dealing with huge volumes of sick patients, providers in areas with less severe outbreaks see themselves as doing their part in their communities by canceling elective procedures. She said AAMC supports the first distribution, though its targeting was imperfect.
"It's a hard job. They have got to get the money out now," Orlowski said.
The American Hospital Association said hospitals should be "first in line" for further support, but acknowledged other providers also need assistance.
"We agree with Congress that there needs to be an acknowledgement of lost revenue for hospitals, health systems and other providers," an AHA spokesperson said.
Hospitals also got additional funding from the CARES Act through inpatient add-on payments for COVID-19 patients, a suspension of the Medicare sequester and delays to Medicaid disproportionate-share hospital payments, said Stephanie Kennan, senior vice president at McGuireWoods Consulting.
The CARES Act didn't provide much specificity to define what the provider relief fund was supposed to be used for and who was supposed to receive the grants, which Numerof & Associates managing partner Michael Abrams said may have been because the law was written quickly and lawmakers may not have agreed on specifics.
"Whenever you do something that is so vague in its intent and also so liberal in terms of uses to which it will be applied, there will always be waste or questionable uses in the funds," Abrams said.
Some of the CARES Act grant funding also went to physician practices owned by private equity funds, which were pointedly shut out of small business assistance.
While $30 billion has been handed out, HHS still has $70 billion left. HHS has indicated that the next round of funds will be more narrowly targeted to COVID-19 hotspots, rural providers, and providers of services with lower shares of Medicare fee-for-service reimbursement or who predominantly serve the Medicaid population. Part of the money will also be used to pay back hospitals for treating uninsured COVID-19 patients.
CMS Administrator Seema Verma said Wednesday that details about the next round of funding will be announced this week.
