HHS officials Wednesday said the department will distribute $40 billion in federal grant funds with carveouts for providers in COVID-19 hotspots and rural areas, and will reimburse providers for uncompensated COVID-19 care.
Roughly $20 billion will go out providers generally based on 2018 net patient revenue from cost reports. HHS Secretary Alex Azar said the funds would be distributed for about half of providers on Friday. A portal will open up this week for providers to enter or confirm their revenue numbers.
In order to accept the funds, providers must promise not to balance bill diagnosed or presumptive COVID-19 patients.
American Hospital Association President and CEO Rick Pollack said the group supports the new formula.
"As urged by the AHA, this will help hospitals with a high percentage of payments under Medicare Advantage and hospitals caring for high numbers of Medicaid patients," Pollack said in a statement.
But some are skeptical about the distribution, which is based on cost reports that physician practices don't file and a net patient revenue metric that favors large health systems with highly paid specialists.
American Academy of Family Physicians Senior Vice President Shawn Martin said he was concerned that some physician practices have additional reporting and data analysis obstacles to obtaining the funds.
"We do think the process and evaluation criteria favors a certain subset of providers and that subset is not independent primary care physicians," Martin said.
Using the net patient revenue metric as opposed to operating costs could be skew funding and disadvantage providers with more low-income patients, said Dan O'Neill, a former Senate health committee staffer, adding, "It tilts in favor of the wealthiest, best-resourced facilities."
Another $10 billion will be sent to providers in COVID-19 hotspot areas. HHS on Tuesday asked providers for information about their Intensive Care Unit beds and COVID-19 admissions. The submission deadline for the information is Thursday night, and Azar said he expects hotspot funding to go out in the middle of next week.
America's Essential Hospitals President and CEO Bruce Siegel said that some providers have experienced technical difficulties inputting their data, and asked that the submission deadline be extended.
A detailed formula for hotspot funding is forthcoming, and HHS also expects to factor in Medicaid disproportionate-share hospital payments to "help address areas with the greatest financial need and the disproportionate burden of the virus on minority communities," Azar said.
Senate Minority Leader Chuck Schumer (D-N.Y.) said Wednesday that New York will receive more than $4 billion from the hotspot fund.
A separate $10 billion is set aside for rural providers, and will be distributed sometime next week based on operating expenses. Sens. Joe Manchin (D-W.V.) and Cindy Hyde-Smith (R-Miss.) led a group of 20 senators asking for HHS to set aside 20% of the provider relief fund for rural providers. A quarter of rural hospitals are in danger of closing due to COVID-19, and National Rural Health Association head lobbyist Maggie Elehwany said the group welcomed HHS' new rural-specific allocation.
"This funding was critical to keeping provider doors open and will help stabilize parts of the rural healthcare safety net. More is needed, but this step was critical and appreciated," Elehwany said.
Indian Health Service providers will receive $400 million, also based on operating expenses.
Azar also announced that the Health Resources and Services Administration will begin paying claims for COVID-19 care for uninsured patients in mid-May, though he declined to state how much money is set aside for the purpose. Providers will be able to register for the program beginning Monday and submit claims starting May 6. For each claim, providers will have to submit patient eligibility information.
Claims for uncompensated COVID-19 treatment on or after February 4 can be submitted for payment. The government will pay for services and products including diagnostic and antibody testing, observation, inpatient treatment and drugs, medical equipment including oxygen and ventilators and vaccines. A Kaiser Family Foundation analysis estimated that care for uninsured COVID-19 patients could cost between $14 billion and $42 billion.
Providers that choose to accept the uncompensated care reimbursement cannot bill the uninsured patients for additional cost-sharing.
The AHA reiterated its call for the Trump administration to pay for uncompensated care from another funding source by re-opening Affordable Care Act marketplaces, using the National Disaster Medical System, or working with Congress to create a new fund.
"The emergency relief fund in the CARES Act was intended to provide hospitals with an infusion of emergency relief as providers incur substantial expenses and lost revenue in preparing and fighting this battle against COVID-19," Pollack said in a statement.
Azar said future targeted funds will go to dentists, skilled nursing facilities in COVID-19 hotspots and providers that only accept Medicaid.
The grants come from a $100 billion provider relief fund created in the Coronavirus Aid, Relief, and Economic Security Act, which Congress is set to replenish with another $75 billion this week. HHS previously distributed $30 billion based on Medicare fee-for-service reimbursements.