Providers begin receiving first round of CARES Act grants

Providers on Friday began receiving $30 billion from the first round of grant funding from Congress' third stimulus package.

The funds, from the $100 billion provider relief fund in the Coronavirus Aid, Relief, and Economic Security Act, were distributed based on providers' share of 2019 Medicare fee-for-service reimbursements.

The grants do not have to be repaid, but administration officials said Thursday that grant recipients have to agree not to balance bill patients for out-of-network COVID-19 treatment.

Federation of American Hospitals President and CEO Chip Kahn said he generally supports the administration's surprise billing ban, though he said important details were unclear including insurer reimbursement for out-of-network services.

"This is in a framework that we support," Kahn said.
Many providers received direct deposits on Friday morning. HHS said that payment was made through information on file either with UnitedHealth Group or the CMS, and paper checks will be sent out for remaining providers within the next few weeks. Payments for larger medical groups will be sent to the group's central billing office, according to background materials.

UnitedHealth Group said combined with its affiliates, it has relationships with more than 80% of all U.S. healthcare providers and hospitals. The insurer donated administrative costs in the partnership.

HHS said it is working on how to distribute the remaining $70 billion. The agency said it will prioritize providers in areas with severe COVID-19 outbreaks, rural providers and those who serve the Medicaid population or have a payer mix that's lighter on Medicare fee-for-service payments in the next round. The Friday announcement also reiterated the department's intent to use some of the funds to reimburse providers for COVID-19 treatment for the uninsured at Medicare rates.

Safety-net hospitals criticized the initial funding mechanism for disadvantaging providers that treat high proportions of low-income and uninsured patients. America's Essential Hospitals President and CEO Bruce Siegel said the formula "misses the mark" for hospitals caring for vulnerable populations and called for more funds to be distributed quickly.

"With no cushion left to absorb the heavy financial pressure COVID-19 creates, essential hospitals disadvantaged by today's allocation need more help now. Time is not on our side," Siegel said in a statement.
The American Hospital Association said the next round of grants should prioritize rural hospitals, providers in COVID-19 hot spots, children's hospitals, hospitals with a high percentage of Medicare Advantage payments and hospitals caring for high numbers of Medicaid and uninsured patients.
The New York and New Jersey congressional delegations have complained that the across-the-board distribution did not provide enough support to hard-hit areas. As of Friday afternoon, New York and New Jersey combined had 45% of confirmed COVID-19 cases in the United States.

Greater New York Hospital Association President and CEO Kenneth Raske said he spoke with White House senior adviser Jared Kushner about his concerns.

"This distribution methodology is woefully insufficient to address the financial challenges facing hospitals at this time, especially those located in hot spot areas such as the New York City region," Raske wrote in a letter to GNYHA members.

The largest recipients by state were California with $2.9 billion, Florida with $2.2 billion, Texas with $2.1 billion, New York with $1.9 billion and Pennsylvania with $1.2 billion.

Republicans on the House Ways & Means Committee acknowledged concerns with the initial allocation.

"While this distribution system is not perfect, the administration should be commended for developing a system that delivers support to key healthcare facilities quickly," members wrote in a statement Friday.

Providers receiving grant funding will have to certify that they will only use the funds for coronavirus-related costs and cannot use the funds for expenses reimbursed from other sources. Providers receiving more than $150,000 from the federal government will have to file quarterly reports detailing how the funds were spent. Providers have to within 30 days confirm receipt of the grant payments and agree to the terms in an online HHS portal opening April 13 or refund the money.

The CARES Act requires the HHS Office of Inspector General to send a report to Congress on audit findings for the $100 billion grant program within three years of when final payments from the fund are made.