After it faced blowback for how it distributed the first tranche of emergency funding to hospitals, the Department of Health and Human Services plans to set aside funding for hospitals in Covid-19 hotspots and rural hospitals. The agency provided guidance on Tuesday for how the remainder of the $100 billion set aside for healthcare providers under the CARES Act will be spent.
“Our goal in all of the decisions we’re making is to get the money from the Provider Relief Fund out the door as quickly as possible while targeting it to those suffering the most from the pandemic,” HHS Secretary Alex Azar said in a news release. “We will continue using every regulatory and payment flexibility we have to help providers continue doing their vital work until we’ve defeated this virus.”
HHS said it would send $20 billion to hospitals based on their 2018 net patient revenue. This funding is meant to offset the initial $30 billion that the agency sent out last week based on Medicare revenue, which missed some facilities that had been affected, such as children’s hospitals. Healthcare providers in New York and other hard-hit states had also balked at initial $30 billion round of funding given that it didn’t take into account the number of Covid-19 cases hospitals had treated.
In an emailed statement on Wednesday, American Hospital Association CEO Rick Pollack said the newly allocated funds would help hospitals that see high numbers of patients covered by Medicare Advantage and Medicaid.
Hotspots and rural hospitals
Addressing concerns about funding for Covid-19 hotspots, HHS is carving out $10 billion for hospitals most affected by the virus. Hospitals in New York are expected to receive a large portion of this funding; New York City alone has seen 138,000 cases and 9,944 deaths attributed to Covid-19 as of Wednesday.
The funding will factor in the number of admissions with a positive Covid-19 diagnosis since January. HHS also said it would take Disproportionate Share Hospital data into account, meaning that hospitals with high amounts of uncompensated care — either through Medicaid or uninsured patients — would see a portion of the funds.
Rural hospitals, which were financially vulnerable before the pandemic, will receive $10 billion based on their operating expenses. The cost of preparing for Covid-19 and cancelling elective procedures has hit these hospitals especially hard, with a recent report by Guidehouse estimating roughly a quarter of rural hospitals are at risk of closing. There are roughly 1,350 critical access hospitals across the U.S., which provide 24-hour emergency services and are several miles away from the nearest facility.
Another $400 million will go to Indian Health Service facilities based on their operating expenses.
“Hospitals have seen a 12% increase in costs related to Covid, but a 40% to 50 % reduction in revenue. Even the hospitals that are doing well, this has really rocked them back on their heels,” said David Mosley, a partner with Guidehouse. “Do I think (the funding) will make them whole financially? Probably not. … We’ve cancelled all these elective surgeries, but we still have all of the costs associated with those practitioners.”
Some details still fuzzy
A few details still remain fuzzy in how the remainder of the funds will be allocated. HHS said some providers will receive an unspecified amount of separate funding, including nursing homes, dentists and providers that solely take Medicaid.
Mosley said some examples of the latter include speech therapists and physical therapists that work with children with disabilities, or community mental health centers, which primarily are paid through Medicaid.
“They were not financially flush before this happened,” he said. “I hope when the lights come on that the infrastructure necessary to take care of the most vulnerable populations among us will still be there.”
A portion of the $100 billion fund will also go to covering uninsured patients who had received treatment for Covid-19, but it’s not yet clear how much will be needed. HHS said healthcare providers who provided treatment for uninsured Covid-19 patients can begin submitting claims in early May.
The AHA has pushed back against using the emergency funds to cover uninsured patients. Instead, Pollack asked the administration to consider other options, such as opening up a special enrollment period for the uninsured through HealthCare.gov or creating a new, separate fund to address the cost of treatment.
“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 wrote in a statement.
Additional funding for healthcare workers is on the way. The Senate passed a bill yesterday that would allocate an additional $75 billion for hospitals. The House is expected to vote on the bill later this week.
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