Health Law Monitor

By: Neil C. Brown

On April 22, 2020, the Department of Health and Human Services (“HHS”) announced how it will allocate a large portion of the remaining $70 billion of funding established by Title III of the CARES Act (the “Provider Relief Fund”) to certain health care providers impacted by COVID-19. As addressed in a prior Jackson Kelly Health Law Monitor article, HHS announced on April 9, 2020 that it would begin distributing $30 billion of a total $100 billion of the Provider Relief Fund. Yesterday, HHS specified how the remaining $70 billion of the Provider Relief Fund will be allocated. This article provides key takeaways regarding this $70 billion infusion into the health care system.

1. General Allocation 

HHS announced that $50 billion of the $100 billion Provider Relief Fund is earmarked for general distribution to Medicare facilities and providers impacted by COVID-19. $30 billion of this $50 billion fund has already been distributed to providers based on their Medicare fee-for-service reimbursements in 2019, in accordance with HHS’ previous announcement on April 9, 2020. In its April 22, 2020 press release, HHS indicated that the remaining $20 billion will be directed to providers with a relatively small share of their revenue coming from Medicare fee-for-service, such as children’s hospitals. HHS will begin distributing the remaining $20 billion of the general distribution to these providers based on the providers’ share of 2018 net patient revenue.

Payments will go out weekly on a rolling basis (as information is validated), with the first wave being delivered on April 24, 2020. Providers receiving payment on April 24, 2020 will automatically be sent an advance payment based off the revenue data they submit in Centers for Medicare & Medicaid (“CMS”) cost reports. Providers without adequate cost report data on file will need to submit their revenue information to a portal https://covid19.linkhealth.com/docusign/#/step/1 which was opened on April 24, 2020. Providers who receive funds from the general distribution have to sign an attestation confirming receipt of funds, agreeing to the terms and conditions https://www.hhs.gov/sites/default/files/terms-and-conditions-provider-relief-20-b.pdf of payment, and confirming their CMS cost report. All recipients will be required to submit documentation sufficient to ensure that these funds were used for healthcare-related expenses or lost revenue attributable to COVID-19. To this end, HHS emphasizes that there will be significant anti-fraud measures and auditing conducted by HHS and the Office of the Inspector General.

2. Targeted Allocation

1. Allocation for COVID-19 High Impact Areas

$10 billion of the Provider Relief Fund will be allocated for a targeted distribution to hospitals in areas that have been particularly impacted by COVID-19. As an example, hospitals serving COVID-19 patients in New York (which has a high percentage of total confirmed COVID-19 cases) are expected to receive a large share of the funds. The distribution will take into consideration the challenges faced by hospitals serving a significantly disproportionate number of low-income patients, as reflected by their Medicare Disproportionate Share Hospital (“DSH”) Adjustment.

Hospitals must apply for a portion of the funds by providing four (4) pieces of information¹ via an authentication portal before midnight pacific time on April 23, 2020. This portal is currently live, and hospitals have already been contacted directly by HHS to provide necessary information. HHS states that this information is necessary to determine what facilities will qualify for a targeted distribution, and that supplying this information does not guarantee receipt of funds from this distribution.

2. Allocation for Treatment of the Uninsured

Every health care provider who has provided treatment for uninsured COVID-19 patients on or after February 4, 2020 can request claims reimbursement, and will be reimbursed at Medicare rates subject to available funding. Steps for reimbursement involve: enrolling as a provider participant; checking patient eligibility and benefits; submitting patient information; submitting claims; and receiving payment via direct deposit. Providers can register for the program on April 27, 2020, and begin submitting claims in early May 2020. For more detailed information about these reimbursements, please visit the Health Resources and Services Administrations’ website dedicated to this topic.

3. Allocation for Rural Providers

$10 billion of the Provider Relief Fund will be allocated for rural health clinics and hospitals. This funding will be distributed as early as next week on the basis of operating expenses, using a methodology that distributes payments proportionately to each clinic and hospital. HHS indicated that this methodology accounts for the precarious financial position of many rural health clinics and hospitals, considering that such facilities have experienced significant declines in revenue or increases in expenses related to COVID-19 than their urban counterparts.

4. Allocation for Indian Health Service

Recognizing the strain experienced by the Indian Health Service, $400 million will be allocated for Indian Health Service facilities, distributed on the basis of operating expenses. 

5. Additional Allocations

Finally, HHS indicated that other providers, including skilled nursing facilities, dentists, and providers that solely accept Medicaid will receive further, separate funding. While more specific details about this additional funding are currently not specified, Jackson Kelly will continue to prepare updates as more information becomes available.

HHS has emphasized that there will be “significant anti-fraud and auditing work” conducted in the future with respect to certain allocations. In anticipation of this effort, Provider Relief Fund recipients must ensure that appropriate measures are in place to accurately document fund usage. Recipients must also be prepared to document that they have complied with all applicable terms and conditions. Jackson Kelly attorneys are ready to help you meet all applicable documentation and compliance requirements, and to serve as trusted advisors with respect to all legal issues you may face as part of the ongoing COVID-19 pandemic.

¹  This information includes the hospital’s: Tax Identification Number (“TIN”); National Provider Identifier (“NPI”); total number of intensive care unit beds as of April 10, 2020; and total number of admissions with a positive diagnosis for COVID-19 from January 1, 2020 to April 10, 2020.