The Department of Health and Human Services (HHS) announced on Oct. 1 distribution plans for the new Phase 3 round of $20 billion in funding from the Provider Relief Fund established in the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136) and expanded in the Paycheck Protection Program and Health Care Enhancement Act (P.L. 116-139) [see Washington Highlights, March 27, April 24].
The overall $175 billion fund was established to support health care providers’ increased related expenses or lost revenue due to COVID-19 response efforts. The HHS will distribute $20 billion in additional funds to providers who have already received Provider Relief Fund payments. Providers are asked to submit an application for funds between Oct. 5 and Nov. 6 to receive additional allocations that will ensure that they receive Provider Relief Fund payments equal to 2 percent of patient care revenue. Providers who have not received that amount will receive a payment that bring their total relief funds to 2%.
After the initial awards are made, the HHS will distribute the remaining Phase 3 funds through an add-on payment that considers factors including the change in operating revenues from patient care between the first quarter of 2020 to the second quarter of 2020, the amount of expenses incurred related to COVID-19, and individual payments already received from the Provider Relief Fund.
Approximately $33 billion remains in the fund.
Additionally, the HHS announced on Sept. 19 updates to the Provider Relief Fund language for calculation of COVID-19-related expenses and lost revenue. The guidance states, “Entities will provide information used to calculate lost revenues attributable to coronavirus, represented as a negative change in year-over-year net operating income from patient care related sources. Once revenue information is provided, cost/expense impacts will be calculated based upon a calendar year comparison of 2019 to 2020 healthcare expenses to determine net operating income. Revenues and expenses in this section include all lost patient care revenues and patient care cost/expense impacts.”
This guidance differs significantly from the calculation the HHS previously used in its June Frequently Asked Questions, in which expenses were broadly defined and may include supplies, equipment, training emergency operations centers, etc., and lost revenues were defined as “any revenue that you as a health care provider lost due to coronavirus … [and you] may use any reasonable method of estimating the revenue during March and April 2020 compared to the same period had COVID-19 not appeared.” The revised definitions have raised numerous questions and concerns amongst health care provider stakeholders who are working to evaluate the new guidance.