HHS Distributes $22 Billion in Provider Relief Funds to Hot Spot and Rural Providers

COVID-19 Update

On Friday, May 1, the Department of Health and Human Services (HHS) announced that it is releasing another $22 billion in Coronavirus Aid, Relief, and Economic Security Act (CARES Act)1 Provider Relief Fund payments—$12 billion to hospitals with large numbers of COVID-19 admissions (“Hot Spot” hospitals) and $10 billion to rural providers. In Figure 1 below, we provide an updated overview of HHS’s distribution of the $100 billion. (For an overview of the initial distributions of Provider Relief Fund payments, see HHS Outlines Plans for $100 Billion Provider Relief Fund.)

Given the magnitude of the COVID-19 outbreak in New York, providers in that state received the greatest share of the Hot Spot allocations. Payments to 90 New York-based hospitals account for $5.02 billion (or more than half) of the $10 billion distribution based on COVID-19 admissions and $686.68 million (or more than one quarter) of the $2 billion distribution based on share of low-income and uninsured patients among Hot Spot hospitals. (Although last month HHS had allocated only $10 billion to Hot Spot hospitals, Friday’s distribution included an additional $2 billion aimed at further targeting funds to safety net hospitals.)

As expected, larger states with a greater number of rural providers received greater shares of the allocation for rural providers; 393 rural providers in Texas received $634.4 million of the $10 billion payments.

Figure 1. What We Know Now: Distribution of the CARES Act $100 Billion Provider Relief Fund

What’s Next?

To date, $72.4 billion of Provider Relief Fund payments have been accounted for—and provider payments for testing and treating uninsured patients are expected to account for a significant portion of the remaining $27.6 billion under the CARES Act. This raises the question of how much funding will be left for HHS to make its planned “additional allocations” for providers such as skilled nursing facilities and providers that solely take Medicaid.

HHS has yet to announce how it will distribute the additional $75 billion authorized by the April 24-enacted Paycheck Protection Program and Health Care Enhancement Act, better known as “Stimulus 3.5.”2 Providers, states, and the organizations that represent them have been advocating for the distribution methodology to be—at least in part—better targeted to increase allocations for Medicaid and other safety net providers. Last week, the Medicaid and CHIP Payment and Access Commission sent a second letter to HHS regarding its concerns about distribution of the Provider Relief Fund, arguing that “many providers serving vulnerable Medicaid beneficiaries” have been left out of the funding allocations. The National Association of Medicaid Directors echoed these concerns.

The organizations are also calling on HHS to make the distributions more transparent, particularly as states seek to understand what additional provider fiscal relief may be needed and how to spend state-level funding (such as federal funding provided to states and localities via the CARES Act Coronavirus Relief Fund). HHS has not released provider-level data.

1 P.L. 116-136.

2 P.L. 116-139. For more information, see Manatt Health’s analysis, Congress Passes CARES Act 3.5 to Replenish Certain CARES Act Funds, Establish COVID-19 Testing Fund.

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