On June 9, 2020, the U.S. Department of Health and Human Services (HHS) announced additional distributions from the CARES Act Provider Relief Fund to several groups of providers, totaling approximately $25 billion. $15 billion of these funds is targeted towards eligible Medicaid and Children’s Health Insurance Program (CHIP) providers participating in state Medicaid and CHIP programs. Another $10 billion is allocated to “safety net hospitals,” serving more vulnerable individuals and can come as soon as this week. In connection with these new disbursements, HHS is launching a newly enhanced Provider Relief Fund Payment Portal to allow reporting of annual patient revenues.

Medicaid and CHIP Distribution

HHS will disburse a payment that, at a minimum, is equal to 2 percent of reported gross revenue from patient care to eligible providers serving Medicaid and CHIP beneficiaries. Providers who have not yet received a disbursement from the initial General Distribution on June 3, 2020 are eligible for this new distribution. The initial General Distribution was authorized under the CARES Act and reached about 62 percent of all providers participating in Medicaid/CHIP. This new, targeted distribution is aimed at reaching the remaining 38 percent of those providers. HHS believes almost one million providers may be eligible, including pediatricians, obstetrician-gynecologists, dentists, opioid treatment and behavioral health providers, assisted living facilities and other home and community-based services providers.

Eligibility requirements include:

  • The provider must not have received payment from the General Distribution, regardless of the size of the distribution received. However, payment under another Targeted Distribution (like High Impact Area, Rural, Indian Health Service, and Skilled Nursing Facility targeted distributions) will not affect eligibility under the Medicaid/CHIP distribution. Those providers who rejected their General Distribution payment are ineligible to receive this targeted distribution.
  • The provider must have directly billed for Medicaid/CHIP programs or Medicaid managed care plans for healthcare-related services between January 1, 2018 and December 31, 2019.
  • The provider must have filed an income tax return for 2017, 2018, or 2019 or be an entity exempt from filing.
  • The provider must have provided patient care after January 31, 2020, not have permanently ceased provided patient care directly.

In connection with this distribution, HHS has retooled the Provider Relief Fund Portal to allow Medicaid and CHIP programs and/or Medicaid and CHIP managed care organizations to submit their annual patient revenue information. This information will be used by HHS to determine the final amount of payment the provider will receive.

Like recipients of the General Distribution, those receiving the Medicaid/CHIP disbursement will have to complete the attestation process and accept the Terms and Conditions within 90 days of payment. Terms and conditions include restrictions on the use of funds, certifications on the part of the recipient, an agreement to submit reports showing compliance with the terms, and agreement that HHS may publicly disclose the payment the recipient receives.

Applications are now available and must be completed by July 20, 2020.

Safety Net Hospitals

An additional $10 billion in funds will be sent directly by direct deposit to those eligible hospitals serving low-income and vulnerable populations. In his remarks announcing this new distribution, Eric D. Hargan, Deputy Secretary of HHS, noted that directing these funds to these providers was critical “because they operate on thin margins and may be struggling more than other providers during this crisis.”   He also noted that these safety net providers serve more low income and minority Americans, who have been disproportionately affected by COVID-19.  In doing so, he cited a CDC report that black Americans suffering from COVID-19 are being hospitalized at a rate of 4.5 times of white Americans; Hispanic Americans at a rate of 3.5 times that of non-Hispanic whites; and American Indians and Alaska Natives at a rate of 5 times that of whites. Eligibility requirements include:

  • A Medicare Disproportionate Payment Percentage (DPP) of 20.2 percent or greater;
  • Average Uncompensated Care per bed of $25,000 or more (as an example, a hospital with 100 beds would need to provide $2,500,000 in Uncompensated Care per year);
  • Probability of 3 percent or less, as reported to CMS in its most recently filed Cost Report.

HHS believes this round of payments will reach many more qualifying safety net hospitals than earlier distributions. The distribution amounts will range from $5 million to $50 million and will be based partly on the individual facility score (number of facility beds multiplied by DPP) as compared to the cumulative facility scores for all safety net hospitals.

As with other distributions, recipients will have to complete the attestation process and agree to the Terms and Conditions similar to those in the Medicaid/CHIP distribution program.

Both the Medicaid/CHIP distribution and the Safety Net distribution appear to be in response to criticism of congressional leaders regarding HHS’ lack of meaningful allocations to institutions that rely heavily on Medicaid funds. Reed Smith will continue to monitor developments in these targeted disbursement programs as well as other CARES Act related funding. Please contact us, or the Reed Smith lawyer with whom you frequently work, to ensure compliance with applicable laws in applying for and utilizing CARES Act funds.