On September 10, 2021 the Department of Health and Human Services (HHS) announced that it will distribute an additional $25.5 billion in COVID-19 relief funds to healthcare providers. This $25.5 billion is comprised of $8.5 billion from the American Rescue Plan Act (ARPA) and $17 billion from the Provider Relief Fund (PRF). This new distribution will cover losses incurred between July 1, 2020, and March 31, 2021. Unlike previous distributions, this phase will require providers to apply for funding amounts starting September 29, 2021, via the Health Resources and Services Administration (HRSA) PRF Reporting portal. (This is the same application and attestation portal that was used during the previous PRF distribution phases.)
In a recent news release, HHS Secretary Xavier Becerra said
“…the funding will be distributed with an eye towards equity, to ensure providers who serve our most vulnerable communities will receive the support they need.â€
The $17 billion Phase 4 distribution from the PRF will allocate the revenue losses and COVID-related expenses based on the following guidelines:
- 75% of the Phase 4 allocation will be based on revenue losses and COVID-related expenses.
- Large providers will receive a minimum payment amount that is based on a percentage of their lost revenues and COVID-related expenses.
- Medium and small providers will receive a base payment plus a supplement, with small providers receiving the highest supplement—as smaller providers tend to operate on thin margins and often serve vulnerable or isolated communities.
- HHS will determine the exact amount of the base payments and supplements after analyzing data from all the applications received to ensure they stay within budget and funds are distributed equitably.
- No provider will receive a Phase 4 payment that exceeds 100% of their losses and expenses.
- HHS will continue to use risk mitigation and cost containment measures in Phase 4 to protect program integrity and preserve taxpayer dollars.
- 25% of the Phase 4 allocation will be put toward bonus payments that are based on the amount and type of services provided to Medicaid, the Children’s Health Insurance Program (CHIP), and Medicare patients.
- HHS will price Medicaid and CHIP claims data at Medicare rates, with some limited exceptions for some services provided predominantly in Medicaid and CHIP.
All funds from both the PRF and ARPA distribution must be used by December 31, 2022.
Rural Healthcare Providers
Providers who serve any patients living in rural areas—as defined by the Federal Office of Rural Health Policy—with Medicaid, CHIP, or Medicare coverage, and who otherwise meet the eligibility criteria, will receive a minimum payment.
The $8.5 billion in ARPA funds are specifically directed to provide resources for rural healthcare providers that see patients who live in rural areas. HRSA plans to expedite the process by using existing Medicaid, CHIP, and Medicare claims data for calculating these payments. ARP rural providers can utilize the HRSA Rural Health Grants Eligibility Analyzer to help determine their qualification as a rural provider.
Use of Funding Reporting Grace Period
In addition to the news of the additional distributions, HHS has also announced a “final 60-day grace period†for the first reporting deadline of September 30, 2021. While providers who file within this 60-day grace period will still be considered out of compliance, HHS indicated that it would not initiate any collection activities or other enforcement actions for providers during this period. REDW still encourages providers to attempt to file before the September 30, 2021 deadline, if possible.
REDW Welcomes Your Questions
REDW’s trusted advisors are currently helping healthcare clients to apply for funding and meet reporting requirements and deadlines. For questions or assistance applying for this new distribution of COVID-19 relief funding, or on reporting during HHS’s 60-day grace period, please contact REDW Principal Chris Tyhurst or Audit & Consulting Senior Manager Claire Hilleary.
