HHS to Distribute $25 Billion of Relief Funds to Medicaid & CHIP Providers and Safety Net Hospitals

June 9, 2020
Firm Publication

On Tuesday, June 9, the U.S. Department of Health and Human Services (HHS) announced in a press release that it expects to distribute approximately $15 billion from the Public Health and Social Services Emergency Fund (Relief Fund) to eligible Medicaid and Children’s Health Insurance (CHIP) providers that have not already received a payment from the $50 billion Relief Fund General Distribution. HHS also announced the distribution of $10 billion in Relief Funds to safety net hospitals, which the agency expects to distribute within one week. These two new targeted distributions are the latest in a series of allocations made by HHS from the $175 billion Relief Fund (as expanded under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and the Paycheck Protection Program and Health Care Enhancement Act (Enhancement Act)), including the allocation for skilled nursing facilities announced in late May.

$15 Billion Medicaid and CHIP Allocation

According to the press release, HHS will launch an “enhanced” Provider Relief Fund Payment Portal (Portal) on Wednesday, June 10, which will allow eligible Medicaid and CHIP providers to apply for a Relief Fund payment. To be eligible, providers must not have already received payments from the $50 billion Relief Fund General Distribution and either have directly billed their state Medicaid/CHIP programs or Medicaid managed care plans for healthcare-related services between January 1, 2018 to May 31, 2020. Although HHS has not yet released significant details regarding eligibility, the agency provided the following examples of potentially eligible providers: pediatricians, obstetrician-gynecologists, dentists, opioid treatment and behavioral health providers, assisted living facilities and other providers of home and community-based services.

Eligible providers that successfully apply for the funds can expect to receive “at least 2 percent of reported gross revenue from patient care,” with the final amount determined based on the data submitted via the Portal. As part of the application process, providers will be expected to submit their annual patient revenue information as well as information regarding the number of Medicaid patients served.

As with previously announced allocations, the funding is intended to “supply relief to Medicaid and CHIP providers experiencing lost revenues or increased expenses due to COVID-19.” In addition, all providers who wish to retain funds from this Medicaid/CHIP allocation will be expected to sign an attestation confirming receipt of funds and agreeing to the terms and conditions of payment. The principal terms and conditions are largely the same as those published by HHS during the General Distribution, except that they do not require recipients to certify that they billed Medicare in 2019. For example, the terms and conditions require that the recipient agree that the funds received will only be used “to prevent, prepare for, and respond to coronavirus” and to reimburse the recipient for “health care related expenses or lost revenues that are attributable to coronavirus.” Recipients will also be required to submit reports to HHS to ensure compliance with the payment conditions and consent to HHS publicly disclosing the payment received. HHS has previously explained that there will be “significant anti-fraud and auditing work” by HHS, including review by the Office of the Inspector General, with regard to Relief Fund payments.

$10 Billion Safety Net Hospitals Allocation

HHS also announced the distribution of $10 billion in Provider Relief Funds to safety net hospitals, recognizing the thin margins on which these hospitals operate. Recipients will directly receive a minimum distribution of $5 million and a maximum distribution of $50 million via direct deposit.

These payments will be allocated to hospitals that serve a disproportionate number of Medicaid patients or provide large amounts of uncompensated care. HHS has explained that qualifying hospitals will have:

  • A Medicare Disproportionate Payment Percentage of 20.2% or greater.
  • Average Uncompensated Care per bed of $25,000 or more (e.g., a hospital with 100 beds would need to provide $2,500,000 in Uncompensated Care in a year to meet this requirement).
  • Profitability of 3% or less, as reported to CMS in its most recently filed Cost Report.

HHS’s announcement does not make clear whether all three of these conditions must be satisfied or whether meeting only one condition will render a hospital eligible for payment. HHS released terms and conditions that these safety net providers must meet in order to accept and retain the funding. These terms and conditions also largely mirror the terms and conditions that have applied to prior rounds of funding, including the requirements described above.

Other Relief Fund Updates

In addition to announcing these new allocations, on Monday, June 8, HHS sent communications to all hospitals asking them to update information on their COVID-19 positive-inpatient admissions for the period January 1, 2020, through June 10, 2020. HHS’s press release indicates that this information will be used to determine a second round of funding to hospitals in COVID-19 high impact areas. To determine eligibility for funding under this $10 billion distribution, hospitals must submit their information by June 15, 2020, at 9:00 PM EST.

Finally, the agency announced that it is continuing to work on an additional allocation to “distribute relief broadly to dentists.”

We are continuing to monitor for additional guidance from HHS regarding new Relief Fund allocations and their terms and conditions. If you have any questions about the Public Health and Social Services Emergency Fund and guidance in the context of the COVID-19 pandemic, please contact the authors.