Accounting and Financial Reporting

Latest COVID-19 federal assistance only partially targets hospitals

June 10, 2020 3:29 pm
  • More than 750 safety net hospitals will garner $5 million to $50 million each in new federal assistance.
  • No hospitals were expected to receive a share of a new assistance pool focused on Medicaid providers.
  • Another $10 billion was set aside for providers in future coronavirus “hot spots.”

Safety net hospitals are eligible for a share of $10 billion in new federal assistance, but no hospitals are expected to garner any of a separate $15 billion pool for Medicaid providers.

The latest sums approved for release by the U.S. Department of Health and Human Services were part of the $175 billion in coronavirus-related provider assistance appropriated by Congress.

The new assistance included $10 billion for safety net hospitals. A senior Trump administration official estimated in a media call that 758 hospitals will receive between $5 million and $50 million each.

The payments target hospitals that have a disproportionate number of Medicaid patients or that provide large amounts of uncompensated care. Criteria include:

  • Medicare Disproportionate Payment Percentage (DPP) of 20.2% or greater
  • Average uncompensated care per bed of at least $25,000
  • Profitability of 3% or less based on the latest CMS cost report

The recipient hospitals have -7% estimated average margins, according to a senior HHS official.

“These are facilities that across all hospitals not only serve communities that are vulnerable but are most vulnerable themselves,” the official said.

America’s Essential Hospitals (AEH), an advocacy group for safety net hospitals, had asked for $20 billion to supplement $50 billion in previous disbursements, which were based on either Medicare revenue or net patient revenue.

Safety net hospitals “provide care to a disproportionately high number of Medicaid and low-income patients, which are reimbursed at lower payment rates compared with Medicare and commercial reimbursements, resulting in these hospitals receiving substantially lower patient revenues,” AEH wrote in a May 5 letter to HHS. “Because of this, they will not get a fair share of the $50 billion relative to their need.”

The new funding will be in addition to any previous payments safety net hospitals may have received.

Also announced was $10 billion in funding that will be reserved to pay providers for their costs if they become a COVID-19 “hot spot” in the future.

The combination of the two funding pools “will help ease the financial pain this public health emergency has inflicted on these caregivers,” said Bruce Siegel, MD, MPH, president and CEO of AEH.

Funding for Medicaid providers

Very different eligibility criteria were used in another newly announced funding round of $15 billion, for which any provider that received earlier assistance will be ineligible. That criteria likely will exclude hospitals, a senior HHS official said.

The $15 billion will target about 275,000 Medicaid providers that have yet to receive any federal assistance. Details on those payments include:

  • Eligibility is based on receipt of payments from state Medicaid programs or Medicaid plans between Jan. 1, 2018 and May 31, 2020.
  • Payments will be determined by reported annual patient revenue and number of Medicaid patients a provider serves.
  • Payments will be at least 2% of reported gross revenue from patient care.

Questions raised about Medicaid assistance

The Medicaid-provider funding total was described as “a step in the right direction but surprisingly modest, given Medicaid providers’ role in the pandemic,” said Jocelyn Guyer, a managing director for Manatt, Phelps & Phillips.

The new funding excludes the more than 1 million providers that were previously paid through appropriated provider assistance, the senior HHS official said, to ensure it targets Medicaid-focused providers that have been clamoring for help.

Some pediatric practices may be excluded from the new Medicaid funding, Guyer said, including those that have provided dialysis for which they received small Medicare payments. Medicare covers dialysis treatments regardless of the patient’s age.

Eligible providers were expected to include pediatricians, OB-GYNs, dentists, opioid treatment and behavioral health providers, assisted living facilities and providers of home- and community-based services, according to HHS.

The payments came weeks after Congress appropriated them and after provider pressure, including letters to members of Congress. According to HHS, delays stemmed from lags by states in submitting provider lists for the administration to use to avoid misallocating the funds.

But Guyer disputed the cause of the delay, asserting HHS took “weeks” to ask for the provider lists and that all but four states submitted them within a week of the request.

“I’m shocked they would go there,” Guyer said.



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