- New federal grants totaling $75 billion were approved for hospitals and other providers, with distribution to be determined by HHS.
- Also included was $25 billion for testing, including for the uninsured.
- There are concerns the assistance may be insufficient to address hospital liquidity challenges.
President Trump signed legislation April 24 to provide $75 billion more in provider assistance to address the consequences of the coronavirus pandemic.
Although repeatedly described by members of Congress as hospital funding, the legislation allows the $75 billion to go to a broad range of providers, as decided by the U.S. Department of Health and Human Services (HHS). The new legislation specifically designates the funding for “eligible healthcare providers for healthcare-related expenses or lost revenues that are attributable to coronavirus.”
The latest funding package, the Paycheck Protection Program and Health Care Enhancement Act, follows the CARES Act, which was signed into law March 27 and provided $100 billion in funding for hospitals and other providers, higher Medicare payments for COVID-19 patients and advances on future Medicare payments.
In a report, Moody’s Investors Service said the latest legislation will provide “another much-needed lifeline for hospitals and other healthcare providers, which will require significant amounts of liquidity to withstand the negative effects of the coronavirus outbreak on their revenue and earnings.”
“We’re grateful for the additional allocation, but we are concerned it is not sufficient given the losses our members are reporting to us,” said Chad Mulvany, FHFMA, director of healthcare finance policy, strategy and development, for HFMA. “We appreciate the speed at which HHS is moving to distribute these funds but strongly encourage them to be more transparent about how the dollars are being allocated and more responsive to provider requests.”
Providers have raised a range of concerns about the previously approved COVID-19 federal assistance, including the requirement that they agree to terms and conditions that were described as vague and contradictory.
The new legislation also allocates $25 billion to increase testing for COVID-19. Those provisions, according to a fact sheet, include:
- $11 billion for states, localities, territories and tribes
- $1 billion for disease efforts by the Centers for Disease Control and Prevention
- $1.8 billion for the National Institutes of Health to accelerate rapid testing abilities
- $1 billion for the Biomedical Advanced Research and Development Authority to accelerate development of point-of-care and rapid diagnostic technologies
- $22 million for the Food and Drug Administration to accelerate rapid testing
- $600 million for community health centers to support COVID-19 testing
- $225 million for rural health clinics to support COVID-19 testing
- Up to $1 billion to cover the cost of testing the uninsured
Hospital liquidity challenges
Moody’s said although the previously approved CARES funding offered hospitals “some relief, it will not fully cover the material revenue decline facing hospitals as a result of the pandemic, and cash flow will likely be materially lower for the next several months.”
A share of the $100 billion in CARES funding for providers could translate to “hundreds of millions of dollars” in grants for large, for-profit hospital companies with revenues around $10 billion or more, the rating agency said.
Among the various legislative assistance to hospitals, Moody’s said the expansion of the Medicare Hospital Accelerated Payment Program will provide the fastest liquidity relief. The program provides hospitals with immediate payments covering six months of expected future Medicare payments. Repayments will be deducted from Medicare payments over the next year.
For large hospitals, those advance payments could reach $1 billion or more, Moody’s said. For instance, HCA Healthcare officials said on their latest earnings call that the health system expects to receive about $4 billion under the program.
Other recently implemented federal policies that have helped hospital liquidity, according to Moody’s, include:
- Deferring the employer portion of federal payroll taxes
- Suspending Medicare sequestration, which had cut Medicare payments by 2%
- Boosting Medicare payments for COVID-19 patients by 20%