Covid 19

Why some hospitals won’t receive a second round of CARES Act funding

May 26, 2020 6:13 pm
  • Some hospitals may not qualify for a second round of general CARES Act funding, HHS says.
  • Hospitals would not be eligible for additional funds if their first-round payment was 2% or more of net patient revenue.
  • A new database showed $20.2 billion in payments have been made, with 309 recipients receiving at least $10 million each.

If your hospital is waiting for a second grant under the general hospital-assistance program related to the coronavirus pandemic, that money may not be coming, according to federal officials.

The U.S. Department of Health and Human Services (HHS) is distributing $20 billion from the “General Distribution” category of a $100 billion provider assistance fund included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. That ongoing funding follows an initial round of $30 billion in general distribution CARES Act grants.

But HHS recently clarified that some hospitals may not garner a second payment.

“If the initial General Distribution payment you received between April 10 and April 17 was determined to be at least 2% of your annual patient revenue, you will not receive additional General Distribution payments,” according to a new update to an HHS FAQ.

The issue stems from changes in the methodology used to determine payments. In the first tranche, payments were determined by an organization’s share of Medicare payments, while second-tranche disbursements were based on a share of all-payer net patient revenue. That formula then was retroactively applied to the first tranche for tracking purposes.

Eisenhower Health, which garners 65% of its revenue from Medicare, was still hoping to receive a second payment from the general distribution fund after receiving $21.5 million in the Medicare-based first round.

The change seems to benefit big health systems with a larger share of private health plan revenue, said Ken Wheat, senior vice president and CFO.

“For us, that’s not a good thing. We don’t have the margins because we’re such a high-Medicare-mix percentage,” Wheat said. 

Determining whether more general funding is coming

The second round of general funding was intended to ensure the disbursement of the overall allocation of $50 billion was proportional to providers’ shares of 2018 net patient revenue.

General fund payments should total the lesser of:

  • 2% of a provider’s net patient revenue in 2018 (or the most recent complete tax year)
  • The sum of incurred losses for March and April

To estimate their payments using net patient revenue, hospitals can use this equation:

(Individual Provider Revenues/$2.5 Trillion) X $50 Billion = Expected Combined General Distribution.

Hospitals may need to use gross receipts or sales or program service revenue in the equation, HHS stated. They are advised to work with a tax professional to develop an accurate estimate.

HHS also clarified that only providers that received a previous payment from the general distribution pool are eligible for the ongoing second round of funding.

However, hospitals still can resubmit an application for funding under the general distribution category for review by HHS.

Additional funding tranches coming

HHS noted in the update that additional distributions of CARES funding may be available for eligible hospitals.

HHS is still reviewing providers’ uploaded financial information, and payments will be sent “as information is validated,” HHS stated, adding that “HHS may seek additional information from providers as necessary to complete its review.”

Hospitals may still receive additional funding through so-called targeted-distribution tranches of the $100 billion CARES Act Provider Relief Fund. For instance, hospitals can file claims for payment for testing and treating uninsured COVID-19 patients.

Leading general fund recipients

As recently revealed on a database of the Health Resources and Services Administration, the top 10 recipients among the 179,000 providers that received general distribution funds and agreed to the terms and conditions are:

  • Dignity Health ($180,264,488)
  • The Cleveland Clinic Foundation ($103,289,897)
  • Stanford Health Care ($102,405,229)
  • Memorial Hermann Health System ($92,422,556)
  • NYU Langone Hospitals ($92,120,455)
  • County of Los Angeles ($80,867,712)
  • HMH Hospitals Corporation ($76,839,719)
  • Florida Cancer Specialists & Research Institute (67,343,375)
  • Memorial Hospital for Cancer and Allied Diseases ($64,048,724)
  • Massachusetts General ($58,076,206)
  • Yale New Haven Hospital ($54,994,143)

The totals may not yet reflect both tranches of general distribution funds in cases where a provider has not yet agreed to the terms and conditions for both or HHS has not yet distributed the second round.

The database showed $20.2 billion in payments, with 309 recipients receiving at least $10 million, according to an analysis by Strata Decision Technologies.



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