On Demand Webinar | Basic | Coronavirus
<div>As COVID-19 pandemic materialized and spread, it has changed so much about healthcare delivery, how we prepare, and how we go about our daily lives.&nbsp; We are reminded how fragile our health and the healthcare system can be. As an i...
On Demand Webinar | Intermediate | Coronavirus
The COVID-19 pandemic is ravaging healthcare facilities, which is partly due to a lack of personal protective equipment (PPE) and other critical supplies.&nbsp; Vulnerabilities in the supply chain have been exposed. As such, hospitals shoul...
On Demand Webinar | Basic | Coronavirus
In the wake of COVID-19, many healthcare providers that traditionally relied on physical office space had to quickly adapt their operations to meet regulatory guidelines and ensure the safety of their employees by shifting to remote work. O...
On Demand Webinar | Basic | Coronavirus
Relying on aggressive financial policies and collection tactics won't help your organization adapt to the "patient as payer" model, especially after the pandemic.&nbsp; Instead, you need a strategy that helps patients easily navigate the fi...
On Demand Webinar | Basic | Coronavirus
<div>The COVID-19 pandemic is causing major economic disruptions and has left many health systems struggling to find ways to drive cash supply and forecast budgets. The ability to pivot and prepare a financial operating plan that provides a...
News | Coronavirus

HHS releases $4 billion more in COVID-19 assistance for hospitals

News | Coronavirus

HHS releases $4 billion more in COVID-19 assistance for hospitals

  • HHS allocated $3 billion in federal assistance for 215 hospitals based on their margins and the incomes of their patient base.
  • Another $1 billion will go to 500 hospitals in rural or small metro areas.
  • HHS clarified that tax-exempt healthcare providers’ relief payments generally are not taxable.

Hospitals in certain types of locations and those with low margins and large populations of low-income patients will get a share of $4 billion in new federal assistance to help them respond to the COVID-19 pandemic.

On July 10, the U.S. Department of Health and Human Services (HHS) said it will begin to release:

  • $3 billion for hospitals that have thin margins and serve a relatively high percentage of vulnerable populations
  • $1 billion for specialty rural hospitals, urban hospitals with certain rural designations from Medicare and hospitals in small metropolitan areas

“Close work with stakeholders informed how we targeted this new round of funds to hard-hit safety-net and rural providers,” HHS Secretary Alex Azar said in a statement.

The funding is the latest allocation from the $175 billion in provider funding available through the CARES Act and the Paycheck Protection Program and Health Care Enhancement Act.

Acute care hospitals will be eligible for some of the $3 billion pool if the cost reports they filed to CMS indicate average profitability of less than 3% over two or more consecutive years out of the last five cost-reporting periods.

HHS expects to distribute over $3 billion to 215 acute care facilities, which will bring total coronavirus assistance payments to $12.8 billion for 959 safety-net hospitals.

The $1 billion pool aims to expand on $10 billion in earlier funding to almost 4,000 rural healthcare providers by including hospitals that are in urban areas but have certain special rural designations in Medicare, as well as others that provide care in smaller nonrural communities.

“These may include some suburban hospitals that are not considered rural but serve rural populations and operate with smaller profit margins and limited resources than larger hospitals,” according to an HHS statement. “They too, have suffered in this pandemic, which is why HHS is responding.”

HHS estimates more than 500 hospitals would qualify for the $1 billion, with payments ranging from $100,000 to $4.5 million for rural-designated providers and $100,000 to $2 million for other providers.

Hospitals welcome the new funding but remain anxious

The funding was applauded by hospital advocates who have been clamoring for HHS to release the unspent shares of the provider assistance approved by Congress.

“Hospitals with high Medicaid volume provide care to our most vulnerable patients and communities, many of which have suffered disproportionately from this virus,” said Rick Pollack, president and CEO of the American Hospital Association. “Even before the pandemic these hospitals operated under serious financial pressure, and these funds will help them continue to stay open and provide care to all who need it.

“Hospitals serving rural patients also face tremendous financial headwinds, with many being forced to close their doors in recent years. This additional funding from HHS will help these hospitals carry out their mission of providing care close to home for patients in communities across the country.”

Pollack said the expedited release of the remaining funds is especially needed in areas with a recent increase in COVID-19 cases and hospitalizations.

In recent weeks, the governors of Mississippi and Texas ordered the suspension of elective surgeries in some parts of their states, and some hospitals in Florida and Arizona voluntarily stopped elective procedures due to outbreaks.

Clarification offered on whether previous payments are taxable

HHS has continued to clarify details of its earlier hospital coronavirus payments on the department’s FAQ page.

Among the latest clarifications was that providers that receive payments from the Provider Relief Fund may not exclude this payment from gross income as a qualified disaster relief payment under the IRS code.

“A payment to a business, even if the business is a sole proprietorship, does not qualify as a qualified disaster relief payment” under IRS rules, the FAQ states.

The payment from the Provider Relief Fund should be included as gross income, according to details posted on the IRS website.

Also, tax-exempt healthcare providers generally are not subject to taxes on payments they receive from the Provider Relief Fund.

However, a payment is taxable if it “reimburses the provider for expenses or lost revenue attributable to an unrelated trade or business” as defined in Section 513 on the IRS website.


About the Author

Rich Daly, HFMA senior writer and editor,

is based in the Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare


Related Articles | Coronavirus

News | Coronavirus

HHS postpones deadline for hospitals to comply with Provider Relief Fund reporting requirements

With new legislation having modified the rules governing the reporting of Provider Relief Fund payments, HHS has indefinitely postponed the Feb. 15 reporting deadline.

News | Managed Care

Healthcare News of Note: Payers push back on CMS prior-authorization rule

Healthcare News of Note for healthcare finance professionals is a roundup of articles from the past week, including why payers are pushing back on the prior-authorization rule and information on HHS funding to support the nation's response to the COVID-19 pandemic.

News | Price Transparency

Appeals court rejects hospitals’ objections to new price transparency policy

An appeals court panel rejected hospitals’ effort to halt the Jan. 1 requirement for hospitals to begin posting the rates they negotiate with health plans.

News | Price Transparency

Hospitals seek reversals of Trump policies, among various requests of Biden

Hospitals are urging a range of policy changes, including halting the new price transparency rules, by the incoming Biden administration.