Update on COVID-19 Funding for Hospitals and Other Providers

The Department of Health and Human Services released new details this week on the $100B in funding for providers (the Relief Fund) that was in the Coronavirus Aid, Relief, and Economic Security (CARES) Act.  Additionally, the President is poised to sign a bill that adds $75 billion more to this fund. With this week’s announcement, HHS has now released information on how $70.4 billion from the Relief Fund will be distributed and provided further clarification on how some of the remaining money would be used to reimburse providers for treating COVID-19 patients who are uninsured.  This blog updates a previous blog and highlights questions that remain regarding the protections for the uninsured and for patients at risk of being balanced billed.

Overview of Funds Allocated to Providers for Coronavirus Expenses and Lost Revenue

  • $50 billion general allocation: In early April, HHS allocated $30 billion to providers based on 2019 Medicare fee-for-service revenue. On April 22, HHS announced that another $20 billion of this general allocation would be given out so that the total $50 billion is distributed based not just on Medicare revenue but instead on each providers’ share of total 2018 net patient revenue from all sources. Since Medicaid typically reimburses at lower rates than other providers, this methodology could disadvantage providers who see a high proportion of Medicaid patients. The Terms and Conditions state that this money can be used for “health care related expenses or lost revenues that are attributable to coronavirus.”
  • $10 billion for high-impact areas: HHS also announced that $10 billion would be targeted to hospitals in areas particularly impacted by COVID-19 and stated that New York hospitals “are expected to receive a large share of the funds.” This more targeted funding will help address concerns from hospitals in the hardest-hit areas that they had not gotten sufficient funds to help them manage a surge in COVID-19 patients.  To help HHS determine which facilities will qualify for this targeted distribution, each hospital must submit the number of ICU beds it has and its total COVID-19 admissions as of April 10, 2020.  HHS also stated that this money will be distributed to provide extra funding for hospitals that see a higher share of low-income patients, as reflected by their Medicare Disproportionate Share Hospital (DSH) Adjustment.  The Medicare DSH calculation is based on a hospital’s share of Medicaid and low-income Medicare inpatient days.  Azar stated that this extra funding was intended to “to help address areas with greatest financial need and the disproportionate burden of the virus on minority communities.”
  • $10 billion for rural providers: HHS will be distributing $10 billion to rural providers, which Secretary Azar said “will go to the approximately 2,000 rural hospitals across the country, including their 1,100 affiliated Rural Health Clinics, and to the more than 1,300 freestanding Rural Health Clinics.”
  • $400 million for the Indian Health Service: HHS announced that it is allocating $400 million for Indian Health Service (IHS) facilities. Due to preexisting disparities in health, social, and economic factors, American Indians and Alaska Natives are at higher risk for health and economic challenges due to COVID-19, including increased risk of serious illness if infected with coronavirus. Access to services through IHS varies significantly across locations, and there have been longstanding gaps in access to care for American Indians and Alaska Natives who rely on IHS for care. Moreover, not all individuals who identify as American Indian or Alaska Native are eligible to receive services through IHS.
  • Additional allocations: HHS stated that additional money from the Relief Fund will be made available to other providers, including skilled nursing facilities, dentists, and providers that only treat Medicaid beneficiaries. There are currently no details available about the amount of money for these providers or when these funds will be distributed. The number of COVID-19 related deaths in long-term care facilities, including skilled nursing facilities, has been on the rise, raising concerns about resources for testing, personal protective equipment and staff screening.

Questions about surprise billing protections:

HHS is requiring that providers who receive a payment from the general Relief Fund must agree to not “surprise bill” insured patients with a presumptive or actual case of COVID-19.  While patients in traditional Medicare are not at risk of balance billing for covered services and Medicare Advantage plans are required to consider all COVID-19 treatment as in-network, people with private insurance are at risk of surprise bills if meaningful protections are not put in place.  Many important questions remain about HHS’s new requirement.  Without further guidance, it is unclear what the impact of this requirement will be for patients.

  • This provision applies to a “presumptive” or actual case of COVID-19. However, a “presumptive case” is not defined. Will HHS issue any guidance on this issue? Will a patient with a suspected case of COVID-19 who subsequently tests negative qualify as a “presumptive” case?
  • Under the Terms and Conditions, providers cannot collect cost sharing in excess of what a patient would have to pay for in-network care, but providers are not required to bill insurers for out-of-network care directly. How will providers know each patient’s in-network cost sharing amount if the provider is not required to bill insurers directly?
  • Can out-of-network providers bill patients who are covered by HMOs or other closed network plans that do not provide any coverage for non-emergency out-of-network claims other than COVID-19 testing?
  • How will patients be notified about this new protection and how to file a complaint if their provider does not comply?

More details on HHS reimbursement for care for the uninsured

On April 22, HHS released guidance detailing how money from the Relief Fund would be used to reimburse providers for treating uninsured patients with COVID-19, a policy that had previously been offered up by President Trump but with few details.  This new guidance provides some clarity on which providers are eligible to receive payments for treating uninsured patients for COVID-19, how they will be reimbursed, and what services will be covered.

  • Timeline: Providers that agree not to balance bill patients can begin signing up for the program on April 27, with payments beginning mid-May. Reimbursement will be available for services provided on or after February 4,
  • Scope of reimbursed providers and services: Along with testing (diagnostic and antibody) and testing-related visits, the guidance specifies reimbursement will be provided for treatment for patients with a primary diagnosis of COVID-19 in a variety of settings, including office visits (including telehealth), emergency room, hospital inpatient and outpatient, and both emergency and non-emergency transportation, and for post-acute care. A few services are excluded from coverage, including hospice and outpatient prescription drugs. While the broad range of covered treatment settings reduces the likelihood that uninsured patients will receive bills for services not covered by the program, the larger number of providers and services will drain available funds more quickly. The guidance does not address the issue of hospital-based physicians who bill separately. If these physicians choose not to participate in the program, they may continue to bill uninsured patients.
  • Funding: The guidance does not indicate how much money will be set aside to reimburse these claims. KFF has estimated that hospital costs alone could run between $13.9 billion to $41.8 billion – not taking into account costs incurred for services provided in other settings Further, the guidance specifies reimbursement will be subject to available funding, meaning once the funding runs out, providers will no longer get paid and uninsured patients may face tens of thousands of dollars in health care bills.

Future outlook

The new details released by HHS and an additional $75 billion to be added to the Relief Fund help to give a fuller picture of the resources that will be available to support providers during the coronavirus pandemic.  While the administration has taken steps to protect uninsured patients and those at risk of being balanced billed, additional policies will be needed to fully protect patients during this pandemic.

This work was supported in part by Arnold Ventures. We value our funders. KFF maintains full editorial control over all of its policy analysis, polling, and journalism activities.

KFF Headquarters: 185 Berry St., Suite 2000, San Francisco, CA 94107 | Phone 650-854-9400
Washington Offices and Barbara Jordan Conference Center: 1330 G Street, NW, Washington, DC 20005 | Phone 202-347-5270

www.kff.org | Email Alerts: kff.org/email | facebook.com/KFF | twitter.com/kff

The independent source for health policy research, polling, and news, KFF is a nonprofit organization based in San Francisco, California.