As part of the CARES Act in response to the COVID-19 pandemic reaching the United States, Congress set aside $175 billion in relief for healthcare providers – initially approving $100 billion in the CARES Act and adding $75 billion several weeks later. However, months after the money was approved, the Trump administration has yet to pay out nearly $100 billion of that money, amid a series of setbacks and internal uncertainty over how best to distribute the money.
This delay has prompted politicians on both sides of the aisle to speak out. “Congress intended these dollars to go to health care providers quickly to combat the pandemic,” said Senator Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee. “It’s clear that the Trump administration’s distribution of this aid has been poorly targeted and too slow in coming.”
According to those familiar with the matter, Republicans have pressured health officials in private over the past few weeks, at one point threatening to make their criticisms public if the administration failed to pick up the pace. “Lead Republicans on the committees of jurisdiction have been unglued at just the remarkable nature of the process,” a person familiar with those discussions said. “It’s just incredibly frustrating.”
Distributed Grants
On May 1, 2020, the United States Department of Health and Human Services (HHS) issued a press release stating it had begun to process payments from the Provider Relief Fund to hospitals with large numbers of COVID-19 inpatient admissions through April 10, 2020, and to rural providers.
“These new payments are being distributed to healthcare providers who have been hardest hit by the virus: $12 billion to facilities admitting large numbers of COVID-19 patients and $10 billion to providers in rural areas, who are already working on narrow margins,” said HHS Secretary Alex Azar. “HHS has put these funds out as quickly as possible, after gathering data to ensure that they are going to the providers who need them the most. With another $75 billion recently appropriated by Congress, the Trump Administration will continue doing everything we can to support America’s heroic healthcare providers on the frontlines of this war on the virus.”
HHS has allocated roughly $77 billion of the $175 billion and has not offered any timeline of when the next round of provider aid is expected to be distributed.
Most of the grants distributed so far have been distributed to Medicare providers, presumably because HHS already has information on those providers, which makes it easier to dole out the funding. Unfortunately, that has resulted in problems for providers whose populations are primarily Medicaid patients, as HHS does not maintain detailed databases for Medicaid, as that program is largely run by individual states.
The Trouble with Medicaid
According to Politico, the Trump administration began asking state health officials for Medicaid-heavy providers’ tax and banking information about a month ago, but some states were slow to disclose information due to privacy concerns and legal limitations.
While most states delivered HHS the information they had within a week, it was not until late May that every state and U.S. territory finalized their data submissions. Even then, several states could not provide comprehensive banking information for all their Medicaid providers – meaning the federal government will likely still need to request it from certain individual hospitals and health care organizations.
Distribution Problems and Lack of Guidance
Some of the initial $50 billion in distributed grants went to closed hospital facilities and major corporations, like Walmart. Several large hospital chains who primarily serve privately insured patients also lucked out, getting billions of dollars in federal support as compared to hospitals that provide more charity care.
Those health care providers and organizations that have received the money were required to agree to certain conditions, including spending the funding only on coronavirus-related expenses or to make up for revenue lost during the pandemic. They would also be responsible for submitting financial documents in regular intervals to HHS. Failure to abide by the rules may result in the money being taken back. However, similar to other programs launched as part of the CARES Act (PPP and EIDL loans for small businesses), the rules and guidelines have changed on several occasions, leading to mass confusion. For example, a May 29 update to an FAQ made dozens of changes compared with the prior version and added four new sections detailing how the money could and could not be used.
The frequent changes and lack of definitive guidance from HHS has caused anxiety among hospitals and doctors that they will inadvertently misspend their funds and/or end up under investigation years down the road.
However, there are still some providers and facilities who desperately need the funding to come through.
“We are concerned that most of our members have not received a second payment from the $50 billion general allocation fund, despite providing the required financial documentation,” the American Medical Group Association (AMGA), wrote in a May 27, 2020 letter to HHS Secretary Alex Azar. The very next day, AMGA members began receiving those dollars, with the rest expected to come in shortly.
Several industry organizations have acknowledged the difficulties HHS is dealing with in administering a such a massive fund with such a short timeline and little guidance given from Congress. Hopefully the intent of Congress is served and the fund will help health care providers who took a financial hit due to the COVID-19 pandemic.