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US will release $25B in relief to Medicaid care providers, safety-net hospitals

The U.S. Department of Health and Human Services will distribute an additional $25 billion to certain hospitals and healthcare providers that have been impacted by the coronavirus pandemic.

HHS will distribute approximately $15 billion to healthcare providers that participate in Medicaid and the Children's Health Insurance Program, or CHIP, and have not yet received federal economic relief funds, according to a June 9 statement. The agency will also distribute $10 billion to safety-net hospitals, which are facilities that treat large volumes of patients who are covered by Medicaid or who are uninsured.

The funds to hospitals primarily serving patients covered by Medicaid and to safety-net hospitals are helping facilities that have low operating margins and serve patients being disproportionately impacted by the pandemic, HHS Deputy Secretary Eric Hargan said on a June 9 call with reporters.

African Americans are hospitalized at about 4.5 times the rate of white Americans from COVID-19, the illness caused by the novel coronavirus, Hargan said, citing a recent report from the U.S. Centers for Disease Control and Prevention. He added that Hispanic Americans are hospitalized at about 3.5 times the rate of non-Hispanic whites, and American Indians and Alaskan Natives have a hospitalization rate about five times greater than that of white Americans.

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The funds will come from the $175 billion in economic relief money that Congress approved for healthcare providers in two separate pieces of legislation, according to the press release.

HHS has been criticized for its allocation method of the provider relief funds because the distribution has largely depended on past payments from Medicare, which chiefly covers care for older Americans and people with disabilities.

HHS Secretary Alex Azar outlined a more targeted distribution method in April. However, the department still faced questions about how it was getting funds to all types of hospitals and providers.

"While HHS has made public statements regarding a commitment to develop a distribution for Medicaid providers who may not have Medicare claims, we have not yet seen public progress on such a commitment," a group of four bipartisan senators and representatives wrote to Azar June 3.

Payments were slow to go out due to challenges verifying that Medicaid providers applying for funds were authentic and eligible for payments, a senior HHS official said on the call.

The American Hosptial Association, or AHA, an industry trade group, supported the additional distribution of funds in a June 9 statement, saying that it gives struggling hospitals crucial resources to respond to the pandemic.

"These hospitals care for our nation's most vulnerable patients and communities, which have suffered disproportionately from the pandemic," Rick Pollack, president and CEO of AHA, said in the statement. "This emergency funding will help these hospitals, many of which were already facing serious financial pressures before the pandemic, continue to deliver care to their patients and communities."

Hospitals and healthcare providers have been hard-hit by the pandemic, primarily from the cancellation of elective or nonemergent care. AHA projected in May that the crisis will cost the U.S. hospital industry over $200 billion between March and June.

Distribution qualifications

HHS also announced that the agency will launch a provider relief fund payment portal on June 10 that will enable Medicaid and CHIP providers to report annual patient revenue.

The information will be used to generate relief payments for these providers, according to the statement. HHS said payments will be at least 2% of reported gross revenue from patient care.

Final payments will also include the total number of Medicaid patients served and be determined after data has been submitted.

The new method will ensure that payments go to the 38% of Medicaid and CHIP providers that have not yet received payments from the $175 billion relief fund, according to HHS.

Eligibility requirements for safety-net hospitals include profitability of 3% or less as reported to the U.S. Centers for Medicare and Medicaid Services, total uncompensated care payments averaging $25,000 or more per hospital bed, and a Medicare disproportionate payment percentage of 20.2% or greater, according to HHS.

Payments for safety-net hospitals will be between $5 million and $50 million, according to the June 9 statement. The agency said that distribution for safety-net hospitals will begin this week.