The $2.2 trillion CARES Act was passed to provide a range of financial assistance to Americans and businesses struggling with the economic fallout from the coronavirus. Included in this package was the $100 billion Provider Relief Fund to help America’s ailing health care sector.
Not all hospitals benefited equally when the initial $30 billion from the Provider Relief Fund was distributed.
But not all hospitals benefited equally when the initial $30 billion of that money was distributed. Now, with the second round of funding set to go out, some health care providers – especially hospitals organized as governmental entities — could again be left out of this second round.
Hospitals have faced a seemingly impossible situation as the pandemic has escalated. As cases of people infected with the virus have climbed, some health care providers have become overwhelmed with patients, forcing them to postpone many revenue-generating procedures to make room for the influx of patients. Even providers that have not yet seen a large surge of virus infected patients have postponed many procedures as a result of government orders.
The CARES Act sought to address this crunch by providing payments to hospitals and by providing a quick distribution from the Provider Relief Fund.
Although the CARES Act sought to get money to hospitals quickly, its distribution left some providers with little or no stimulus. Of the $30 billion initially distributed, much of it was limited to hospitals that had received Medicare Fee for Service reimbursement in 2019. That left out a range of health care providers that did not participate as actively in Medicare. These included children’s hospitals, behavioral health providers, hospitals that rely on patients with private insurance, and providers with a higher proportion of Medicare Advantage patients.
Another round
Now, with $70 billion of that $100 billion total still to be distributed, every indication from federal health officials is that it will be aimed at providers that operate in areas particularly affected by the coronavirus outbreak, rural hospitals, hospitals with lower shares of Medicare reimbursement, and those hospitals that serve uninsured populations.
Late last week, the Washington Post had an article that quoted a member of the administration that the second tranche of payment from the Provider Relief Fund will also be $30 billion and broken into two pieces: $20 billion will be based on the provider’s share of total revenue, according to the Internal Revenue Service data, and $10 billion will be paid to hospitals with large numbers of coronavirus patients.
This second tranche will also most likely provide some much-needed support to children’s hospitals, providers serving Medicare Advantage providers, and providers with larger shares of commercially insured patients.
But it also creates a situation where some providers – especially hospitals organized as governmental entities — may not receive payments through this second tranche. Those providers are those that do not file tax or informational returns with the IRS. Examples of those providers are those that are organized as governmental entities, which is common for health care providers including hospital districts, county hospitals and some academic medical centers affiliated with state universities.
According to the data obtained from the American Hospital Association, there are 965 state and local government community hospitals.
Source: American Hospital Association
Although no distribution mechanism of the Provider Relief Fund will make every provider in America whole, it is clear that federal health officials are working on distributing this money quickly. For providers like hospitals organized as governmental entities, it again may be a waiting game until funds do arrive.
For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.
