The U.S. Department of Health and Human Services (HHS) has designated $25.5 billion for provider relief funding available to healthcare providers that still need assistance after the first rounds of stimulus support. The funding consists of $17 billion in Provider Relief Fund (PRF) Phase 4 General Distribution payments and $8.5 billion in American Rescue Plan Act (ARP) Rural payments, the latter of which is designated solely for providers serving rural patients. The portal for reporting opened on September 29, 2021 and was closed on October 26, 2021.
The dispersal of Phase 4 funds will be based on providers’ lost revenues and increased expenditures from July 1, 2020 through March 31, 2021. Large providers will receive a minimum payment that is based on the percentage of lost revenue and increased COVID-related expenses. Medium and small providers will receive a minimum payment based on the same criteria as large providers; however, they will also receive a supplement, with small providers receiving the highest supplement. HHS will continue to use risk mitigation and cost containment measures when final distributions are made.
To promote equity, the Health Resources and Services Administration (HRSA) will reimburse a higher percentage of lost revenue and expenses to smaller providers, and there will be bonus payments made for those providers that service a large percentage to Medicaid, Children’s Health Insurance Program (CHIP), and Medicare patients. Distributions are expected in mid-December 2021, with it likely providers will have until December 31, 2022 to spend those funds.
Phase 3 Methodology Revealed
To promote transparency, HHS has released the methodology used to calculate Phase 3 payments. The methodology took into consideration the lost revenue and the increase in COVID-related expenses and then calculated a loss ratio based on losses and annual patient care revenue from prior tax returns. If a payment was less than anticipated, a few factors could have contributed.
The loss ratio was capped at 6.73% for nursing homes (mean loss ratio plus one standard deviation). If one of the reported quarter revenues or expenses was greater than 50% of annual patient care revenue, the application was flagged and the loss ratio was adjusted to 1.09%, which was the mean loss ratio for nursing homes, and all Provider Relief Funds previously received were deducted before further payment was distributed. These calculation adjustments impacted 47.9% of providers that applied for the funds.
Phase 4 funding will be calculated using the same cost containment and risk mitigation measures as were used on Phase 3. Providers that feel their Phase 3 payments were not calculated correctly can contact PRFReconsiderations@hrsa.gov.
Provider Relief Fund Deadlines
The period 1 PRF deadline was September 30, 2021; however, HHS did provide a 60-day grace period that ends November 30, 2021. Period 2 (July 1, 2020 to December 31, 2020) reporting is due by March 31, 2022.
Phase 4 reporting (July 1, 2021 to December 31, 2021) will be open for submissions starting January 1, 2023 through March 31, 2023.
Contributing Author Stephanie Christopher is an owner of Squared Business Solutions, a consulting and professional services firm specializing in healthcare. She may be reached at schristopher@squaredbusinesssolutions.com.
