The U.S. Department of Health & Human Services (HHS) recently announced new distributions from the Provider Relief Fund totaling $4 billion with approximately $3 billion in funding to Safety Net Hospitals and $1 billion to specialty rural hospitals, urban hospitals with certain rural Medicare designations, and hospitals in small metropolitan areas. In addition, HHS has opened its Enhanced Provider Relief Portal to allow dentists to apply for relief funding.
The $3 billion distribution is an addition to the $10 billion in Provider Relief Fund payments made in June 2020 that went to hospitals serving a large percentage of vulnerable populations on thin margins. HHS is now making this additional $3 billion in payments to acute care hospitals that did not qualify for the earlier funding. HHS is expanding the criteria for payment qualification so that certain acute care hospitals meeting the revised profitability threshold of less than of 3 percent averaged consecutively over two or more of the last five cost reporting periods, as reported to the Centers for Medicare and Medicaid Services (CMS) in its Cost Report filings, will now be eligible for payment. HHS expects to distribute over $3 billion across 215 acute care facilities, bringing the total payments for safety net hospitals from the Provider Relief Fund to approximately $13 billion to 959 facilities.
This targeted distribution will be made to certain acute care hospitals that meet the following criteria: (1) a profit margin threshold of less than or equal to 3% averaged consecutively over two or more of the last five cost reporting periods and (2) an annualized uncompensated care cost (UCC) of at least $25,000 per bed in the most recent cost report and (3) a Medicare Disproportionate Patient Percentage (DPP) of 20.2% or higher.
HHS used the hospitals’ last two to five Medicare cost report filings for determining eligibility based on profit margin and the latest Medicare cost report filing for determining eligibility based on annualized UCC per bed and Medicare DPP.
There is no action required by the provider to apply for this distribution. As with other payments, providers will be required to attest to Terms and Conditions to keep the funds received.
The $1 billion distribution is an addition to the $10 billion in Provider Relief Fund payments made in May 2020 to almost 4,000 rural health care providers including hospitals, health clinics, and health centers. HHS is expanding the existing payment formula to include certain special rural Medicare designation hospitals in urban areas as well as others who provide care in smaller non-rural communities. These may include some suburban hospitals that are not considered rural but serve rural populations and operate with smaller profit margins and limited resources than larger hospitals. HHS estimates the funding announced today will provide relief of over $1 billion to 500 of these hospitals with payments ranging from $100,000 to $4,500,000 for rural designated providers and $100,000 to $2,000,000 for the other providers.
Rural/Small Metropolitan Areas Targeted Distribution payments are limited to hospitals in small cities and rural areas that did not previously received payment in the Rural Targeted Distribution in May 2020. Payments were calculated based on hospitals’ most recent Medicare cost reports and patient residence identified in the Hospital Area Service File. The payment formula varied depending on hospital location and Medicare designation.
For hospitals with a special Medicare payment designation of Sole Community Hospitals (SCH) or Medicare Dependent Hospitals (MDH), and for hospitals in small metro areas with a designation of Rural Referral Center (RRC), the payment amount is based on 1% of operating expenses (calculated based on their most recent Medicare Cost Report) with a minimum payment of $100,000, a supplement of $50 for each rural inpatient day, and a maximum payment of $4.5 million. HHS also provided a supplemental payment of $1,000,000 for 10 isolated urban hospitals that are 40 or more miles away from another hospital open to the public. HHS estimated the number of inpatient days provided by these hospitals to rural residents by calculating the proportion of patient days attributed to Medicare patients from rural zip codes using the Hospital Service Area File, calendar year 2018 (the most recent data available), multiplied by the total number of patient days as reported in the hospital’s Medicare cost report.
For small city hospitals without a special Medicare designation, the payment amount was based on 1% of operating expenses (calculated based on their most recent Medicare cost report) with a minimum payment of $100,000 and a maximum of $2 million each.
The payment formula for rural specialty hospitals (psychiatric, rehabilitation, and long-term acute care) used the previous Rural Targeted Distribution methodology (graduated base payment + approximately 2% of operating expenses) adjusted for the rural patient share (calculated as percent of inpatient days provided to rural patients) with a minimum payment of $100,000 and a maximum of $4.5 million. Operating expenses were determine based on the most recent Medicare Cost Report. Rural patient share was estimated using the proportion of patients from rural zip codes as reported in the Hospital Service Area File.
“Small metropolitan” is defined as a metro area with less than 250,000 in population as identified by the county-level Rural-Urban Continuum Codes developed by the U.S. Department of Agriculture.
Eligible rural specialty hospitals included Inpatient Psychiatric Facilities (IPFs), Inpatient Rehabilitation Facilities (IRFs), and Long-Term Acute Care Hospitals (LTACHs) located in a geography that meets the following rural definition:
There is no action required by the provider to apply for this distribution. As with other payments, providers will be required to attest to Terms and Conditions to keep the funds received.
HHS has opened an application process to dentists who were not previously eligible to receive funding through the Provider Relief Fund. Eligible dentists will receive a reimbursement of two percent of their annual reported patient revenue and will have until July 24, 2020 to apply for funding through the Enhanced Provider Relief Portal. To support payments to dental providers who may not bill Medicare or Medicaid, HHS has developed a curated list of dental practice TINs from third party sources and HHS datasets. Providers with TINs on the curated list must meet other eligibility requirements including operating in good standing and not be excluded from receiving federal payments. As a next step, HHS will work with states and its vendors to authenticate dental providers not on the curated list. Payment for dental providers under this distribution is the same as for other providers under this Medicaid-focused General Distribution. Payments will be based upon 2% of (revenues * percent of revenues from patient care) for most recent tax filing, as reported by the applicant, and with accompanying submitted tax documentation.
To be eligible to apply, a dental provider must meet all of the following requirements:
Providers must apply for this Dental Targeted Distribution through the Enhanced Provider Relief Portal before July 24, 2020. As with other payments providers will be required to attest to Terms and Conditions to keep the funds received.
Please contact Baker Tilly for any questions related to these Provider Relief Fund Distributions.