COVID-19 relief fund distribution fell short for hospitals treating Hispanic, underinsured communities

hospital money
The Trump administration's formulas for distributing pandemic relief funds generally skewed toward hospitals serving well-insured communities, researchers wrote in Health Affairs. This led to hospitals treating demographics with lower coverage, such as Hispanics, receiving less support. (Getty/PraewBlackWhile)

The Trump administration’s approach to distributing provider COVID-19 relief funds was hit and miss in regard to health equity and reaching underserved demographics, according to new data published in Health Affairs.

Across a sample of 2,709 hospitals that received $69.5 billion through February 2021, Harvard University health policy researchers found that hospitals serving areas with high shares of Black residents, those with a high number of nursing home beds in their community or those reporting a high ratio of Medicaid revenue to beds saw “meaningfully increased” federal relief funding.

On the other hand, researchers observed the opposite for hospitals serving communities with a high share of Hispanic residents, who like Black Americans were hospitalized at nearly three times the rate of non-Hispanic white Americans.

Facilities treating a low share of patients with employer-sponsored insurance were also disadvantaged, they wrote, while those with residents living in medically underserved areas saw neither an increase or decrease in relief.

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Part of these distribution trends can be attributed to the Trump administration’s emphasis on high-impact hospital disbursements, or relief provided to hospitals that cared for a substantial number of COVID-19 patients. The researchers noted that hospitals treating a large share of Black residents would have received substantially lower relief than others if not for the high-impact funding, as would have those with low commercial revenue and those in communities with numerous nursing home beds.

However, much of the inequity was driven by decisions made regarding the formulas for determining hospital relief, they continued. These formulas often relied on hospital financial records and other administrative data for inputs while prioritizing net patient revenue to determine capacity, decisions that, among others, skewed allocation decisions and generally privileged hospitals that serve well-insured populations.

“All else being equal, hospitals serving more uninsured people will tend to have lower net patient revenue, as this measure does not count uncompensated care,” the researchers wrote. “Future approaches to extraordinary relief should integrate measures of community need from outside Medicare data.”

The mean total relief funding per hospital was $25.7 million for those included in the analysis. Among the roughly one-third of hospitals that received high-impact funding, the mean high-impact funding received was $21.2 million.

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About 20% of the included hospitals only received relief through a revenue-based funding stream, as most picked up additional relief from rural, high-impact or safety-net funding pools. Still, net patient revenue explained 45.9% of the variation in relief disbursement, the researchers wrote.

“Our findings emphasize that funding formulas reflect consequential political judgments,” they wrote. “In future allocations, the relationship between need and aid should be strengthened by de-emphasizing historical net patient revenue in favor of a broader set of community and hospital characteristics.”

Both industry groups and lawmakers have clamored for the Biden administration to release the remaining 25% of relief funding that has so far gone undistributed. On Friday they got their wish, as the U.S. Department of Health and Human Services announced that an additional $25.5 billion will become available to providers starting Sept. 29. This includes $8.5 billion in American Rescue Plan resources and $17 billion for the Provider Relief Fund.