HHS releases $25.5B in COVID-19 relief funding targeted at smaller providers

Roughly a week after heat from Republican senators, HHS announced a new distribution of $25 billion in COVID-19 relief funds. (Tupungato/GettyImages)

The Biden administration is making available $25.5 billion in relief funds to providers to offset revenue loss and higher expenses due to the pandemic, the first announced infusion in nearly a year.

The funding will go towards reimbursing smaller providers that tend to operate on thin margins and boost payments to providers that serve a disproportionate amount of Medicaid and/or Medicare patients. The announcement Friday comes as some provider groups have clamored for the Department of Health and Human Services (HHS) to release the remainder of a $178 billion relief fund passed by Congress last year.

“The funding will be distributed with an eye towards equity, to ensure providers who serve our most vulnerable communities will receive the support they need,” said HHS Secretary Xavier Becerra in a statement.

It includes $8.5 billion in resources from the American Rescue Plan Act passed earlier this year and another $17 billion from the $178 billion pot passed last year as part of the CARES Act.

The new funding will be based on providers’ lost revenue and higher expenses from July 1, 2020 to March 31, 2021, according to an HHS release.

HHS is particularly targeting smaller providers for lost revenues and “COVID-19 expenses at a higher rate compared to larger providers,” the release said.

There will also be bonus payments for providers that are serving Medicaid, Children’s Health Insurance Program and/or Medicare patients “who tend to be lower-income and have greater and more complex medical needs,” HHS officials said.

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The bonuses will be based on “the generally higher Medicare rates to ensure equity for those serving low-income children, pregnant women, people with disabilities and seniors,” agency officials added.

HHS will also make payments to rural providers based on the amount of Medicaid, CHIP and Medicare services they give to patients in a rural area.

The agency will also use existing Medicaid, CHIP and Medicare claims data for calculating the payments in a bid to get them out faster. Applications for the funding open on Sept. 29.

Providers will also get a 60-day grace period to come into compliance with any relief fund reporting requirements.

“While the deadlines to use funds and the Reporting Time Period will not change, HHS will not initiate collection activities or similar enforcement actions for non-compliant providers during this grace period,” the release said.

The new funding comes as some provider groups have clamored for HHS to release more relief as the pandemic continues to impact revenues, as it has been nearly a year since the last distribution was announced.

It also comes roughly a week after Republican Senate leaders wrote to the Biden administration calling for the swift distribution of the remaining money.

“During the first seven months of this administration, the department has refused to issue any [provider relief] distributions,” the letter said. “Our question to you is simple: Why?”