HHS to dole out $15B to Medicaid, CHIP providers and $10B to safety net hospitals

rural area
HHS plans to distribute $15 billion this week to providers reliant on Medicaid and CHIP funding, which are primarily in rural areas. (Pixabay)

The Department of Health and Human Services (HHS) will give out $15 billion to Medicaid and Children’s Health Insurance Program (CHIP) providers and another $10 billion to safety net hospitals after facing criticism from Congress on why these providers haven’t gotten financial help.

The funding announcement Tuesday will apply to providers that have not gotten any money from a $175 billion provider relief fund passed by Congress a few months ago. HHS has been criticized that the method for doling out the relief money relied too heavily on commercial and Medicare insurance claims.

The agency said the distribution to safety net providers will happen this week.

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On Wednesday, HHS will launch a new portal to allow eligible Medicaid and CHIP providers to report their annual patient revenue that will be used to calculate their payment.

“The payment to each provider will be at least 2% of reported gross revenue from patient care; the final amount each provider receives will be determined after the data is submitted, including information about the number of Medicaid patients providers serve,” HHS said in a release.

HHS added that initial payments from the relief fund went to approximately 62% of all providers participating in state Medicaid or CHIP programs.

The more targeted distribution announced Wednesday will be for the additional 38%.

The move comes less than a week after a group of bipartisan congressional leaders slammed HHS for a delay in sending out funding to Medicaid-reliant providers, which usually operate in rural areas and on thin profit margins.

The reason for the delay was the timing it took to get a list of Medicaid providers from states so HHS could validate and authenticate the providers, said Deputy HHS Secretary Eric Hargan on a call with reporters Tuesday. 

Hargan said that the Medicaid and CHIP providers can expect to get the funding as soon as 10 days after they submit an application. 

The new funding also comes as some rural areas are reporting spikes in COVID-19 activity.

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HHS also announced a $10 billion allocation for safety net hospitals, which will be sent via direct deposit. The minimum a hospital could get is $5 million and the max $50 million, HHS officials said on a call with reporters Monday.

To qualify as a safety net hospital, a facility must have:

  • Medicare disproportionate payment percentage of 20.2% or greater;
  • Average uncompensated care per bed of $25,000 or more; and
  • Profitability of 3% or less as told to the Centers for Medicare & Medicaid Services’ recent cost report.

Hargan anticipates that 758 hospitals would be eligible to get the funding.

HHS also sent a letter to all hospitals on Monday asking for updated information on their COVID-19 admissions through June 10 of this year.

“This information will be used to determine a second round of funding to hospitals in COVID-19 hot spots to ensure they are equitably supported in the battle against this pandemic,” the agency said.

The targeted distribution to Medicare providers was welcome news to hospital groups.

“This emergency funding will help these hospitals, many of which were already facing serious financial pressures before the pandemic, continue to deliver care to their patients and communities,” the American Hospital Association said in a statement.

But providers said that Congress and HHS are going to have to do more to ensure rural and safety net hospitals make it through the financial crisis. 

"The heavy costs of battling the coronavirus continue and likely will linger long after this crisis ends," said Bruce Siegel, president and CEO of safety net hospital group America's Essential Hospitals. "This outlook and the earlier funding gaps that let many hospitals fall through the cracks demand that Congress and the administration keep the focus on the safety net and providers caring for our most disadvantaged people and communities."

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