Reps. Axne and Bacon Seek Assurances from HHS to Preserve CARES Act Allocations for Hospitals, Health Clinics
Today, Rep. Cindy Axne (IA-03) and Rep. Don Bacon (NE-02) called on the U.S. Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) to provide answers and clear assurances for hospitals that are at risk of having their federal aid clawed back due to a change in formulas for coronavirus (COVID-19) relief funding.
In April, HHS began allocating relief funding for hospitals and health centers through the Provider Relief Fund (PRF), created and funded by Congress through the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
After the first PRF distribution in April, which allocated over $522 million for health centers in Iowa and Nebraska, HHS changed the formula for PRF distributions – leading some providers to receive less than expected in subsequent allocations and creating uncertainty on whether the change would require repayments of funds being used to preserve health care in communities affected by the pandemic.
“This change in funding distribution methodology is concerning to us, because it resulted in some of our providers receiving less funding than they expected in the second allocation of Provider Relief Funds,” the members wrote. “Now, even more concerningly, some health providers have been informed that they may have to repay HHS… we are asking you to issue a statement, ensuring they will not have to repay any funding received under the $50 billion allocated for general distribution.”
With the creation of the PRF, Congress sought to quickly allocate and distribute relief funds to ensure hospitals and health centers could remain open and fully staffed during the COVID-19 pandemic. To follow congressional intent for swift distribution for providers in need, the first allocation of PRF was distributed to hospitals and health clinics by HHS based on their Medicare Fee for Service (FFS).
That allocation provided $297,929,171 for over 3,200 different health care providers in Iowa, including over $74 million for 759 providers within Iowa’s Third Congressional District.
Following the April 10th round of funding, HHS changed the PRF formula to make subsequent awards proportional to the providers' share of their 2018 net patient revenue. Since the formula change, the HHS has been unclear on whether they will require providers to return funding they have already received – even if the funding has been used to keep their doors open during the public health emergency.
“Rural providers need to focus on providing care during this pandemic,” said Nathan Baugh, Director of Government Affairs for the National Association of Rural Health Clinics. “They shouldn’t have to worry about paying CARES Act money back because the government’s formulas were changed after the fact.”
“Hospitals were grateful to receive the much-needed support from the two general disbursements of Provider Relief Funds. As a result of suspending all elective surgeries and the increased costs in caring for COVID-19 patients, hospitals were in critical need of these funds and still are," said Kirk Norris, President and CEO of the Iowa Hospital Association. "Due to the ongoing uncertainty with the virus and the key role hospitals play in fighting this pandemic, hospitals should not be expected to return any Provider Relief Funds that have already been disbursed to them.”
On June 10, HHS announced a supplemental round of PRF funding that allocated $63,279,616 for eight Iowa providers. On Friday, HHS announced an additional $89 million in PRF funding for high impact areas in Iowa for 12 providers.
The PRF has also provided $383,318,585 in relief funding for 177 rural health care providers in Iowa.
The full text of the letter can be found below:
Dear Secretary Azar and Administrator Verma,
Throughout this pandemic, we have spoken with health care providers across our districts, states, and country. Many are concerned that, due to a change in the funding allocation formula change by HHS and CMS, hospitals and health providers will be forced to pay back money that HHS has now determined is overpayment. We are writing to seek clarity on if you will require hospitals, health clinics, and health providers to return their funding, and request you issue a statement ensuring health providers do not need to repay this funding.
As you know, Congress has passed legislation to providing direct funding for our health care facilities, because we know that health provider are in dire need of assistance to deal with the increased costs associated with COVID-19. We heard from providers who feared, without Congressional action, they would not have been able to pay their staff or keep their doors open. The Coronavirus Aid, Relief, and Economic Security (CARES) Act appropriated $100 billion in relief for providers under the Provider Relief Fund. The recent Paycheck Protection Program and Health Care Enhancement Act (P.L. 116-139) appropriated an additional $75 billion for the CARES Act Provider Relief Fund. This funding is aimed at supporting healthcare-related expenses or lost revenue attributable to COVID-19 and ensured that uninsured Americans can get testing and treatment for COVID-19.
HHS determine that they would allocate $30 billion in immediate relief funding to our health providers based on 2019 Medicare fee-for-service (FFS) rates. HHS then distributed an initial $30 billion between April 10 and April 17 to ensure that hospital and health providers around the country would have funds to ensure they remained in service. We appreciate that HHS moved quickly to help providers.
HHS then began to release the remaining $20 billion of remaining funding within the Provider Relief Fund on April 24th. However, HHS announced a change in funding allocation formula. Instead of using Medicare FFS, HHS determined funding would be allocated proportional to providers' share of their 2018 net patient revenue.
This change in funding distribution methodology is concerning to us, because it resulted in some of our providers receiving less funding than they expected in the second allocation of Provider Relief Funds. Now, even more concerningly, some health providers have been informed that they may have to repay HHS if they received more funding under the Medicare FFS than they would have received under net patient revenue.
HHS has left open the possibility that at some point our health providers would need to return money they were assured was for immediate financial relief. Our health providers have not told how much funding they were given that was believed to be in excess, nor when they might be expected to pay this funding back. Our health providers are being held responsible for a decision made by HHS that was entirely out of their control. It is not the fault of our providers they may have had more Medicare FFS in 2019 than they had net-patient revenue in 2018, nor should they be held financially responsible for this HHS decision to change the allocation methodology.
We are all acutely aware that our healthcare providers are struggling to care for COVID-19 patients while facing financial insolvency because of safety precautions they must take against COVID-19. Many of our health care providers have been forced to pay steep prices for personal protective equipment (PPE) and testing supplies which, due to lack of supply, have skyrocketed in cost. Our health providers are also struggling to cover the costs of adding personnel and overtime pay.
We applaud HHS quick action to get funding to our health providers, but our hospitals and health care providers should not have to return relief funds due to the Department’s change in methodology. That is why we are asking you to issue a statement, ensuring they will not have to repay any funding received under the $50 billion allocated for general distribution.
Sincerely,