On Friday, September 10, 2021 the Department of Health and Human Services (HHS), through the Health Resources and Services Administration (HRSA), announced $25.5 billion in new funding for healthcare providers affected by the COVID-19 pandemic.
The $25.5 billion that will be made available for healthcare providers will include $17 billion through a Phase 4 General Distribution of the Provider Relief Fund (PRF). An additional $8.5 billion from the American Rescue Plan (ARP) through a rural distribution will assist providers who serve rural Medicare, Medicaid and/or Children’s Health Insurance Program (CHIP) patients.
The application portal for these funds officially opened on September 29, 2021 and is available here. Both distributions can be requested through a single application that will be due by October 26, 2021 at 11:59pm ET.
Numerous resources for these distributions, including instructions, sample forms, terms and conditions (Phase 4 and ARP Rural), an interactive user guide, etc. have also been released by HRSA and are available at the hrsa.gov/provider-relief website under “future payments.”
HRSA provided detailed eligibility requirements for the Phase 4 distribution on their website. Providers may be eligible to receive Phase 4 distributions if they:
Additionally, health care providers that did not previously receive distributions from the PRF program may now be eligible if all of the eligibility requirements are met.
Payments to providers from the $17 billion allocation will be calculated in two separate components:
1. Base Payment
Approximately 75% of the funding ($12.75 billion) will be allocated based on reported changes in patient revenues and expenses for the period from July 1, 2020 to March 31, 2021, as compared to the same quarters in 2019. Definitions of “Operating Revenues from Patient Care” and “Operating Expenses from Patient Care,” which are used in the calculation of the base payment are available on the HRSA website.
The calculation will be a percentage of the change in quarterly patient revenues and expenses, summed across all three quarters. These base payments will be grouped into small, medium and large provider groups based upon annual net patient care revenues with the small and medium providers receiving a larger percentage.
The small, medium and large provider groupings and the percentages used for each will be determined after the application period. No provider will receive more than the change in quarterly patient revenues and expenses. Applicants that have not previously received a PRF distribution will receive the greater of 2% of annual net patient care revenue or the calculated base payment.
2. Bonus Payment
Approximately 25% of the funding ($4.25 billion) will be based upon Medicare, Medicaid, and CHIP claims from January 1, 2019 through September 30, 2020. This portion of funding will be completed “automatically” using information HRSA already has available. These claims will be “priced” at predominantly Medicare rates and the claims times rates applied will ultimately be used to calculate the bonus payment.
HRSA will utilize analytical procedures to identify and flag outliers during the application process. These include:
These outliers may result in higher payments in the scenario of new providers; capped payments for pharmacies, DME suppliers, and certain anomalies; or no payments for certain anomalies and duplicate applications.
Healthcare providers are eligible for the ARP Rural Distribution based on similar eligibility requirements as Phase 4, but limited to rural health clinics, providers treated as located in a rural area, OR a provider that “operates in or serves patients living in the HHS Federal Office of Rural Health Policy’s (FORHP) definition of a rural area."
This is important to understand because it means eligible providers merely need to treat patients that are from a rural area, rather than be physically present in the rural area, to be eligible. The guidance in the ARP bill requires that a provider apply for these funds. Accordingly, to access this component of the distribution, there is a “Yes/No” question on the application, “Select ‘Yes’ if your organization would like to be considered for an additional ARP rural payment.”
"...eligible providers merely need to treat patients that are from a rural area, rather than be physically present in the rural area, to be eligible"
The ARP Rural Distribution totaling $8.5 billion will be allocated to providers based upon services provided to Medicare, Medicaid and CHIP beneficiaries in a rural market. Similar to the Bonus Payment component of Phase 4, HRSA will utilize the information it has available to make these calculations based upon the tax identification number (TIN) of the applicant. Eligible billing TINs that have at least one Medicare, Medicaid or CHIP claim for a rural beneficiary will receive a minimum payment to be determined based on the total applications.
One important distinction of the ARP Rural Distributions from any other previous PRF distributions is that they must be maintained and used by the original TIN recipient. In other words, these amounts may not be transferred to another entity, regardless of relationship.
Both the Phase 4 General and ARP Rural Distributions require an attestation to certain terms and conditions (T&C). These T&C are very similar to previous general distribution T&C in that the funds must be used to prevent, prepare for and/or respond to coronavirus and that the expenses or lost revenues claimed must not be reimbursed or obligated to be reimbursed by another source. There are a few new updates to the T&C, however, including:
On a recent webinar, HRSA indicated they expect to distribute the ARP Rural Distributions in November, prior to Thanksgiving. The Phase 4 Distributions are slated to happen in December, with additional payments anticipated being made into 2022 for more complex applications.
While the periods of time utilized for each of the components of the application for funding vary, the Period of Availability to use the Phase 4 and Rural ARP Distributions is consistent with other PRF distributions and is based upon the date the payments are received. For payments that are received between July 1, 2021 and December 31, 2021, the provider will have until December 31, 2022 (or over one year from the date of receipt) to use the funds.
For non-complex entities and individuals, the following information will be needed for the application:
More complex entities may require additional worksheets and organizational structure documents.
There are a few things your healthcare entity can do now to prepare for this new round of funding.
We encourage healthcare providers to apply for this round of funding. Many have experienced impacts past the Period of Availability of previous PRF payments. Additionally, the pandemic has proven to be unpredictable and future impacts are not known. This funding could help support healthcare providers for both these historical impacts, as well as those still unknown.
Our healthcare industry advisors are here to assist you in navigating any Provider Relief Fund questions or concerns you have.
The HHS also announced a 60-day grace to help providers come into compliance with their PRF Reporting requirements if they fail to meet the deadline on September 30, 2021, for the first PRF Reporting Time Period. 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 noncompliant providers during this grace period.
Gather supporting documentation, such as most recent tax documents and financial statements for the second half of calendar year (CY) 2020 and the first quarter of CY 2021.
In addition to the new funding and grace period announcement released by HHS, HHS also provided some updates to the FAQ document dated August 30, 2021. The key items in this FAQ update include:
The PRF application and reporting process can be complex. It’s important to keep an accurate record of your financials for the specific reporting periods. Don’t hesitate to reach out for help applying for ARP and/or PRF or any reporting issues.