Changing landscape of pandemic relief for health care providers

The Real Economy

Changing landscape of pandemic relief for health care providers

Dec 07, 2020

In March, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act, which included $100 billion to help health care providers make it through a significant downturn. So acute was the downturn for hospitals that Congress later approved an additional $75 billion to the segment of the CARES Act earmarked for health care providers, known as the Provider Relief Fund. 

The purpose of the fund seemed straightforward, with the CARES Act stating that the money was intended for “eligible health care providers or health care-related expenses or lost revenue that are attributable to coronavirus.” In April, the administrator of the Centers for Medicare and Medicaid Services, Seema Verma, went so far as to say that there were “no strings attached” to gaining reimbursement. But the reality has turned out to be much different, health care providers say.

The Department of Health and Human Services, which is responsible for administering the fund, has offered guidance on how hospitals can get reimbursed. Some of that guidance is favorable to providers, and some of it is not. One of the more unfavorable updates came on Sept. 19, when HHS defined lost revenue as “a negative change in year-over-year net patient care operating income.” This was an abrupt and unexpected change, prompting the American Hospital Association to ask the HHS to revert to the definition of lost revenue used in the FAQs dated June 19, which define lost revenue as “any revenue that… a health care provider lost due to coronavirus.” After some lawmakers expressed similar concerns, the HHS on Oct. 22 revised the definition of lost revenue to be “actual patient care revenue.”

But the agency did not fully revert to previous guidance. In fact, on Oct. 28, the HHS issued updated FAQs stating that budgeted 2020 revenue cannot be used as compared to actual 2020 results, an unfavorable decision to many providers that have experienced any type of growth of revenue from 2019.  The AHA has continued to write letters to HHS asking for adjustments to the lost revenue calculation.  Several other pieces of guidance have continued to cause health care providers concern, including information on how to report incremental expenses, which is no small issue to providers.

What can health care providers do now?

  • Continue to monitor updates to HHS guidance.
  • Consider adding temporary incremental resources to assist with data collection and analysis of determining incremental expenses.
  • Advocate for change with trade associations as well as their congressional delegation.

The takeaway

The importance of the CARES Act Public Health and Social Services Emergency Fund and the ability to keep it are critical to health care providers whose margins have been helped enormously by the aid. If health care providers are not able to support the receipt of these funds, there will be significant questions about their sustainability.

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This article was written by RSM US LLP and originally appeared on 2020-12-06.
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