Second round of emergency medical provider funds delayed

HHS secretary tells House Appropriations panel the distributions could take another week and a half to calculate

Health and Human Services Secretary Alex Azar testifies before the House Energy and Commerce Health Subcommittee on Feb. 26, 2020. (Caroline Brehman/CQ Roll Call file photo)
Health and Human Services Secretary Alex Azar testifies before the House Energy and Commerce Health Subcommittee on Feb. 26, 2020. (Caroline Brehman/CQ Roll Call file photo)
Posted April 16, 2020 at 7:59pm

A second wave of emergency funds that Congress directed to medical providers appears to be delayed, after Health and Human Services Secretary Alex Azar told the House Appropriations Committee the distributions could take another week and a half to calculate.

Azar’s projection follows Centers for Medicare and Medicaid Services Administrator Seema Verma’s remarks to reporters Wednesday that the second batch would be distributed this week. Verma declined to share specifics on what formula the department is using to divvy up the funds.

House Labor-HHS-Education Appropriations Chairwoman Rosa DeLauro, D-Conn., revealed the delay in a letter to Azar Thursday after a phone call the secretary held with committee members. HHS Deputy Secretary Eric Hargan previously told DeLauro and Senate Health, Education, Labor and Pensions Committee ranking member Patty Murray, D-Wash., on April 6 that the department was aiming to calculate the second round of funds within seven to 10 days.

A CMS spokesperson declined to comment. HHS did not return a request for comment.

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The money is part of a $100 billion emergency fund appropriated for medical providers in the $1.8 trillion economic aid package enacted last month. CMS sent an initial wave of $30 billion to providers based on their Medicare fee-for-service revenue last week, prompting urging from lawmakers and hospital groups for more money to struggling hospitals that rely on Medicaid or have high rates of uncompensated care. The formula also excluded revenue from Medicare Advantage private plans, which cover roughly one-third of Medicare enrollees.

“This is unacceptable and unfair to the hot spots, like my home state of Connecticut, that were disproportionately harmed by the first tranche formula, given the state has substantial enrollment in Medicare Advantage,” DeLauro wrote.

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In this round of funding, CMS plans to focus on areas with high numbers of coronavirus cases first, before turning to providers that were shortchanged in the first $30 billion distribution. The American Hospital Association on Thursday asked the administration to prioritize hospitals over other medical providers in subsequent funds, saying hospitals are shouldering the brunt of the pandemic.

‘Time is of the essence’

“Hospitals continue to be in a crisis situation and time is of the essence,” AHA President and CEO Rick Pollack wrote to Azar. “Simply put, hospitals should be at the front of the line when it comes to receiving assistance since they are the frontline in fighting this battle to combat COVID-19.”

AHA said HHS could identify priority areas by analyzing COVID-19 patient admissions, then base funding on metrics like a facility’s bed count or admission rate. Advocates emphasize that the need is dire.

“With no cushion left to absorb the heavy financial pressure COVID-19 creates, essential hospitals disadvantaged by today’s allocation need more help now,” America’s Essential Hospitals President and CEO Bruce Siegel said last week. “Time is not on our side.”

Congress has cleared three laws since the pandemic began, releasing billions more beyond the emergency fund to medical providers struggling to build capacity amid a decline in revenue from routine procedures. But the priority on speed over specificity means struggling hospitals are also missing out on some of that money. 

Requests for Congress to act

Pressure is building for additional changes. Democrats are pushing for another $100 billion for hospitals and community health centers in an upcoming stopgap bill meant to replenish funds for small business loans in the Paycheck Protection Program, but Republicans say larger aid talks should happen later. Smaller provisions, however, have bipartisan support and could expand safety-net hospitals’ access to cash.

Concerns have coalesced around two issues. The first stems from the apparent exclusion of publicly owned hospitals from qualifying for small business loans through the Paycheck Protection Program. Public hospitals make up around a third of rural facilities.

Bipartisan groups of lawmakers urged the Small Business Administration not to exclude medical providers even if they’re owned by local governments. Public hospitals see a large share of underserved populations with fewer resources, said Rep. Danny K. Davis, D-Ill., whose district includes Chicago’s Cook County Health. 

“They're already low-income, they already have multiple health problems and health issues and need special attention,” he told CQ Roll Call.

The second issue is a 10.25 percent interest rate for Medicare’s accelerated payment loan program, which advances payments to providers based on their past Medicare revenue. The most recent aid package expanded eligibility for the loans, but the interest rate renders the program useless to hospitals that were financially underwater even before the pandemic struck.

“Struggling rural hospitals who are already operating at a financial loss will never be able to repay these loans because they are already so far in debt,” said Maggie Elehwany, vice president of government affairs and policy for the National Rural Health Association.

CMS said in a statement that it was aware of the concerns and would continue to analyze the situation. Lawmakers have homed in on the issue, urging CMS to waive or reduce the rate, while other advocates have called for forgiving some portion of the loans.

“Our frontline health care providers and medical professionals across this country need financial support to continue their vital work in responding to COVID-19 and dealing with the economic consequences of this pandemic,” a bipartisan group of senators wrote last week. “Given the unprecedented nature of this crisis, more flexibility on interest rates and repayment of accelerated and advance payments will be very important.”