New Provider Relief Fund Targeted Allocations

On June 9, 2020, the Department of Health and Human Services (“HHS”) announced that two additional targeted allocations from the Provider Relief Fund will be made to Medicaid and the Children’s Health Insurance Program (“CHIP”) providers and to safety net hospitals. The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was enacted as a response to the ongoing 2019 Novel Coronavirus worldwide pandemic. The CARES Act has already dispersed a general distribution, as well as various targeted allocations.

The general distribution initially provided payments to around 62% of Medicaid and CHIP providers, and this new targeted allocation will provide payments to the remaining 38%. Approximately $15 billion will be distributed those Medicaid and CHIP providers who have not already received a payment from the general allocation of the Provider Relief Fund.

An enhanced Provider Relief Fund payment portal is now accessible to Medicaid and CHIP providers, where they will report their annual patient revenue. Each provider will receive a payment of at least 2% of reported gross revenue from patient care, subject to increase or decrease according to the amount of Medicaid patients the providers serve. In order to be eligible, these Medicaid and CHIP providers:

• Must not have received payments from the $50 billion Provider Relief Fund general distribution;
• Must have either directly billed their state Medicaid or CHIP programs or Medicaid managed care plans for healthcare-related services between January 1, 2018 and May 31, 2020;
• Must have either filed a federal income tax return for fiscal years 2017, 2018, or 2019 or be an entity exempt from the requirement to file a federal income tax return;
• Must have provided patient care after January 31, 2020;
• Must not have permanently ceased providing patient care; and
• If the applicant is an individual, have gross receipts or sales from providing patient care.

Providers must submit their data by July 20, 2020, but first they are asked to read the “Medicaid Provider Distribution Instructions.” As part of the application, providers must agree to the terms and conditions for the targeted allocation.

In addition to the targeted allocation for Medicaid and CHIP providers, there will also be a targeted allocation of $10 billion to safety net hospitals. Safety net hospitals care for high-risk and vulnerable citizens, and the targeted allocation will specifically be going to safety net hospitals with either: (1) an extremely disproportionate number of Medicaid patients, or (2) historically provide large amounts of uncompensated care. Safety net hospitals will receive a minimum of $5 million and a maximum of $50 million. A safety net hospital must have the following to qualify:

• A Medicare Disproportionate Payment Percentage of 20.2% or more;
• Average uncompensated care per bed of $25,000 or more; and/or
• Profitability of 3% or less, as reported to CMS in its most recent filed cost report.

For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in understanding the general distributions and targeted allocations. Wachler & Associates will continue to stay up to date with the CARES Act, as well as other COVID-19-related news.  If you or your healthcare entity has any questions pertaining to healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com.