Details on HHS’ Distribution of Emergency Funds

The Department of Health and Human Services (HHS) this week distributed $22 billion from the Public Health and Social Services Emergency Fund to hospitals with high numbers of COVID-19 admissions, as well as rural hospitals and clinics. Specifically, $12 billion was allocated to hospitals with at least 100 COVID-19 inpatient admissions through April 10, 2020. Another $10 billion went to all critical access hospitals (CAHs), in addition to general acute-care hospitals, rural health clinics (RHCs) and community health centers (CHCs) located in rural areas. HHS has announced new details on the distribution methodologies, which are described below. Also included in the Special Bulletin, is a Terms and Conditions comparison chart for the first three tranches of payments from the Coronavirus Aid, Relief, and Economic Security (CARES) Act Provider Relief Fund.

High-COVID-19 Admission Methodology

Last month, HHS requested that hospitals submit information on their number of COVID19 inpatient admissions through April 10. HHS used this information to identify those hospitals with at least 100 admissions, who accounted for over 70% of the total number of admissions reported. HHS distributed $10 billion to these facilities, in the form of $76,975 per admission. HHS noted that this payment is not intended to reimburse the specific cost of these admissions. Rather, the number of COVID-19 admissions was being used as a proxy for the extent to which each facility experienced lost revenue and increased expenses associated with directly treating a substantial number of COVID-19 inpatient admissions.

In addition, HHS distributed $2 billion in additional funding to the hospitals identified above in proportion to each facility's share of Medicare Disproportionate Share funding.

Rural Distribution Methodology

Definition of Rural

HHS utilizes the following definition of rural to identify general acute-care hospitals for these targeted funds:

• All non-metro counties;
• All census tracts within a metro county that have a Rural-Urban Commuting Area (RUCA) code of 4-10;
• 132 large area census tracts with RUCA codes 2 or 3. These tracts are at least 400 square miles in area with a population density of no more than 35 people per square mile.

All CAHs received funds from this distribution regardless of their geographic location. In addition, all independent RHCs are eligible per the authorizing statute criterion of being located outside of an Urbanized Area as defined by the U.S. Census Bureau.

Payments to CAHs and Rural Hospitals

The per-hospital allocation of the rural distribution is based on total operating expenses of the hospital, calculated by the formula below:

Graduated Base payment + 1.97%¹ of the hospital’s operating expenses

The base payment increases as operating expenses increase, with a maximum base payment of $3 million. The most recent, publicly available Medicare hospital cost reports were used to identify operating costs. Rural hospitals with no operating expense data receive a base payment of $1 million.

The calculated amount for each hospital was then multiplied by 1.03253231 to determine the actual payment in order to ensure the total rural distribution equaled $10 billion.

Payments to RHCs and CHCs in Rural Areas

• Provider-based RHCs: Payments for provider-based RHCs are part of the payment to the respective CAH or rural hospital – these provider-based RHCs do not receive separate payments. Operating expenses of these RHCs are considered as part of the total operating expenses of the hospital.
• Independent RHCs: Independent RHCs receive approximately $100,000 as a base payment for each site and an add-on that is approximately 3.6% of the RHC’s total operating expenses.
• CHCs: CHCs receive a flat payment rate, approximately $100,000. Only those CHC sites located in a rural area receive payment from this distribution.

Terms and Conditions Comparison Chart

Attached (see PDF below) is a chart comparing the Terms and Conditions for the first three tranches of payments from the CARES Provider Relief Fund – the $30 billion general distribution, the $20 billion general distribution and the $10 billion targeted distribution to rural providers. While most of the Terms and Conditions are consistent, there are a few key difference flagged in the attached chart.

Further Questions

If you have questions, please contact AHA at 800-424-4301.

1. Per the HHS website, the actual value used in the formula was 1.967728428%.