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On September 10, HHS announced that applications for the long-awaited Phase 4 general distribution funding will be accepted through a portal opening on September 29, 2021.
Phase 4 Funding Application
In the announcement, HHS confirmed that the funding will be based on coronavirus related expenses and lost revenues incurred between July 1, 2020 and March 31, 2021. Approximately $17 billion is available and 75% will be apportioned based on coronavirus related losses with smaller providers reimbursed at a higher rate than larger providers. The remaining 25% of the distribution will support bonus payments for providers with higher volumes of services to Medicare, Medicaid, and CHIP beneficiaries in order to support more vulnerable communities. The payer mix will be based on claims data and Medicaid claims will be priced at the higher Medicare rates in calculating the bonus payment. The exact methodology for each of these payments is unclear and HHS has stated that HRSA will, “determine the exact amount of the base payments and supplements after analyzing data from all the applications received to ensure we stay within our budget and funds are distributed equitably.” Providers will also need to report any merger or acquisition activity with greater scrutiny to ensure funds are used for patient care.
Additional Support for Rural Providers
Also announced was the distribution of $8.5 billion in funding appropriated in the American Rescue Plan for rural providers. Payments from this pool will be based on the volume and type of services provided to Medicare, Medicaid and CHIP patients in rural areas as defined by the Federal Office of Rural Health Policy. Medicaid services will be priced at the Medicare rates when determining the payment.
Phase 3 Calculation Methodology Posted
HHS also released the calculation methodology for the Phase 3 payments that went out between November 2020 and the present. The Phase 3 payments were calculated as the greater of 88% of losses for the first and second quarters of 2020 or 2% of net patient revenue from the provider’s application. HHS then applied several “risk mitigation/cost containment safeguards in order to ensure the adequate stewardship of funds appropriated.” These controls included flagging for large fluctuations between quarterly and annual revenues and expenses, reported totals that deviated considerably from similar provider types, and applications that required manual review or had incomplete information. HHS has announced that providers may request a reconsideration of the payment if they feel it was calculated incorrectly. In order to be notified of the forthcoming reconsideration process, please email PRFReconsiderations@hrsa.gov.
Reporting Period 1 Grace Period
The deadline to complete the reporting portal for the first reporting period is September 30, 2021. Providers who received more than $10,000 between March 10,2020 and June 30, 2020 will need to complete the portal. However, given the challenges posed by the Delta variant, HHS has instituted a 60-day grace period. Although the deadline has not technically changed, HHS will not pursue any collection activities or other similar enforcement for non-compliant providers during the grace period.
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The information and advice we are providing for this matter relates to COVID-19 legislative relief measures. Because legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that could modify some of the advice and information provided to you, after the conclusion of our engagement. We therefore make no warranties, expressed or implied, on the services provided hereunder.