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Modern Healthcare: HHS formula for $20 billion in CARES Act provider grants prompts questions

24 Apr 2020 7:47 AM | AIMHI Admin (Administrator)

Modern Healthcare Source Article | Comments Courtesy of Matt Zavadsky

Ambulance services generally do not file cost reports.  As such, it will be important for ambulance providers to assure they are accounting their 2018 ‘net revenue’ appropriately be prepared to submit this data to HHS next week.  Ambulance agencies should check with their national associations, many of whom have resources available to assist with this calculation.

Asbel Montes and Brian Choate from the Solutions Group provided an informative 10 minute video that provides insight into calculating net revenue here.

Since concern has been raised about the adequacy of the allocated funds, it will also be crucial to file this information as soon as the HRSA web link is opened on Monday.  Plan NOW!  If you outsource your billing, it is important to reach out to them TODAY to start getting this data ready for submission.  Note that the calculation of your net revenue will likely be impacted by the rates you charge.  Net revenue calculations, and therefore the amount of eligible relief funding, will be less for agencies that charge below market rates.

Also, this process will include relief funding for the cost of providing care to uninsured COVD-19 patients, actual or presumed.  This will include ambulance services.  It’s important that you begin accounting your costs and revenues for treating and transporting these patients.


HHS formula for $20 billion in CARES Act provider grants prompts questions


April 23, 2010



The formula HHS will use to distribute $20 billion in COVID-19 relief grants is unclear about how much money providers will get and if enough money will be left after the first direct deposits go out Friday.

HHS Secretary Alex Azar said Wednesday that the department will soon pay out an additional $20 billion from the Coronavirus Aid, Relief, and Economic Security Act's provider relief fund to top up providers that were disadvantaged in the department's first $30 billion round of grant funds based on Medicare fee-for-service reimbursement. The department will now use 2018 net patient revenue to decide providers' total share of the total $50 billion, and send out the second round of grants accordingly.

But cost report data is incomplete, and Azar said some of the funds will be distributed on Friday before the department begins collecting data from providers who don't already have information on file. Some are worried that they could be left out, or that funds could be delayed.

The second round of funds should benefit some providers who were largely excluded from the earlier tranche, such as children's hospitals. The first round's formula emphasized Medicare revenue. According to Azar, one large children's hospital that got $233,000 from the first round of funds will get an additional $32 million on Friday.

But a Modern Healthcare analysis found that nearly a quarter of the 82 children's hospitals that filed full-year 2018 CMS cost reports failed to fill out the net patient revenue field that will be used to distribute the funds.

Children's Hospital Association chief operating officer Amy Knight said the new distribution formula is an improvement for children's hospitals, but a lack of centralized data will complicate the effort.

"That data is hard to come by, which is a challenge for children's hospitals," Knight said.

Independent physician groups are also worried about their share of the funds, as they don't file CMS cost reports. American Academy of Family Physicians Senior Vice President Shawn Martin said he was concerned that some physician practices have additional reporting and data analysis obstacles to obtaining the funds.

With data missing, McDermott+Consulting vice president Mara McDermott said it's difficult to tell what total proportion HHS is using to send out the first wave of direct deposit payments, and how much will be left over.

"It feels like a total black box to me. How do you rebalance the funds with less than you started with?" McDermott said.

With funds going to smooth uneven grants from the first round, some providers will likely get less than they would have if the $20 billion had just been determined proportionally on cost report data. Federation of American Hospitals President and CEO Chip Kahn said he is disappointed the formula isn't focused on COVID-19 related losses, and is unsure his member hospitals will get enough support in the second round.

"I can't say until we see all of the money, but I have my doubts and I sincerely hope they find other ways to give out what's left and the new $75 billion," Kahn said, referring to Congress' passage of a bill replenishing grant funds on Thursday.

While HHS chose to distribute funds to rural hospitals and Indian Health Service providers based on operating expenses, they are allocating general funds by net patient revenue.

Health policy experts including Guidehouse healthcare partner Dave Moseley said the net patient revenue metric favors providers with more commercially insured patients, which are largely better off anyway. But Moseley also noted HHS had to make hard choices to get the grants out fast.

"When there is an expediency requirement, equitability is not as high on the priority list," Moseley said.

Many variables such as different organizational structures, market pricing, and payer mix are difficult to account for using any one metric, Knight said.

"It's messy, and people are working hard to create some sense of relief. No number is perfect," Knight said.

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