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Tough task ahead in doling out medical provider funds

Administration gives few details on its plans

Rep. Rosa DeLauro is keeping tabs on hospital relief funding.
Rep. Rosa DeLauro is keeping tabs on hospital relief funding. (Bill Clark/CQ Roll Call file photo)

The first $30 billion in the $100 billion emergency fund created by Congress for medical providers is on its way, but the second round could take more time. The Trump administration still must identify the quickest means of calculating and distributing money to frontline workers who need it most.

The most recent coronavirus response package authorized a $100 billion emergency fund to providers as they struggle to bolster supplies and bed space amid declining revenues. Details of who exactly qualifies for the funds are still unclear.

Doctors and hospitals, as well as other clinicians and facilities, are receiving $30 billion of the funds based on their 2019 Medicare fee-for-service revenues beginning this week through direct deposit. But figuring out how to distribute aid to other providers who serve more Medicaid and uninsured patients is more difficult to organize. 

“That is very tricky logistically,” said Andy Schneider, a research professor at the Georgetown University Center for Children and Families. “There is just not a direct pipeline in the same way there is in Medicare.”

Questions on distribution

The administration is aiming to develop a new plan within the next seven to 10 days, administration officials told lawmakers. Health and Human Services Deputy Secretary Eric Hargan on Monday spoke with Rep. Rosa DeLauro of Connecticut and Sen. Patty Murray of Washington, the top Democrats on the Appropriations Committees’ health panels. Vice President Mike Pence and Centers for Medicare and Medicaid Services Administrator Seema Verma were also among the officials that joined a conference call with House Democrats on Wednesday to discuss the funding.

But the administration offered few details on how they would distribute the next wave of money. While 10 days is an extremely short timeline for developing a new allocation system of this magnitude, it’s an eternity for hospitals already facing an overwhelming number of coronavirus patients each day. A number of areas are expected to see peak surges this week. 

DeLauro and Murray sent a follow-up letter to HHS Secretary Alex Azar requesting more details, including whether the department would impose any conditions along with the funding — such as employee retention requirements or restrictions on executive pay. Verma previously announced the first $30 billion as funding with “no strings attached.”

A congressional aide said the department plans to prioritize providers in geographic hotspots first, and then focus on providers more broadly that rely on Medicaid or that have high rates of uncompensated care. HHS is also aiming to keep the distribution policy flexible in order to shift the money as new needs are identified.

But how the department will achieve that is unclear. Officials could tap into Medicare’s pipeline again and allocate payments based on existing data on which providers have the lowest revenues. Another option is increasing the federal government’s match rate for state Medicaid costs, although states would then have to distribute the money themselves. States that partner with health insurance companies to manage their Medicaid programs might also have to retool contracts or establish a separate fund to distribute the cash. 

Political hurdles could also pose an obstacle as politicians attempt to protect their own hospital systems. Joe Antos, a health care scholar with the American Enterprise Institute, a conservative think tank, predicts that it will be difficult to oppose entrenched interests if HHS seeks to redirect funds. 

The money could also be delayed in getting to providers in hard-hit areas because the U.S. is doing a poor job of identifying them ahead of time.

“A lot of that really hinges on our failure so far to do massive testing for the virus,” he said. “If we really had good data on that then a lot of these issues would be resolved, because it would be far easier for epidemiologists to predict where pressure is going to rise on a geographic basis.”

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