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Medical providers worry about potential loss of COVID-19 aid

Industry groups compete for priority as HHS considers next round of emergency pandemic funding

National Nurses United members demonstrate in Lafayette Park in Washington April 21 demanding that health care workers be provided with the best personal protective equipment.
National Nurses United members demonstrate in Lafayette Park in Washington April 21 demanding that health care workers be provided with the best personal protective equipment. (Tom Williams/CQ Roll Call)

Long-term care hospitals and other medical providers could be asked to return some payments from $175 billion in emergency funding that Congress provided as the Trump administration seeks to balance the allocations.

The twist in the allotments is the latest in an ongoing tussle over the emergency funding — a $100 billion program created under the third economic aid package due to the COVID-19 pandemic that cleared in March and infused with $75 billion more in a fourth law earlier this month. Industry groups representing an array of medical providers have jostled for priority as the Department of Health and Human Services races to determine how much different provider types will receive.

HHS has said it would dedicate a total of $50 billion in “general” payments. An initial $30 billion had already gone out to providers earlier this month based on Medicare fee-for-service revenue. But last week, HHS announced an additional $20 billion in general funds paid under a tweaked formula that includes revenue from other payers, which HHS said would “augment” total allocations.

The change in methodology follows criticism that HHS shortchanged safety net providers who serve more Medicaid or uninsured patients. Last week, the department also set up a portal for providers to submit claims for uncompensated care, although HHS has not said how much money it will dedicate to covering the uninsured. The department additionally allocated $10 billion each for rural hospitals and hospitals with high rates of COVID-19 patients.

But the Medicaid and CHIP Payment Access Commission expressed concerns that the new formula is still biased against safety net providers, and urged HHS to publish more details. “Making such information available would help assuage concerns of providers that help is on the way as well as assist states as they assess how best to meet the health care needs of their residents at this time of crisis,” the commission wrote.

And certain providers who benefited from the first round of payments could see their fortunes reversed as more money is calculated and distributed.

“It’s entirely possible that they will have a negative payment,” Mark Parkinson, CEO of the American Health Care Association and the National Center for Assisted Living, said on a call with reporters Wednesday.

An HHS spokeswoman did not say whether the department would immediately force providers to return any funding based on the new formula, but indicated HHS would conduct future audits.

“The Relief Fund requires that recipients be able to demonstrate that lost revenues and increased expenses attributable to COVID-19 do not exceed total payments from the Relief Fund, net of expenses and losses that have been reimbursed from other sources or that other sources are obligated to reimburse,” the spokeswoman said. “HHS reserves the right to audit Relief Fund recipients in the future to ensure that this requirement is met, and collect any Relief Fund amounts that exceed lost revenue or increased expenses due to COVID-19.”

Providers seek targeted funds

The possibility is one of several reasons the long-term care industry is calling for its own dedicated pot of money within the fund, similar to the two separate $10 billion allocations for hospitals in rural and hot spot areas.

“It’s now time to really turn our attention to long-term care facilities where this battle is really taking place every single day,” Parkinson said.

Nursing homes and long-term care hospitals have been hit especially hard by the COVID-19 pandemic, as the industry grapples with a severely at-risk population, a nationwide shortage of protective equipment and a history of spotty infection control.

Potential recoupments could also disproportionately affect dialysis, hospice and home health providers, according to an analysis by Spencer Perlman, director of health care research at investment analysis firm Veda Partners.

Rebalancing the payments is “essentially impossible” to do without forcing a clawback, Perlman said in a note to clients. He also cautioned that the possibility of a clawback was “conjecture” until HHS released more details on the department’s intentions, noting that it would be politically unpopular to recoup any money.

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