On Oct. 1, 2020, the U.S. Department of Health and Human Services (HHS) announced the next tranche of CARES Act provider relief fund payments. As we have addressed in previous law bulletins, HHS has $175 billion in funds for distribution from the authorizing CARES Act and Health Care Enhancements Act legislation enacted in Spring 2020. HHS said on Oct. 1 that it has issued over $100 billion of these funds to date.

HHS will make payments totaling $20 billion in this third general distribution. This phase is for providers that have already received Provider Relief Fund payments, and also for previously ineligible providers, including new providers that opened health care facilities in the first quarter of 2020. Behavioral health care providers are also eligible recipients in this phase.

Specifically, eligible providers for the Phase 3 General Distribution include:

  • Providers who previously received, rejected, or accepted a General Distribution Provider Relief Fund payment.
  • Providers that have already received payments of approximately 2% of annual revenue from patient care, who may submit more information to become eligible for an additional payment.
  • Behavioral Health providers, including those that previously received funding and new providers.
  • Healthcare providers that began practicing Jan. 1, 2020, through March 31, 2020. This includes Medicare, Medicaid, CHIP, dentists, assisted living facilities, and behavioral health providers.

For eligible providers, the new Phase 3 General Distribution is designed to balance an equitable payment of 2% of annual revenue from patient care for all applicants plus an add-on payment to account for revenue losses and expenses attributable to COVID-19.

Eligible providers will be considered for payment against the following criteria:

  • A minimum Provider Relief Fund payment equal to approximately 2% of patient care revenue from prior general distributions. Applicants that have not yet received Relief Fund payments of 2% of patient revenue will receive a payment that, when combined with prior payments (if any), equals 2% of patient care revenue.
  • With the remaining balance of the $20 billion budget, HHS will then calculate an equitable add-on payment that considers the following:
    • A provider's change in operating revenues from patient care.
    • A provider's change in operating expenses from patient care, including expenses incurred related to the coronavirus.
    • Payments already received from prior Provider Relief Fund distributions.

Providers can begin applying for funds on Monday, Oct. 5, 2020, through the HHS provider relief fund portal accessible through the HHS site. HHS is urging all eligible providers to apply early to expedite HHS's review process and payment calculations, and accelerate the distribution of all payments.

All payment recipients will be required to attest to receiving the Phase 3 General Distribution payment and accept the associated terms and conditions. There are also reporting requirements for most recipients, which we previously summarized here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.