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HHS now accepting applications for $20 billion in Phase 3 relief funding

published in McAfee & Taft Healthcare Alert | October 6, 2020

The U.S. Department of Health and Human Services (HHS), through the Health Resources and Services Administration (HRSA), has announced the availability of $20 billion in additional funding for providers. The application period closes November 6, 2020, and eligible providers are encouraged to apply early.

Under this Phase 3 General Distribution allocation, providers that have already received Provider Relief Fund payments will be invited to apply for additional funding that considers financial losses and changes in operating expenses caused by COVID-19. Previously ineligible providers, such as those who began practicing in 2020, will also be invited to apply, and an expanded group of behavioral health providers confronting the emergence of increased mental health and substance use issues exacerbated by the pandemic will also be eligible for relief payments.

Although HHS has already issued more than $100 billion in relief funding to providers through prior distributions, HHS recognizes that many providers continue to struggle financially from COVID-19’s impact. For eligible providers, the new Phase 3 General Distribution is designed to balance an equitable payment of two percent 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.

Eligibility

All providers eligible for a previous Provider Relief Fund distribution, plus new 2020 providers and behavioral health providers, may apply. Providers may be eligible regardless of whether they were eligible for, applied for, received, accepted, or rejected payment from prior Provider Relief Fund distributions.

To be eligible to apply, the applicant must meet at least one of the following criteria:

  • Billed Medicaid/CHIP programs or Medicaid managed care plans for health-related services between January 1, 2018, and March 31, 2020; or
  • Billed a health insurance company for oral healthcare-related services as a dental service provider as of March 31, 2020; or
  • Be a licensed dental service provider as of March 31, 2020, who does not accept insurance and has billed patients for oral healthcare-related services; or
  • Billed Medicare fee-for-service during the period of January 1, 2019, and March 31, 2020; or
  • Be a Medicare Part A provider that experienced a CMS-approved change in ownership prior to August 10, 2020; or
  • Be a state-licensed/certified assisted living facility as of March 31, 2020; or
  • Be a behavioral health provider as of March 31, 2020, who has billed a health insurance company or who does not accept insurance and has billed patients for healthcare-related services as of March 31, 2020.

Additionally, to be eligible to apply, the applicant must meet all of the following requirements:

  • Filed a federal income tax return for fiscal years 2017, 2018, 2019 if in operation before January 1, 2020; or be exempt from filing a return; and
  • Provided patient care after January 31, 2020. (Note: patient care includes health care, services, and support, as provided in a medical setting, at home, or in the community); and
  • Did not permanently cease providing patient care directly or indirectly; and
  • For individuals providing care before January 1, 2020, have gross receipts or sales from patient care reported on Form 1040 (or other tax form).

Payment methodology

HHS has indicated that all eligible providers will be considered for payment using the following criteria:

  1. All provider submissions will be reviewed to confirm they have received a Provider Relief Fund payment equal to approximately two percent of patient care revenue from prior general distributions. Applicants that have not yet received Relief Fund payments of two percent of patient revenue will receive a payment that, when combined with prior payments (if any), equals two percent of patient care revenue.
  2. With the remaining balance of the $20 billion budget, HRSA 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 coronavirus
    • Payments already received through prior Provider Relief Fund distributions

Don’t wait to apply

HHS is urging all eligible providers to apply early and to not wait until the last day or week of the application period. Applying early will help to expedite HHS’s review process and payment calculations, and ultimately accelerate the distribution of all payments.

Providers will have until November 6, 2020, to apply for Phase 3 General Distribution funding. All applicants must submit their TIN and financial information to the Provider Relief Fund Application and Attestation Portal.

For assistance in navigating issues created by the COVID-19 pandemic, please contact your McAfee & Taft Healthcare attorney.

* HHS has indicated that “provider” means any provider of health care, services, and support in a medical setting, including acute care hospitals, ambulatory surgical centers, assisted living facilities, behavioral health providers (e.g., substance use disorder, counseling, psychiatric services), dental services, diagnostic services (e.g., independent imaging, radiology, labs), DME/suppliers, eye and vision services, home and community-based support (e.g., housing services, care navigators, case management), home health agencies, inpatient behavioral facilities (e.g., inpatient rehabilitation facilities, long-term acute care hospitals, other residential facilities), multi-specialty practices, nursing homes and skilled nursing facilities, other ancillary services (e.g., chiropractors, speech and language pathologists, physical therapy, occupational therapy), other inpatient facilities, other outpatient clinics (e.g., urgent care, dialysis center), other services (e.g., foster care, developmental disability services), other single-specialty practices, pediatrics practices, and primary care practices.

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