HHS Announces New Phase 4 Provider Relief Funding

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Healthcare providers and related advocacy groups have been working for months to secure Phase 4 Provider Relief Funding (“Funds”). On September 10, 2021, the Department of Health & Human Services announced that it would make an additional $17 billion available in new Funds, with an additional $8.5 billion in American Rescue Plan (“ARP”) resources (the latter for rural healthcare providers). The news comes as a relief to healthcare providers across the country as they continue to tackle the COVID-19 pandemic, particularly in light of the fast-spreading delta and other COVID-19 variants. Below are additional details on both the new Funds and ARP resources.

  • Phase 4 Funds: A total of $17 billion will be made available to a broad range of providers that can document lost revenues and expenses due to the pandemic. Funds received by providers will be based on lost revenues and expenses between July 1, 2020 and March 31, 2021. Additionally, smaller providers (a term which has not yet been defined) will receive a higher rate of reimbursement compared to larger providers, and bonus payments will also be made to providers who serve Medicaid, CHIP, and/or Medicare patients. The bonus payments will be priced at the generally higher Medicare rates. Providers may apply for Funds when the application portal opens on September 29, 2021. The Funds are expected to be disbursed beginning December 2021.
  • ARP Funds: A total of $8.5 billion will be made available in ARP resources. The Health Resources & Services Administration (“HRSA”) will make ARP rural payments to providers based on the amount of Medicaid, CHIP, and/or Medicare services they provide to patients who live in rural areas. These payments will also be based on Medicare reimbursement rates. The ARP funds are expected to be disbursed beginning November 2021.

In a statement by Acting HRSA Administrator Diana Espinosa, HRSA provided the following background on the need for additional funding: “We know that this funding is critical for healthcare providers across the country, especially as they confront new coronavirus-related challenges and respond to natural disasters . . . We are committed to distributing this funding as equitably and transparently as possible to help providers respond to and ultimately defeat this pandemic.”

Providers should also note that HRSA, in an effort to promote transparency, is also releasing more information regarding the methodology to calculate Phase 3 Funds, so that providers who believe their Funds were not calculated correctly can request a reconsideration. Finally, HRSA is also announcing a 60-day grace period to help providers come into compliance with Fund reporting requirements. Providers required to report in the first period were originally required to report by September 30, 2021; while that date has not moved, HRSA has stated that it will not initiate collection activities or similar enforcement actions for not meeting that date.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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