Report: $10 Billion in Provider Relief Funds Diverted to Operation Warp Speed For Vaccine Development

King & Spalding

According to an exclusive report from STAT, sometime last year, federal officials decided to redirect billions in funds from the $175 billion CARES Act’s Provider Relief Fund to the “Operation Warp Speed” (OWS) vaccine initiative. Specifically, the report’s sources determined that the Office of General Counsel for HHS approved the administration’s decision to use $10 billion from the Provider Relief Fund to assist with OWS projects. According to the report, it is unclear how much remains in the Provider Relief Fund, and it is uncertain whether the Fund will be replenished to make up for the $10 billion in diverted funds, which Congress had made available to eligible healthcare providers to cover their pandemic-related expenses and lost revenues.

Under the terms of the CARES Act, the Provider Relief Fund is intended for healthcare providers and facilities affected by the COVID-19 pandemic, and specifically to reimburse providers for expenses or lost revenues attributable to COVID-19. As the healthcare industry enters year two of the pandemic, providers will continue to require support through mechanisms like the Provider Relief Fund, although it is unclear how much funding remains available. Agencies have provided unclear data, as STAT reports, with the Government Accountability Office noting at the end of 2020 that the Fund has $33.4 billion available and the Health Resources and Services Administration (HRSA) more recently reporting that remaining funds are closer to $24 billion.

Meanwhile, HHS’s tracking of Provider Relief Fund spending currently reports approximately $107 billion (of $175 billion) being “attested to” by providers around the country, although the funds may not yet have been received by those providers. According to data, approximately $117 billion has been awarded to “a single entity, located in Utah” that makes direct Provider Relief Fund payments to recipients around the country, but it is unclear how much of that award has actually been disbursed to recipients.

As STAT reports, former officials from the Trump administration have suggested that Provider Relief Funds can be used for OWS purposes, despite the fact that OWS was not established by Congress. The Biden administration has not yet provided its views on this subject.

The Trump administration established Operation Warp Speed as a public-private partnership between various federal agencies and private firms. The initiative was launched on May 15, 2020, to “accelerate the development, manufacturing, and distribution of COVID-19 vaccines, therapeutics, and diagnostics (medical countermeasures).” The project was intended to produce and distribute millions of doses of vaccines by January 2021. The Biden Administration retired the “Operation Warp Speed” program, at least in name, on January 15, 2021.

King & Spalding’s Healthcare team will continue to monitor and report on updates related to use of the Provider Relief Fund. The original report from STAT is available here. More information regarding Operation Warp Speed is available here.

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