Hospitals fear being shortchanged in coronavirus funding

The Trump administration has been moving quickly to distribute CARES Act funding to hospitals and doctors, but providers on the front lines of the coronavirus pandemic are worried they will be shortchanged.

Congress set aside $100 billion in the legislation to provide direct financial assistance to hospitals and other health care providers responding to the pandemic. 

The first $30 billion was deposited into hospital bank accounts last week, and the Department of Health and Human Services (HHS) has said the remaining $70 billion will be distributed as soon as this week.

But in the interest of speed, Congress included very few requirements as to how the money should be allocated, or how hospitals are allowed to use it. Instead, lawmakers gave broad authority to the HHS secretary to decide.

As a result, much of that first wave bypassed hospitals in states on the front lines of the areas hardest hit by the coronavirus. HHS gave out the money based on a past share of Medicare revenue, rather than any coronavirus-related financial impact. 

That decision has set off a furious lobbying effort from hospitals in hot spot states to make sure they don’t get overlooked again. 

The administration’s method of distributing funds “misses the mark for many of our members and their patients,” said Bruce Siegel, president and CEO of America’s Essential Hospitals.

“Our hospitals are struggling now to manage surging patient volume, staff and supply shortages, and other severe challenges as their limited cash reserves dwindle,” Siegel said, adding that “these hospitals care for large numbers of uninsured and Medicaid patients in communities where COVID-19 has exposed persistent disparities in health and health care.”

According to an analysis by the Kaiser Family Foundation, New York, which is the state hardest hit by the virus, received about $8,300 per coronavirus patient. New Jersey, which has the second-highest number of cases, received just over $12,000 per patient.

But Idaho, with just over 1,500 cases, received about $88,300 per patient, and North Dakota received about $230,000 per patient. The analysis was based on numbers provided to the House Ways and Means Committee by HHS and state-level data on coronavirus cases from The New York Times as of April 17. 

HHS has said the second wave will be more targeted to hot spots, and Centers for Medicare and Medicaid Services Administrator Seema Verma told reporters that details will be released by the end of this week.

During a call with reporters, Verma said basing the initial batch on Medicare revenue was the easiest way to get the money distributed quickly.

“Using Medicare reimbursement was the fastest way because we had that data,” Verma said.

She said the next round will also aim to help providers in financial distress after closing down services to protect public health.

“There are providers across the country that aren’t able to work,” Verma said.

Lawmakers have also been pressing the agency to get a guarantee that the rest of the funding will go to hospitals hit hardest by the pandemic.

In a letter to HHS Secretary Alex Azar on Thursday, Rep. Rosa DeLauro (D-Conn.) said she was told the agency will need at least a week, if not a week-and-a-half to finalize the formulas and timeline for distribution. 

“This is unacceptable and unfair to the hot spots, like my home state of Connecticut, that were disproportionately harmed by the first tranche formula,” DeLauro said. 

Last week, New Jersey Democratic Sens. Cory Booker and Bob Menendez led the state’s entire congressional delegation in asking the administration to better target COVID–19-heavy providers with new funding.

Complicating matters is the fact that President Trump and Azar have said they want to use part of that $100 billion to cover hospital costs for caring for uninsured coronavirus patients, rather than open an ObamaCare special enrollment period. The administration hasn’t said how much money they think will be needed.

In addition, using the money to cover the uninsured is likely to disproportionately benefit GOP-led states that have not expanded Medicaid. The hospitals in those states are not likely to see a large number of coronavirus patients. 

The language in the CARES Act also gives broad latitude for how hospitals use the funds.

At a White House briefing last week announcing the first batch of funding, Verma said the money was “no strings attached. So the health care providers that are receiving these dollars can essentially spend that in any way that they see fit.”

Gerard Anderson, a health economist at Johns Hopkins University, said even outside of the CARES Act, tracking hospital spending can’t be done in real time. 

He said some hospitals may have taken a hit due to higher expenses from pandemic preparations and lost revenue from fewer nonessential medical procedures.

But hospitals in areas that haven’t seen large numbers of cases could have continued making money on nonessential procedures, yet still received a large amount of the initial $30 billion, he said.

“There is no way to follow money that goes into a hospital, every single dollar is fungible,” Anderson said. “We just don’t know what specific costs they will incur. Hospitals do a lot of advocacy, and they may need the money or they may not. We don’t know.”

Meanwhile, hospital groups say more money is needed. The $100 billion in the CARES Act was a start, but not enough to fully address the breadth of the problem. 

The Federation of American Hospitals told Congress an additional $100 billion will be necessary to fund not just hospitals in hot spots, but rural hospitals, hospitals with a high percentage of payments under Medicare Advantage, and hospitals caring for large numbers of Medicaid patients.

“Absent swift federal intervention, many of these hospitals may never reopen and communities may lose access to vital services,” the Federation of American Hospitals wrote. “Congress must act quickly to protect hospitals before these dire warnings become a grim reality.”