- The Trump administration gave healthcare providers a direct deposit of $30 billion starting on April 10 to help keep them afloat during the coronavirus pandemic.
- The money comes from the coronavirus stimulus package that President Donald Trump signed into law in March. The Trump administration still has another $70 billion to give out.
- To get the funding, healthcare providers had to be getting reimbursement from Medicare, the US insurance program for the elderly and some disabled people. That means the earliest relief went out to providers who aren’t necessarily at the front lines of fighting the coronavirus pandemic.
- Hospitals that serve a large number of patients who are uninsured or have Medicaid said the formula used to calculate the payments puts them at a big disadvantage.
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Healthcare providers who aren’t at the front lines of fighting the coronavirus pandemic were among the first to receive funding from the $2 trillion government relief package.
On Friday, the Trump administration, with help from health insurance giant UnitedHealth Group, started directly depositing $30 billion to healthcare providers. The money came from a $100 billion pool Congress allocated through the CARES Act that President Donald Trump signed last month.
At the time, lawmakers lauded the funding as a lifeline for hospitals struggling against the pandemic. But the formula the Trump administration set up to funnel money to providers means any doctor, medical practice, or hospital who billed Medicare in the last year gets an automatic deposit, even if they’re not one of the most affected.
The formula is based on the amount of money that the provider got from Medicare, the government program that covers seniors and some people with disabilities. While most doctors accept payments from Medicare, some get higher shares of their revenue from the program than others, depending on which patients they treat. The money will not necessarily go to hospitals, even though it has been billed that way by both parties, with Trump announcing Monday that the payments would be “in direct support for our hospitals.”
A formula that ‘misses the mark’
Instead, the formula means even providers such as dermatologists, physical therapists, ophthalmologists, podiatrists, and others not treating people for symptoms caused by the coronavirus were among the first to get funding. And it puts hospitals and doctors that treat a large share of low-income people, who are uninsured or who get coverage via Medicaid, at a disadvantage.
“The allocation formula for this tranche will leave many essential hospitals behind just when they need aid the most,” Dr. Bruce Siegel, president and CEO of America’s Essential Hospitals, said in a statement. The group represents hospitals that treat a large swath of patients who are uninsured or have Medicaid.
Because of that, Siegel said, the distribution formula “misses the mark for many of our members and their patients.”
Dr. Robert Berenson, a fellow at the Urban Institute who specializes in healthcare policy, said the funding decision clashes with the text of the law. He pulled up the text of the CARES Act, which reads that “an eligible healthcare provider shall submit to the Secretary of Health and Human Services an application that includes a statement justifying the need.”
“It’s not supposed to be an automatic formula that goes to the wrong places,” he said.
More money is coming
When asked about the decision-making process, a spokesperson at the Department of Health and Human Services said the agency would “rapidly” distribute the other funding, particularly to have it go toward providers impacted by the coronavirus outbreak and those who didn’t receive as much during the first round. The spokesperson cited examples such as children’s hospitals, pediatricians, and Medicaid providers.
A website explaining the program said the remaining money would also go to “rural providers, providers of services with lower shares of Medicare reimbursement or who predominantly serve the Medicaid population, and providers requesting reimbursement for the treatment of uninsured Americans.”
Seema Verma, administrator at the Centers for Medicare and Medicaid Services, on Tuesday had acknowledged some providers might be left out, and said the administration prioritized getting the funds out quickly.
“This is going to be based on Medicare revenue,” she said in describing the first round of funding. “There are no strings attached. So the healthcare providers that are receiving these dollars can essentially spend that in any way that they see fit.”
The Trump administration’s decision highlights the complexities of the toll caused by the coronavirus pandemic. Hospitals in certain parts of the US are seeing a surge of patients with COVID-19, as the disease caused by the coronavirus is known, but others have been far less busy than usual.
Medical providers are struggling
Still, that means medical providers across the board have suffered massive hits to their bottom lines because surgeries and appointments are getting canceled. Some healthcare practices and hospitals have more reserves than others. Across the US, healthcare workers are being furloughed, laid off, and reassigned, both from hospitals and from individual medical practices.
When asked about the formula used to distribute CARES funding, the Federation of American Hospitals, which represents for-profit hospitals, stressed that hospitals had suffered not just health but financial turmoil.
“There is an urgency for hospitals to make sure the rest of the money gets out quickly as they fight extreme financial pressures because of the pandemic — not just because of caring for those with COVID-19, but also because of the lack of other services which have been suspended,” said Sean Brown, a spokesman for the organization.
In announcing the $30 billion in funding, the Department of Health and Human Services noted that the money was intended to offer relief to “hospitals and other healthcare providers on the front lines of the coronavirus response” as well as “healthcare-related expenses or lost revenue attributable to COVID-19.”
Democrats are pushing for more money for hospitals
Congress didn’t specify that the $100 billion in funding must go to hospitals or those directly involved in coronavirus relief efforts. An FAQ from Senate Democrats shows lawmakers intended a range of healthcare providers would qualify, but the announcement Friday is likely to amplify calls from hospitals that they should receive far more funding to emerge solvent from the pandemic.
Congressional Democrats already are pushing Republicans to include another $100 billion in an interim stimulus bill set for discussion next week.
Rick Pollack, president and CEO of the American Hospital Association, applauded the first round of funding but urged the Trump administration to deliver the rest quickly. He called for the future funding to target “hospitals in hot spots, children’s hospitals, rural hospitals, and hospitals with a high percentage of payments under Medicare Advantage.”
Medicare Advantage, paid for by the federal government but administered by private plans, wasn’t included as part of the funding formula the Trump administration put out Friday.
Are you a healthcare provider who received relief funding from the CARES Act? Share your story with senior healthcare reporter Kimberly Leonard at KLeonard@businessinsider.com.
