The Trump administration started sending out initial payments to hospitals and physicians Friday, marking the first tranche of $100 billion in relief funding for health systems and providers passed by Congress as part of the Coronavirus Aid, Relief and Economic Security act.
The money will help make up for lost revenue and increased costs health systems are facing due to the coronavirus response.
"Payments being delivered this morning account for $26 billion of the initial $30 billion, delivering funds to hospitals and providers just two weeks after the President signed the CARES Act," said Health and Human Service Secretary Alex Azar in a tweet.
The government has contracted with UnitedHealth Group to help expedite this initial tranche of payments. Normally, the Centers for Medicare and Medicaid contracts with several regional health insurers to pay the government's bills under the Medicare fee-for-service program. UnitedHealth Group said it will be donating all fees paid by the federal government for the administration of the relief fund program.
"We need the money fast," said Erin O'Malley, senior policy director for America's Essential Hospitals which represents non-profit health systems which cater to lower-income patients. "Several of our members just a few weeks ago had less than a few weeks of cash on hand and since March 27th we continue to hear that."
For the initial payments, hospitals and providers will be paid based on how much they were reimbursed under traditional Medicare Fee For service, or Medicare Part A and Part B contracts in 2019. That is a concern for hospitals which have a lower share of Medicare Part A patients.
"We're worried that by only looking at Medicare fee for service revenues, it could tilt the playing field against some of our members that have a disproportionate share of uninsured as well as Medicaid patients," said O'Malley.
It could similarly mean that health systems with a larger share of patients on private Medicare Advantage plans rather than traditional Medicare would also see lower funding.
"That means in areas of the country like southern Florida, like California and some others the providers in those areas will be disadvantaged, because their Medicare Advantage didn't count that towards their percentage of Medicare," said Chip Kahn, president and CEO of the Federation of American Hospitals, which represents for profit health systems.
In its announcement, HHS acknowledged that some hospitals may see lower funding from this initial payment, but assured that the administration is "working rapidly on additional targeted distributions" for rural providers, and those that predominantly serve patients under Medicaid.
The administration has also said that it will use part of the $100 billion to reimburse hospitals for patients who are uninsured. But some hospital groups have argued that they will need more money if some of the emergency will be used to pay for the uninsured.
In Washington, Democrats held up a vote to extend funding for small business loans this week, in a push for additional hospital funding beyond the $100 billion in the CARES Act in the next wave of relief legislation.
"As we have said, the CARES Act was an important first step," said Rick Pollack, president and CEO of the American Hospital Association, adding that he supports "additional efforts by the Congress to make sure providers on the front line — hospitals, physicians and nurses--remain prioritized for federal assistance."
Correction: An earlier version of the story said the UnitedHealth Group would donate its fees to the CARES Act Provider Relief Fund. The Company says that it has not yet specified where it will donate the fees.