US HEALTH REFORM—MONITORING AND IMPACT Support for this research was provided by the Robert Wood Johnson Foundation. The views expressed here do not necessarily reflect the views of the Foundation. More Than a Year and a Half after Congress Approved Funding to Help Health Care Providers Weather the Pandemic, Billions of the $178 Billion Allocated Remain Unspent Remain Teresa Unspent A. Coughlin, Christal Ramos, and Haley Samuel-Jakubos October 2021 Since March 2020, Congress has allocated $178 billion to the COVID-19 Provider Relief Fund. Established under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the fund was meant to help providers “prevent, prepare for, and respond to coronavirus” and to “reimburse…eligible health care providers for health care related expenses or lost revenues that are attributable to coronavirus.”1 Passed in March 2020, the CARES Act allocated $100 billion for the fund. This was followed by $75 billion in the Paycheck Protection Program and Health Care Enhancement Act,2 passed a month after the CARES Act, and an additional $3 billion from the Consolidated Appropriations Act, 2021.3 Unlike some other pandemic health care relief efforts,4 provider relief funds are grants and do not have to be repaid so long as providers meet the fund’s terms and conditions.5 From the outset, the fund has faced sharp criticism. Early on, stakeholders were concerned that the fund’s eligibility criteria systematically disadvantaged providers who were already underresourced, especially safety net hospitals on the front line of the pandemic response. 6 More recently, congressional lawmakers have raised concerns that some hospitals and health systems have used fund grants to help finance mergers, rather than using the money to care for patients.7 About US Health Reform—Monitoring and Impact With support from the Robert Wood Johnson Foundation, the Urban Institute is undertaking a comprehensive monitoring and tracking project to examine the implementation and effects of health reform. Through the US Health Reform—Monitoring and Impact project, which began in May 2011, Urban researchers are using microsimulation modeling to project the cost and coverage implications of proposed health reforms, documenting the implementation of national and state health reforms, and providing technical assistance to states. More information and publications can be found at www.rwjf.org and www.urban.org. In this brief, we use the most recent publicly available information to update our earlier work and review how fund grants have been allocated into general and targeted distributions and paid to providers meeting the specified criteria. 8 We find that more than a year and a half after Congress first approved provider relief funding, billions of fund dollars have yet to be spent. Specifically, we estimate $7.1 billion remains unallocated as of October 2021 (figure 1). As of May 31, 2021 (the latest publicly available data), another $19.7 billion had been allocated to a particular distribution category but had yet to be disbursed to eligible providers, including $8 billion in grants that providers had returned (GAO 2021c).9 We estimate $26.8 billion remains in the fund as of October 2021. In addition, the fund balance will likely grow soon, because some providers will need to return unspent grants, as required under recent guidance issued by the US Department of Health and Human Services (HHS). 10 As of this writing, the US continues to face large numbers of COVID-19 cases. Given greater understanding of how providers have used (or returned) provider relief funds and improved knowledge about how to treat patients with COVID-19, policymakers have an opportunity to consider how best to target remaining relief funds to health care providers who were hardest hit by the pandemic and continue to have the greatest needs. 2 BILLIONS OF PROVIDER RELIEF FUND ING REMAIN UNSPENT FIGURE 1 Status of Provider Relief Fund, October 2021 Of $178 billion in total funding Unallocated $7.1B Returned Spent Remaining $8.0B $151.2B $26.8B $19.7 $19.7B Allocated and not spent $11.7B URBAN INSTITUTE Sources: US Government Accountability Office, COVID-19: Sustained Federal Action Is Crucial as Pandemic Enters Its Second Year (Washington, DC: US Government Accountability Office, 2021), which has been updated to reflect the September 2021 Phase 4 release of funds. See US Department of Health and Human Services, “HHS Announces the Availability of $25.5 Billion in COVID-19 Provider Funding,” news release, September 10, 2021, https://www.hhs.gov/about/news/2021/09/10/hhs- announces-the-availability-of-25-point-5-billion-in-covid-19-provider-funding.html. Note: B = billion. Following the Money As described in our previous work,11 how provider relief funding has been allocated stirred controversy from the outset. Moreover, publicly available data on the fund are limited and therefore difficult to fully analyze, an issue recently highlighted by the Congressional Research Service (CRS 2021). HHS, the agency charged with managing the fund, has allocated funds in general and targeted distributions (figures 2 and 3). Starting with the Phase 1 General Distribution on April 10, 2020, HHS released $30 billion based on a provider’s share of total Medicare fee-for-service reimbursements in 2019.12 Providers did not need to apply for this funding; rather, the money was transferred unsolicited to providers’ accounts. This simple formula enabled HHS to release the money quickly. However, disbursing funds based on Medicare reimbursements disadvantaged many providers, including Medicare Advantage providers, pediatricians, obstetricians, and safety net providers with high shares of Medicaid-covered and uninsured patients. More fundamentally, the allocation was largely divorced from providers’ needs caused by the pandemic,13 the intended purpose of the aid. The disbursement formula therefore prompted an outcry from various stakeholders.14 BILLIONS OF PROVIDER RELIEF FUNDING REMAIN UNSPENT 3 FIGURE 2 Allocation of Provider Relief Fund Grants, October 2021 Billions of dollars Unallocated funds 7.1 Phase 1 Phase 2 Phase 3 Phase 4 General distributions 46.0 6.0 24.5 17.0 93.5 High-impact hospitals 20.8 Safety net hospitals 13.1 Rural health care facilities 11.1 Treatment and testing for uninsured patients and vaccine 10.0 administration Vaccine and therapeutic development and procurement 10.0 activities Nursing home infection control, quality, and performance 5.0 Skilled nursing facilities 5.0 Children's hospitals, administration, and Indian Health Care Providers 2.6 URBAN INSTITUTE Sources: US Government Accountability Office, COVID-19: Sustained Federal Action Is Crucial as Pandemic Enters Its Second Year (Washington, DC: US Government Accountability Office, 2021), which has been updated to reflect the September 2021 Phase 4 release of funds. See US Department of Health and Human Services, “HHS Announces the Availability of $25.5 Billion in COVID-19 Provider Funding,” news release, September 10, 2021, https://www.hhs.gov/about/news/2021/09/10/hhs- announces-the-availability-of-25-point-5-billion-in-covid-19-provider-funding.html. Note: Provider Relief Fund grants total $178 billion. To address concerns, HHS quickly allocated another $16 billion, which, when combined with the first $30 billion of Phase 1 General Distribution grants overall, ensured funds were allocated in proportion to a provider’s share of net patient revenue in 2018 (or the provider’s most recent complete tax year), including revenue received from Medicare, private insurance, and Medicaid.15 Even under this revised allocation method, however, safety net providers remained disadvantaged, because the Medicaid program tends to pay providers at lower reimbursement levels than private insurance or Medicare and providers receive little to no reimbursement for treating uninsured patients. To help correct these and other problems, HHS started making targeted distributions to providers, including safety net hospitals, rural providers, and skilled nursing homes, in May 2020. In addition, it distributed high-impact grants totaling $22 billion, paid out in two waves, to hospitals in areas hardest 4 BILLIONS OF PROVIDER RELIEF FUND ING REMAIN UNSPENT hit by COVID-19 at the time. Targeted distributions continued throughout the summer of 2020, using a different eligibility formula each time. In contrast with the Phase I distribution, providers had to affirmatively apply for these targeted distribution grants. FIGURE 3 Timeline of Selected Provider Relief Fund Allocations Authorized under the CARES Act, October 2021 June 2020: August General 2020: Distribution Phase Nursing 2; safety net home April 2020: distribution round distribution; October 2020: General 1; distribution for distribution General Distribution tribal health to children's Distribution Phase 1 providers hospitals Phase 3 May 2020: July 2020: September 2020: September 2021: High-impact High-impact Distribution to General distribution distribution assisted living Distribution round 1; round 2; facilities Phase 4 rural safety net distribution; distribution skilled round 2 nursing facilities distribution URBAN INSTITUTE Sources: “CARES Act Provider Relief Fund: General Information,” US Department of Health and Human Services, accessed August 4, 2021, https://www.hhs.gov/coronavirus/cares-act-provider-relief-fund/general-information/index.html. For more about the September 2021 Phase 4 release of funds, see US Department of Health and Human Services, “HHS Announces the Availability of $25.5 Billion in COVID-19 Provider Funding,” news release, September 10, 2021, https://www.hhs.gov/about/news/2021/09/10/hhs-announces-the-availability-of-25-point-5-billion-in-covid-19-provider- funding.html. Notes: CARES = Coronavirus Aid, Relief, and Economic Security. In addition to these allocations, the US Department of Health and Human Services issued targeted distributions for nursing home incentive payments and for providers who administered COVID-19 vaccines to underinsured patients. These targeted distributions were also plagued with problems. For example, the formula for distributing high-impact grants was controversial. HHS first distributed $10 billion in high-impact funds to hospitals that had provided inpatient care to at least 100 COVID-19 patients between January 1 and April 10, 2020. Nationwide, 395 hospitals got these grants.16 Though these high-impact payments were generally found to correlate with COVID-19 prevalence rates,17 some hospitals and other stakeholders were concerned about the arbitrary April 10 cutoff and 100-patient caseload requirement.18 Smaller hospitals with fewer intensive care unit beds, for example, may have cared for their proportional share of COVID-19 patients in their area but not met the 100-patient admission mark because of their size. HHS sought to fix this problem and other concerns by allocating another $10 billion for hospitals in COVID-19 hotspots in June 2020, and payouts started the following month. BILLIONS OF PROVIDER RELIEF FUNDING REMAIN UNSPENT 5 As HHS distributed targeted allocations, it announced a Phase 2 General Distribution in June 2020. This distribution provided $18 billion to Medicaid and Children’s Health Insurance Program (CHIP) providers, dentists, assisted living facilities, and some other providers excluded from the Phase 1 General Distribution. Later, Phase 2 funding was reduced to about $6 billion because of the limited number of provider applications for these grants.19 HHS then announced a Phase 3 General Distribution, totaling $24.5 billion, in October 2020. Under Phase 3, HHS made grants available to providers eligible for other general distributions, behavioral health providers, and providers who began practicing in 2020. Most grants from Phase 3 account for the financial impact the pandemic has had on eligible providers, rather than on a provider’s revenue from an earlier period, as in the Phase 1 and Phase 2 General Distributions.20 After the Phase 3 General Distribution in October 2020, no further allocations were made for nearly a year, until September 2021. Between these distributions, tens of billions of dollars remained in the fund, as reported by the US Government Accountability Office (GAO 2021a, 2021c). Over that same period, 34.9 million new COVID-19 cases were reported nationally, accounting for about 83 percent of US COVID-19 cases reported since January 2020.21 Under considerable bipartisan pressure from congressional lawmakers and trade organizations representing the health care industry,22 HHS announced the $17 billion Phase 4 General Distribution in September 2021.23 This was the first fund distribution made under the Biden administration. With provider applications accepted starting September 29, HHS said Phase 4 grants will be “distributed with an eye towards equity, to ensure providers who serve our most vulnerable communities will receive the support they need,” presumably to try to address some of the concerns about previous distributions.24 Toward that end, 75 percent of Phase 4 funds will be distributed based on pandemic- related lost revenues and high expenditures that occurred between July 1, 2020, and March 31, 2021. However, smaller providers will be reimbursed at a higher level than their larger counterparts in recognition of their often “thin margins” and because they “often serve vulnerable or isolated communities,” as HHS put it.25 The remaining 25 percent of Phase 4 funds will be paid out as bonus payments to providers based on the amount of services they provide to Medicaid, CHIP, and Medicare patients. However, HHS will not determine the exact formula through which Phase 4 funds will be paid out until it receives all applications. Despite the many different distributions, concerns persist about how fund grants have been allocated. For example, a Medicaid and CHIP Payment and Access Commission analysis concluded that many Medicaid and CHIP providers—that is, those who have cared for the populations hardest hit by the pandemic and who do not participate in Medicare—have not received any grants from the fund (MACPAC 2021). Even with the recently announced Phase 4 distribution and its focus on equity, problems have been identified, including that large safety net hospitals and systems—one of the intended beneficiaries of the distribution—will be disadvantaged given the higher payments to small- and medium-sized providers. Similarly, treatment for uninsured COVID-19 patients is not expressly accounted for in the Phase 4 methodology, which also negatively affects safety net providers. More broadly, concerns have been raised that the Phase 4 funds cover lost revenues and added COVID-19- 6 BILLIONS OF PROVIDER RELIEF FUND ING REMAIN UNSPENT related expenses only through March 31, 2021, thereby neglecting expenses associated with the summer 2021 surge in COVID-19 cases; between March 31 and October 1, 14.6 million COVID-19 cases were reported.26 Indeed, the release of fund grants has not closely aligned with the number of COVID-19 cases (figure 4). FIGURE 4 Timing of Provider Relief Fund Allocations and Number of COVID-19 Cases, by Month, 2020–21 New cases $ allocated Millions of cases Billions allocated 7 50 45 6 40 5 35 30 4 25 3 20 2 15 10 1 5 0 0 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept 2020 2021 Sources: Allocated funds are from US Government Accountability Office, COVID-19: Sustained Federal Action Is Crucial as Pandemic Enters Its Second Year (Washington, DC: US Government Accountability Office, 2021), which has been updated to reflect the September 2021 Phase 4 release of funds; see US Department of Health and Human Services, “HHS Announces the Availability of $25.5 Billion in COVID-19 Provider Funding,” news release, September 10, 2021, https://www.hhs.gov/about/news/2021/09/10/hhs-announces-the-availability-of-25-point-5-billion-in-covid-19-provider- funding.html. New cases are from the Centers for Disease Control and Prevention’s “Trends in Number of COVID-19 Cases and Deaths in the US Reported to CDC, by State/Territory,” available at https://covid.cdc.gov/covid-data- tracker/#trends_dailycases_newhospitaladmissions. These data were generated Monday, October 4, 2021, at 00:02:08 GMT- 0400 (EDT). Moreover, lawmakers have raised concerns that wealthy hospitals have used provider relief funds to finance mergers and acquisitions, rather than to pay for patient care or maintain operations. A May 2021 letter from members of Congress to leaders of the Federal Trade Commission and HHS described how health care systems that received large payments from the fund continued with mergers and acquisitions during the pandemic at a similar pace as the previous year, despite claiming financial difficulties.27 The letter also highlighted how mergers and acquisitions by for-profit health systems increased during the pandemic (KaufmanHall 2021). The Congress members charge that fund payments have been used to further facilitate hospital consolidation, which was already accelerating before 2020. This has put further strains on smaller hospitals that cannot survive without being bought, thereby increasing health care prices and reducing competition.28 As part of the Phase 4 distribution, HHS sought to at least partly address this by requiring fund recipients to notify HHS of BILLIONS OF PROVIDER RELIEF FUNDING REMAIN UNSPENT 7 “any merger with, or acquisition of, another health care provider” while recipients are using fund payments.29 Providers who report such activity may be subject to audits to ensure funds were used for COVID-19 patient care. Some Providers Returned Grant Funds and Others Have Asked for More Time to Spend Funds As of February 2021, providers had returned $8 billion of the fund grants they received (figure 5; GAO 2021c). Nearly three-quarters of the returned grants were from the general distributions, particularly Phase 1, which accounts for more than half of returned funds. Given that Phase 1 has been the largest distribution from the fund, that providers did not have to apply for grants distributed under Phase 1, and that the allocation formula used was largely unrelated to providers’ experiences with COVID-19 or need, it follows that Phase 1 grants account for a sizable amount of returned funds. In addition to returning general distribution funding, providers have returned nearly $2 billion in high-impact grants and $1 billion in other targeted distributions. Several major nonprofit and for-profit health care systems that received funds reported they did not need the money because they had gained experience managing operations and expenses as the pandemic progressed, or they recovered sooner than expected.30 Indeed, some large health care systems reported banner surpluses in 2020. 31 Systems that have returned grants include the Mayo Clinic ($156 million returned), Kaiser Permanente ($500 million), and HCA Healthcare ($1.6 billion). 32 FIGURE 5 Returned Provider Relief Fund Grants, February 2021 Billions of dollars 5.9 1.2 0.9 General distributions High-impact funds Other targeted distributions URBAN INSTITUTE Source: US Government Accountability Office, COVID-19: Sustained Federal Action Is Crucial as Pandemic Enters Its Second Year (Washington, DC: US Government Accountability Office, 2021). 8 BILLIONS OF PROVIDER RELIEF FUND ING REMAIN UNSPENT Whether providers have returned more fund grants since February of this year is unclear.33 Public information on returned funds is incomplete, making it difficult to comprehensively track which providers have returned grants and their reasons for doing so. According to HHS, returned grants will be used in future fund distributions, but HHS has not clarified how.34 For example, will returned grants be put back in their original distribution category (e.g., high-impact hospitals, General Distribution Phase 1) to be redistributed using the same allocation formula? Or will HHS develop new allocation and distribution formulas? Though some providers have returned fund grants, others have asked for more time to spend theirs. Initially, HHS set a June 30, 2021, deadline by which providers had to use their grants, after which any unused funds were to be returned to HHS. However, lawmakers and some health care trade groups argued more time was needed to spend the money.35 The American Hospital Association, for example, said hospitals needed more time because facilities are still incurring expenses related to COVID-19 patients and want to apply the funding to future expenses.36 The association also maintained that HHS guidance on the use of fund grants changed over time and that, consequently, hospitals delayed using the money because they were uncertain of the criteria. Though providers asked that the spending deadline for all grants be extended until the public health emergency ends, HHS guidance issued in June 2021 gave providers up to a year to spend fund grants (table 1).37 Thus, any remaining money from grants issued before June 30, 2020, that a provider had not used by June 30, 2021, for example, would need to be returned to HHS. According to HHS, the updated reporting requirements seek to give providers “an equitable amount of time to use and report on their funds.”38 By May 31, 2020, about a third of Provider Relief Fund grants ($65 billion) had been released, and a significant share had been disbursed through General Distribution Phase 1 grants.39 Given the unfocused allocation formula used to distribute Phase 1 grants, more providers will likely have to return some of their early grant funding. More recently, in September 2021, HHS provided a 60-day grace period for reporting on funds received during period 1; between October 1 and November 30, HHS will not take recoupment or enforcement actions against providers not reporting on their funding by September 30. Importantly, this grace period did not change the deadline to use the funds or the reporting period. Meanwhile, the American Hospital Association continues pressing HHS to grant more flexibility in using the funding and to allow providers to retain the money they have already received through the end of the public health emergency. 40 BILLIONS OF PROVIDER RELIEF FUNDING REMAIN UNSPENT 9 TABLE 1 Reporting Timeline for Recipients of Provider Relief Funds, October 2021 Period when funds were received Deadline to use funds Reporting period Period 1: June 30, 2021 July 1–September 30, 2021a April 10–June 30, 2020 Period 2: December 31, 2021 January 1–March 31, 2022 July 1–December 31, 2020 Period 3: June 30, 2022 July 1–September 30, 2022 January 1–June 30, 2021 Period 4: December 31, 2022 January 1–March 31, 2023 July 1–December 31, 2021 Source: US Department of Health and Human Services, “HHS Issues Revised Notice of Reporting Requirements and Reporting Timeline for Recipients of Provider Relief Fund Payments,” news release, June 11, 2021, https://www.hhs.gov/about/news/2021/06/11/hhs-issues-revised-reporting-requirements-timeline-for-provider-relief-fund- recipients.html. Notes: a On September 10, 2021, the US Department of Health and Human Services granted a 60-day grace period allowing providers to report on Period 1 funding until November 30, 2021. See “Provider Relief Fund Reporting Requirements and Auditing,” Health Resources and Services Administration, accessed October 6, 2021, https://www.hrsa.gov/provider- relief/reporting-auditing. Going Forward More than 18 months have elapsed since Congress first appropriated significant funding to help health care providers weather the COVID-19 crisis. All told, Congress has appropriated $178 billion toward the effort. The money has undoubtedly been critical to shoring up the nation’s health care system during the pandemic. But, as discussed above, controversy has surrounded the Provider Relief Fund, and more issues will likely arise as the pandemic persists and the needs of both health care providers and patients evolve. As of October 2021, we estimate more than $25 billion remains in the fund. In June 2021, HHS issued guidance stipulating that providers spend their grants within a year, after which the money must be returned to the federal government. Thus, the fund balance will likely increase in the coming months, because some providers will need to return some of the grants they received. The pandemic is not over. Indeed, some have called COVID-19 the “forever virus,” 41 with many hospitals across the country still dealing with surging COVID-19 caseloads.42 Policymakers must accordingly consider how best to support providers and the health care system over the long term to mitigate current losses from the pandemic and prepare for the next phase of the pandemic with the sizable amount of remaining provider relief funding. More transparent public information and data and further research are also needed to better understand which providers are returning grants and which providers need resources to weather the pandemic. This is essential to effectively targeting the remaining funds. 10 BILLIONS OF PROVIDER RELIEF FUND ING REMAIN UNSPENT Notes 1 Coronavirus Aid, Relief, and Economic Security (CARES) Act, Pub. L. 116–136 (2020). 2 Paycheck Protection Program and Health Care Enhancement Act, Pub. L. 116-139 (2020). 3 Consolidated Appropriations Act, 2021, Pub. L. 116-260 (2021). 4 In addition to the Provider Relief Fund, providers and suppliers have received more than $100 billion through the Medicare Accelerated and Advance Payments Program. Unlike grants from the fund, money received through the accelerated payment program must be repaid. 5 To view the terms and conditions of the Provider Relief Fund, see “Acceptance of Terms and Conditions,” US Department of Health and Human Services, accessed August 3, 2021, https://www.hhs.gov/sites/default/files/terms-and-conditions-provider-relief-20-b.pdf. 6 Erica Werner, Shane Harris, and Amy Goldstein, “Hospital Relief Money Slow to Reach Places That Need It Most, Lawmakers and Industry Groups Say,” Washington Post, April 16, 2020, https://www.washingtonpost.com/us-policy/2020/04/16/bailout-money-hospitals-slow-get-out-missing- some-places-that-need-it-most-lawmakers-industry-groups-say/. 7 US Representatives Katie Porter and Rosa DeLauro, letter to Rebecca Slaughter (acting chairwoman, Federal Trade Commission) and Xavier Becerra (secretary, US Department of Health and Human Services), regarding the possibility of hospitals and health care systems using provider relief funds to finance mergers and acquisitions, May 21, 2021, https://porter.house.gov/uploadedfiles/ftc_letter_on_prf_and_hospital_ma.pdf. 8 Teresa A. Coughlin, Christal Ramos, Fredric Blavin, and Stephen Zuckerman, “Federal COVID-19 Provider Relief Funds: Following the Money,” Urban Wire (blog), Urban Institute, June 10, 2020, https://www.urban.org/urban-wire/federal-covid-19-provider-relief-funds-following-money; and Fredric Blavin, Teresa A. Coughlin, Christal Ramos, and Diane Arnos, “What Types of Hospitals and Areas Received the First Round of High-Impact COVID-19 Funding?,” Urban Wire (blog), Urban Institute, August 19, 2020. www.urban.org/urban-wire/what-types-hospitals-and-areas-received-first-round-high-impact-covid-19- funding. 9 The $19.7 billion estimate cited above differs from the $29.1 billion reported in GAO (2021c). However, the authors confirmed that $19.7 billion is the correct figure through personal communication with GAO on July 21, 2021. 10 US Department of Health and Human Services, “HHS Issues Revised Notice of Reporting Requirements and Reporting Timeline for Recipients of Provider Relief Fund Payments,” news release, June 11, 2021, https://www.hhs.gov/about/news/2021/06/11/hhs-issues-revised-reporting-requirements-timeline-for- provider-relief-fund-recipients.html. 11 Coughlin, Ramos, Blavin, and Zuckerman, “Federal COVID-19 Provider Relief Funds: Following the Money,” Urban Wire; and Blavin, Coughlin, Ramos, and Arnos, “What Types of Hospitals and Areas Received the First Round of High-Impact COVID-19 Funding?,” Urban Wire. 12 US Department of Health and Human Services, “HHS to Begin Immediate Delivery of Initial $30 Billion of CARES Act Provider Relief Funding,” news release, April 10, 2020, https://public3.pagefreezer.com/browse/HHS%20%E2%80%93%C2%A0About%20News/20-01- 2021T12:29/. 13 Warner, Harris, and Goldstein, “Hospital Relief Money Slow to Reach Places That Need It Most,” Washington Post. 14 Jesse Drucker, Jessica Silver-Greenberg, and Sarah Kliff, “Wealthiest Hospitals Got Billions in Bailout for Struggling Health Providers,” New York Times, May 25, 2020, https://www.nytimes.com/2020/05/25/business/coronavirus-hospitals-bailout.html. 15 Though the two waves of General Distribution Phase 1 allocated $50 billion total, the second-wave allocation was ultimately reduced to $16 billion. The final Phase 1 allocation totaled $46.02 billion. See “Past General BILLIONS OF PROVIDER RELIEF FUNDING REMAIN UNSPENT 11 Distributions,” Health Resources and Services Administration, accessed October 7, 2021, https://www.hrsa.gov/provider-relief/past-payments/general-distribution. 16 An additional $2 billion was allocated to a subset of these hospitals proportionate to the care facilities provided to patients with low incomes and uninsured patients. 17 Blavin, Coughlin, Ramos, and Arnos, “What Types of Hospitals and Areas Received the First Round of High- Impact COVID-19 Funding?” Urban Wire. 18 Stephanie Goldberg, “Why Some Smaller Hospitals Treating Lots of COVID Patients Aren't Getting ‘High- Impact' Federal Aid,” Modern Healthcare, June 1, 2020, https://www.modernhealthcare.com/finance/why- some-smaller-hospitals-treating-lots-covid-patients-arent-getting-high-impact-federal. 19 “CARES Act Provider Relief Fund Distribution Timeline,” US Department of Health and Human Services, last reviewed July 1, 2021, https://www.hhs.gov/coronavirus/cares-act-provider-relief-fund/general- information/index.html#timeline. 20 For providers who previously received provider relief funding and have sought payments from Phase 3, their earlier payments would be deducted from any payment under Phase 3 they may qualify for. See “Phase 3 General Distribution,” US Department of Health and Human Services, accessed August 3, 2021, https://www.hhs.gov/coronavirus/cares-act-provider-relief-fund/general-information/index.html#phase3. 21 “Daily Trends in Number of Cases and 7-Day Average of New Patients Admitted to Hospital with Confirmed COVID-19 in the United States Reported to CDC,” Centers for Disease Control and Prevention COVID Data Tracker, accessed October 6, 2021, https://covid.cdc.gov/covid-data- tracker/#trends_dailycases_newhospitaladmissions. 22 Senators Roy Blunt, Richard Burr, Mike Crapo, Mitch McConnell, and Richard Shelby, letter to Xavier Becerra (secretary, US Department of Health and Human Services), regarding the lack of strategy in targeting remaining provider relief funds, September 2, 2021, https://www.blunt.senate.gov/imo/media/doc/prf_letter_9-2- 21.pdf; Senators Susan M. Collins, Jeanne Shaheen, Kyrsten Sinema, Lisa Murkowski, Joe Manchin III, Roger Marshall, Thomas R. Craper, et al., letter to Xavier Becerra (secretary, HHS), regarding an immediate update to HHS’s plans for distributing unobligated provider relief funds, August 26, 2021, https://www.collins.senate.gov/sites/default/files/Collins-Shaheen%20PRF%20Letter%202021-08-26.pdf; Bruce Siegel (president and chief executive officer, America’s Essential Hospitals), letter to Xavier Becerra (secretary, HHS), regarding HHS’s allocation of remaining provider relief funds, August 24, 2021, https://essentialhospitals.org/wp-content/uploads/2021/08/FINAL-AEH-Letter-to-HHS-COVID-19-8-24- 21.pdf; and Richard J. Pollack (president and chief executive officer, American Hospital Association), letter to Xavier Becerra (secretary, HHS), regarding releasing COVID-19 relief funds to hospitals and health systems, August 17, 2021, https://www.aha.org/lettercomment/2021-08-17-aha-urges-hhs-release-covid-19-relief- funds-hospitals-health-systems. 23 In addition to the $17 billion allocated from the fund, another $8.5 billion in American Rescue Plan Act funds were released to providers who serve rural Medicaid, Children’s Health Insurance Program, and Medicare patients. We do not address these funds here. See US Department of Health and Human Services, “HHS Announces the Availability of $25.5 Billion in COVID-19 Provider Funding,” news release, September 10, 2021, https://www.hhs.gov/about/news/2021/09/10/hhs-announces-the-availability-of-25-point-5-billion-in-covid- 19-provider-funding.html. 24 HHS, “Availability of $25.5 Billion in COVID-19 Provider Funding,” news release. 25 HHS, “Availability of $25.5 Billion in COVID-19 Provider Funding,” news release. 26 “Trends in Number of COVID-19 Cases and Deaths in the US Reported to CDC, by State/Territory,” Centers for Disease Control and Prevention COVID Data Tracker, accessed October 6, 2021, https://covid.cdc.gov/covid-data-tracker/#trends_dailycases_newhospitaladmissions. 27 Porter and DeLauro, letter to Slaughter and Becerra, regarding the possibility of hospitals and health care systems using Provider Relief Fund dollars to finance mergers and acquisitions during the pandemic. 12 BILLIONS OF PROVIDER RELIEF FUND ING REMAIN UNSPENT 28 Drucker, Silver-Greenberg, and Kliff, “Wealthiest Hospitals Got Billions in Bailout for Struggling Health Providers,” New York Times. 29 HHS, “HHS Announces $25.5 Billion in COVID-19 Provider Funding,” news release. 30 HCA Healthcare, “HCA Healthcare Previews 2020 Third Quarter Results,” news release, October 8, 2020, https://investor.hcahealthcare.com/news/news-details/2020/HCA-Healthcare-Previews-2020-Third-Quarter- Results/default.aspx; Ayla Ellison, “Kaiser Returns $500M in CARES Act Payments,” Becker’s Hospital Review, June 30, 2020, https://www.beckershospitalreview.com/finance/kaiser-returns-500m-in-cares-act- payments.html; and Tara Bannow, “Mayo Returns Almost Half of Its COVID-19 Relief Grants,” Modern Healthcare, December 21, 2020, https://www.modernhealthcare.com/hospital-systems/mayo-returns-almost- half-its-covid-19-relief-grants. 31 Alexandra Ellerbeck, “The Health 202: Pandemic Relief Funds Boosted Surpluses for Some Large Hospitals,” Washington Post, June 21, 2021, https://www.washingtonpost.com/politics/2021/06/21/health-202- pandemic-relief-funds-boosted-surpluses-some-large-hospitals/. 32 Ellison, “Kaiser Returns $500M in CARES Act Payments,” Becker’s Hospital Review; Alia Paavola, “Mayo Clinic Returns Nearly Half Its Federal COVID-19 Aid,” Becker’s Hospital Review, December 22, 2020, https://www.beckershospitalreview.com/finance/mayo-clinic-returns-nearly-half-its-federal-covid-19- aid.html; Bruce Japsen, “Hospital Giant HCA to Return $6 Billion in CARES Act Money,” Forbes, October 8, 2020, https://www.forbes.com/sites/brucejapsen/2020/10/08/hospital-giant-hca-to-return-6-billion-in- cares-act-money/?sh=26c5533ce364; and Robert King, “Mayo Clinic's Revenue Slightly Increases in 2020 Despite Financial Hit from Pandemic,” Fierce Healthcare, March 1, 2021, https://www.fiercehealthcare.com/hospitals/mayo-clinic-s-revenue-slightly-increases-2020-despite-financial- hit-from-pandemic. 33 Since the fund was established, HHS has only made information about returned high-impact grants publicly available; it did so in August 2020. As of October 2021, HHS had not made available any information on returned grants from other distributions. In a March 2021 report (GAO 2021c), GAO reported that $8 billion in grants had been returned, which HHS verified. See also “Provider Relief Fund COVID-19 High-Impact Payments,” Centers for Disease Control and Prevention, accessed August 4, 2021, https://data.cdc.gov/Administrative/Provider-Relief-Fund-COVID-19-High-Impact-Payments/b58h-s9zx. 34 Rachel Cohr, “HHS Will Redistribute Provider Grant Funds Returned by Insurers,” Modern Healthcare, May 22, 2020, https://www.modernhealthcare.com/finance/hhs-will-redistribute-provider-grant-funds-returned- insurers. 35 Dorothy Mills-Gregg, “HHS Faces Growing Pressure from Congress, Providers on COVID-19 Relief,” Inside Health Policy, May 11, 2021, https://insidehealthpolicy.com/daily-news/hhs-faces-growing-pressure- congress-providers-covid-19-relief. 36 Richard J. Pollack (president and chief executive officer, American Hospital Association), letter to Xavier Becerra (secretary, US Department of Health and Human Services), regarding allowing providers to use relief funds until the COVID-19 emergency ends, May 5, 2021, https://www.aha.org/lettercomment/2021-05-06- aha-letter-hhs-allow-providers-use-relief-funds-until-covid-19-emergency. 37 US Department of Health and Human Services, “HHS Issues Revised Notice of Reporting Requirements and Reporting Timeline for Recipients of Provider Relief Fund Payments,” news release, June 11, 2021, https://www.hhs.gov/about/news/2021/06/11/hhs-issues-revised-reporting-requirements-timeline-for- provider-relief-fund-recipients.html. 38 HHS, “HHS Issues Revised Notice of Reporting Requirements and Reporting Timeline for Recipients of Provider Relief Fund Payments,” news release. 39 See appendix 4 in GAO (2021b). 40 Stacey Hughes (executive vice president, American Hospital Association), letter to Diana Espinosa (acting administrator, Health Resources and Services Administration), regarding HHS distributing provider relief funds quickly and increasing flexibility, September 24, 2021, https://www.aha.org/lettercomment/2021-09-24-aha- hhs-distribute-provider-relief-funds-quickly-and-increase-flexibility. BILLIONS OF PROVIDER RELIEF FUNDING REMAIN UNSPENT 13 41 Larry Brilliant, Lisa Danzig, Karen Oppenheimer, Agastya Mondal, Rick Bright, and W. Ian Lipkin, “A Forever Virus: A Strategy for the Long Fight against COVID-19,” Foreign Affairs, July/August 2021, https://www.foreignaffairs.com/articles/united-states/2021-06-08/coronavirus-strategy-forever-virus. 42 Christopher Rowland, “Hospitals in Less-Vaccinated Areas Are Struggling Financially as Infections Mount and Stimulus Runs Out,” Washington Post, October 5, 2021, https://www.washingtonpost.com/business/2021/10/05/hospitals-delta-variant-surge-budgets/. References CRS (Congressional Research Service). 2021. “The Provider Relief Fund: Frequently Asked Questions.” Washington, DC: Congressional Research Service. GAO (US Government Accountability Office). 2021a. COVID-19: Continued Attention Needed to Enhance Federal Preparedness, Response, Service Delivery and Program Integrity. Washington, DC: US Government Accountability Office. ———. 2021b. COVID-19: Opportunities to Improve Federal Response and Recovery Efforts. Washington, DC: US Government Accountability Office. ———. 2021c. COVID-19: Sustained Federal Action Is Crucial as Pandemic Enters Its Second Year. Washington, DC: US Government Accountability Office. Grogan, Colleen M., Yu-An Lin, and Michael K. Gusmano. 2021. “Health Equity and the Allocation of COVID-19 Provider Relief Funds.” American Journal of Public Health 111 (4): 628–31. https://doi.org/10.2105/AJPH.2020.306127. KaufmanHall. 2021. “2020 M&A in Review: COVID-19 as Catalyst for Transformation.” Chicago: KaufmanHall. MACPAC (Medicaid and CHIP Payment and Access Commission). 2021. “COVID Relief Funding for Medicaid Providers.” Washington, DC: Medicaid and CHIP Payment and Access Commission. 14 BILLIONS OF PROVIDER RELIEF FUND ING REMAIN UNSPENT About the Authors Teresa A. Coughlin is a senior fellow in the Health Policy Center at the Urban Institute and a recognized expert on the Medicaid program and the health care safety net. In her current work, Coughlin is examining the costs and sources of funding for uncompensated health care for the uninsured, studying the implementation and impact of the Affordable Care Act, and leading Urban’s team on the Centers for Medicare and Medicaid Services–sponsored national evaluation of the State Innovation Models Initiative. During her than 30-year career in health policy, Coughlin has published on a wide range of topics, including Medicaid, managed care, dual eligibles, state health policy, the health care safety net, Medicaid hospital finance arrangements, and geographic variation in Medicaid spending. Christal Ramos is a senior research associate in the Health Policy Center, where her work focuses on a range of topics, including payment and delivery system reforms, health information technology, and opioid use disorder and treatment, particularly in Medicaid. She has experience with both qualitative and quantitative research methods and has played a key role in a number of federal evaluation and technical assistance contracts. Before coming to the Urban Institute, Ramos was a senior research associate in the Health Policy Department at the George Washington University, where she studied health care quality and health disparities. She received her PhD in public policy and administration and MPH in health policy at the George Washington University. She has a BA in public health from the Johns Hopkins University. Haley Samuel-Jakubos is a former research analyst in the Health Policy Center. Her research focused on a range of topics, including health care payment and delivery system reform at the federal and state levels, health information technology, and access to care. Before joining Urban, Samuel-Jakubos interned with the Senate Committee on Health, Education, Labor, and Pensions where she assisted with tracking various health policy issues. She graduated with distinction from the University of North Carolina at Chapel Hill with a BSPH in health policy and management. BILLIONS OF PROVIDER RELIEF FUNDING REMAIN UNSPENT 15 Acknowledgments This brief was funded by the Robert Wood Johnson Foundation. The views expressed do not necessarily reflect the views of the Foundation. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders. Funders do not determine research findings or the insights and recommendations of Urban experts. Further information on the Urban Institute’s funding principles is available at urban.org/fundingprinciples. The authors thank John Holahan and Kathy Hempstead for their review of a draft of the brief and Rachel Kenney for her copyediting. In addition, the authors thank staff from US Government Accountability Office Health Care Team and Beth Feldpush of America’s Essential Hospitals. ABOUT THE URBAN INSTITUTE The nonprofit Urban Institute is a leading research organization dedicated to developing evidence-based insights that improve people’s lives and strengthen communities. For 50 years, Urban has been the trusted source for rigorous analysis of complex social and economic issues; strategic advice to policymakers, philanthropists, and practitioners; and new, promising ideas that expand opportunities for all. Our work inspires effective decisions that advance fairness 500 L’Enfant Plaza SW and enhance the well-being of people and places. Washington, DC 20024 Copyright © October 2021. Urban Institute. Permission is granted for reproduction www.urban.org of this file, with attribution to the Urban Institute. 16 BILLIONS OF PROVIDER RELIEF FUND ING REMAIN UNSPENT