The U.S. Department of Health and Human Services (HHS), through the Health Resources and Services Administration (HRSA), announced the distribution of approximately $9 billion in Provider Relief Fund (PRF) Phase 4 payments to health care providers who have experienced revenue losses and expenses related to the COVID-19 pandemic. The average payment being announced for small providers is $58,000, for medium providers is $289,000, and for large providers is $1.7 million. More than 69,000 providers in all 50 states, Washington, D.C., and eight territories will receive Phase 4 payments.
The PRF Phase 4 payments, in addition to the $8.5 billion in American Rescue Plan (ARP) rural payments to providers and suppliers who serve rural Medicaid, Children's Health Insurance Program (CHIP), and Medicare beneficiaries, are part of the $25.5 billion the Biden-Harris Administration is releasing to health care providers to recruit and retain staff, purchase masks and other supplies, modernize facilities, or other activities needed to respond to COVID-19.
HRSA publicly released the Phase 4 payment methodology in September, making it available to providers during the application period. Approximately 75% of Phase 4 funding is being distributed based on expenses and decreased revenues from July 1, 2020 to March 31, 20211. HRSA is reimbursing a higher percentage of losses and expenses for smaller providers - which generally entered into the COVID-19 pandemic on worse financial footing, have historically operated on slimmer financial margins, and typically care for vulnerable populations - as compared to larger providers.
HRSA is distributing 25% of Phase 4 funding as "bonus" payments based on the amount and type of services provided to Medicare, Medicaid, or CHIP patients. Similar to the American Rescue Plan (ARP) Rural payments, HRSA is using Medicare reimbursement rates in calculating these payments to mitigate disparities due to the varying Medicaid reimbursement rates.
Additionally, HHS has updated the Terms and Conditions for Phase 4 and aRP Rural payments to ensure relief funds are being used to address the financial impact of COVID-19. Recipients whose payment(s) exceed $10,000 are required to notify HHS of a merger with or acquisition of any other health care provider. Providers who report a merger or acquisition may be more likely to be audited to ensure compliant use of funds.
HRSA is currently reviewing the remaining Phase 4 applications and will make the remainder of Phase 4 payments in 2022.
