Federal government sending $64 billion this week to providers for coronavirus costs

• This week, hospitals and other providers should receive $30 billion, the first wave of $100 billion in federal coronavirus funding.
• Hospitals also should receive $34 billion in advance Medicare payments, which are loans.
• Subsequent waves of coronavirus funding will focus on providers that receive little or no Medicare payments.

The federal government this week is distributing $64 billion in grants and loans to hospitals and other providers, the head of Medicare said.

Seema Verma, administrator of the Centers for Medicare & Medicaid Services (CMS), said at an April 7 news conference that to financially assist providers in responding to the COVID-19 pandemic, the federal government is distributing:

• $30 billion in provider payments from the $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act
• $34 billion in advance Medicare payments that are functionally loans

Verma said that in the 10 preceding days CMS had about 25,000 requests for advance Medicare payments and processed about 70% of them.

The advance payments to providers are based on their historical Medicare revenues and function as six-month loans. If repayments are not received after a year, a 10.25% interest rate applies.

The $30 billion in CARES Act grants released this week likewise is based on providers’ Medicare revenues. 

“There are no strings attached,” Verma said. “So, the healthcare providers that are receiving these dollars can essentially spend that in any way that they see fit.”

Many providers will receive the CARES funding through direct deposits. Other providers are required to complete “some very simple registration” to get the funds, she said. CMS did not respond to a request to clarify details of the process for obtaining the CARES funding.

“The other thing to note is that this is not a first-come, first-serve basis because we’re basing this on their Medicare revenue,” Verma said. “They will get these dollars. So, even if it takes a few days, there shouldn’t be any panic in the system.”

Future funding waves

Verma acknowledged concerns from some providers, such as pediatricians, children’s hospitals, OB-GYNs and nursing homes, that they may not receive much of the initial CARES funding since most of their revenue comes from non-Medicare sources, such as Medicaid.

“And so, those organizations will be addressed in the second tranche of funding,” Verma said. “And we’ll have a priority for these organizations and these types of healthcare providers.”

Provider advocates urged CMS to expedite subsequent CARES Act funding waves, but CMS has not provided a timeline.

“We urge CMS to act quickly to ensure the essential hospitals leading our nation’s response to COVID-19 have the resources they need to withstand the dire public health threat and financial stress this epidemic creates,” Bruce Siegel, MD, MPH, president and CEO of America’s Essential Hospitals, said in a written statement.

Available funding

The $2.2 trillion CARES Act, which was signed into law March 27, had numerous hospital-focused components, including:

• $100 billion for hospital “COVID-19-related expenses and lost revenue”
• $275 million for rural hospitals, telehealth, poison control centers and HIV/AIDS programs
• $250 million for hospital capacity expansion and response
• $150 million for modifications of existing hospitals, nursing homes and “domiciliary facilities” in response to COVID-19

In response to hospitals’ concerns about the cost of COVID-19 care for uninsured patients, Trump administration officials said CARES funding will be used to pay hospitals for such care.