HHS Announced Phase 3 of General Distribution Funding

05 Oct 2020

As part of the ongoing efforts to assist healthcare providers, the Department of Health and Human Services (HHS) announced on October 1st, 2020 the “Phase 3” of the Provider Relief Fund. Phase 3 releases another $20 Billion of HHS Stimulus funding for providers to assist with the COVID-19 pandemic.

As of noon, on October 2nd, the HHS website has not yet been updated to provide specifics and clarity on this program. As of right now, all we do know is based off of the HHS press release announcing the program. As more details become available, we will provide updates.

Right now, Phase 3 of the program is slated to include the following:

Increased Eligibility

HHS claims that there will be a “large number” of providers eligible for Phase 3, including:

1. Providers who may have previously rejected, received or accepted a General Distribution (in Phase 1 or Phase 2) Provider Relief Fund Payment – these payments should be up to 2% of patient care revenue. HHS has indicated there will be an “additional payment” for that providers that have already received the prior payments.

2. Behavioral Health providers.

3. Providers that began practice between January 1, 2020 – March 31, 2020.

HHS has yet to define who precisely behavioral health providers are, but reference “addition counseling centers, mental health counselors and psychiatrists.”

Any provider that applies will first be reviewed to see if any prior payments have been received from prior distributions and then that total payments equaled 2% of patient care revenue. This allows providers that missed prior deadlines or otherwise made errors a second bite at the apple.

Equitable Add-On Payment

Beyond interest to providers otherwise previously ineligible, the HHS release also references an equitable add-on payment for providers. The precise calculation and terms of this payment are not yet known, but HHS says it will consider the following

1. A providers change in operating revenues from patient care.

2. A providers change in operating expenses from patient care.

3. Payments already received.

A lot of uncertainty still exists but this additional payment could be very helpful for struggling practices. Unfortunately, little is known on the scope and scale of this payment. Based on the release and title a safe guess would be that this payment pool will be determined first based off of any remaining funds in Phase 3 after newly eligible and other providers get their 2% of revenue and then from that pool HHS will allocate to practices that show a decline in revenue or increase in expense. Its possible that they will first determine an eligibility threshold and then split the allocation in that threshold to providers based on their share of revenue or expense, similar to how the first payment was determined based on share of 2019 Medicare charges. However, this is complete conjecture at this point.

Providers will not be able to apply until October 5th 2020 and have a window of October 5th, 2020 to November 6th 2020 to apply. HHS is encouraging any eligible providers to apply early to help expedite the payment calculations and distribution process. However, until more specific terms and conditions are disseminated we will not 100% know who are eligible providers and what they may need to claim this funding.


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