About $7.1 billion of the Provider Relief Fund (PRF) — which has totaled $178 billion over the past 18 months — has not been allocated, an October analysis from Washington, D.C.–based think tank Urban Institute determined.
Skilled nursing facilities received $5 billion of allocated funds, the analysis found, and another $5 billion was devoted to nursing home infection control, quality and performance.
American Health Care Association (AHCA) president and CEO Mark Parkinson said earlier this month that future allocations will be a “short-term fix” for the industry, lasting nursing home operators on average three to six months.
The last PRF allocation was $19.7 billion as of the latest publicly available data published May 31, including $8 billion in returned grants — the report estimates $26.8 billion remains in the fund as of this month, with more on the way once providers return unspent grants.
The analysis states it’s “unclear” whether providers have returned more fund grants since February. It’s also unclear how Health and Human Services (HHS) will utilize returned funds distributions in future, authors of the report said.
“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?” the report notes.
The skilled nursing industry was one of the first to have funds allocated, with “high-impact” distribution in May 2020 to rural health systems and SNFs.
At least for hospitals, these “high-impact” allocations were limited to providers with at least 100 COVID-19 patients between Jan. 1 and April 10, considered a controversial requirement by Urban.
Smaller systems may have cared for their proportional share of COVID patients but did not meet the 100-patient mark within early allocation requirements, the analysis noted.
HHS sought to fix the issue by allocating funds based on COVID hotspots proportional to the number of beds available in June 2020.
“With provider applications accepted starting Sept. 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,” Urban said in its analysis.
About 75% of Phase 4 funds will be distributed based on pandemic-related lost revenues and high expenditures between July 1, 2020 and March 31.
“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,” the analysis explained.
In an effort to address another contentious distribution loophole, PRF recipients are required to notify HHS of any merger or acquisition of another health care provider while using PRF payments.
Previous funds spent were sometimes used to help finance mergers rather than care for patients during the pandemic, a concern for Congressional lawmakers, the analysis said. Those that used the funds toward M&A may be subject to an audit.
Still, dealmakers don’t expect the HHS requirement to have a “chilling effect” on SNF transactions.
“I think that the parties are well versed at this point in the pandemic in dealing with provider relief funds and will be able to appropriately apportion and account for the funds that they apply for and receive. Folks in our industry are very accustomed to audits,” said Hedy Rubinger, partner at Atlanta-based Arnall Golden Gregory LLP previously told Skilled Nursing News.
The report indicates more PRF controversies will likely arise as the pandemic and the health care industry’s response continue to evolve, while acknowledging the fund’s critical importance across the care continuum.
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