Reminder: Register here to participate in Toyon’s open CARES PRF webinar Wednesday 9/15 at 10 AM PDT
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New $25.5 billion in PRF
Re-Determination for PRF Phase 3 Eligibility
Grace Period through November 30 for PRF Period 1 Reporting
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1. New $25.5 billion in PRF
Last Friday, HHS announced $25.5 billion in PRF to eligible healthcare providers. The $25.5 billion is split between $17 billion in Phase 4 payments and $8.5 billion in payments to Rural Medicaid providers. The application portal will open on September 29, 2021. |
HHS established a
Future Payments Webpage with further information on the application and payment methodologies. Providers will apply for both Phase 4 and Rural payments in a single application. HHS recommends providers gather supporting documentation, such as most recent tax documents and financial statements for the second half of calendar year (CY) 2020 and the first quarter of CY 2021 in preparation to file the application for this funding.
Phase 4 $17 billion: Approximately $12.75 billion (75%) is based on revenue losses and COVID-related expenses. HHS will determine the exact amount after analyzing all applications. No provider will receive a Phase 4 payment that exceeds 100% of their losses and expenses. This funding will:
- Be based on lost revenues and expenditures between July 1, 2020, and March 31, 2021.
- Reimburse large providers a minimum payment based on a percentage of their lost revenues and COVID-related expenses.
- Fund medium and small providers with a base payment plus a supplement, with small providers receiving the highest supplement.
The remaining ~$4.25 billion (25%) will be allocated as bonus payments based on the amount and type of services provided to Medicaid, CHIP, and Medicare patients. Providers who meet the eligibility (application) criteria will be reimbursed:
- Based on an HHS calculation pricing Medicaid and CHIP claims data at Medicare rates [1].
- A minimum payment for providers serving any patients living in Federal Office of Rural Health Policy-defined rural areas with Medicaid, CHIP, or Medicare coverage. HRSA’s tool at Rural Health Grants Eligibility Analyzer provides insight into qualifying rural areas.
Rural PRF $8.5 billion: HHS is also preparing to disperse $8.5 billion in payments to rural providers from the American Rescue Plan (ARP). Rural payments will be based on the amount of Medicaid/CHIP and Medicare services provided to patients living rural areas as defined in HRSA’s tool –
Rural Health Grants Eligibility Analyzer. HRSA will price payments at Medicare rates for Medicaid/CHIP patients. Eligible rural providers may be considered for both Phase 4 and ARP Rural payments.
2. Re-Determination for PRF Phase 3 Eligibility
Providers who believe their PRF Phase 3 payment eligibility was erroneously determined will have a forthcoming opportunity to request a reconsideration. HHS provided a
detailed methodology for providers to evaluate and further assess whether initial Phase 3 payments were correctly determined. HHS advises providers to email
Reconsiderations@hrsa.gov if it is believed Phase 3 payment was calculated incorrectly, or to be notified when more information becomes available on the Phase 3 reconsiderations process.
HHS’s detailed Phase 3 methodology includes seven steps:
A. Calculating 2 percent of Annual Patient Care Revenue
B. Calculating initial Loss Ratio and Provider-Type Loss Ratios
C. Capping Loss Ratios and other pre-payment value adjustments
D. Calculating 88 percent of Adjusted Losses
E. Selecting the greater of calculated A or D
F. Deducting all prior PRF payments from result of E
G. Flagging and conducting manual review of flagged potential payments
3. Grace Period Through Nov. 30 for PRF Period 1 Reporting
Mentioning COVID surges and natural disasters around the country, HHS posted on the
PRF website a 60-day grace period for Period 1 reporting. Providers unable to meet the September 30 deadline for Period 1, are allowed to “come into compliance” with PRF Period 1 submissions through November 30. HHS strongly encourages providers to complete their Period 1 report in the PRF Reporting Portal by September 30, 2021. HHS will not recoup or apply other enforcement actions during the 60-day grace period (October 1 – November 30, 2021).
Toyon’s Take
HHS’s commitment to over $25 billion in PRF is much needed to the provider industry and exhausts a great deal of the remaining balance of CARES funding. Phase 4 may have some semblance of Phase 3 in perhaps measuring operating margins (as HHS recommends providers gather supporting documentation, such as most recent tax documents and financial statements for the second half of CY 2020 and the first quarter of CY 2021). Operating margins comparing the latter half of CY 2020 vs. latter half of CY 2019, as well as a measurement of the first quarter of 2021 vs. the first quarter of 2019 [2] may be evaluated as part of Phase 4. In this round however, HHS is further prioritizing funding based on hospital size [3] and payer mix (e.g., pricing eligible providers’ Medicaid and CHIP claims at Medicare rates). Other funding (e.g., base-funding amounts for large, medium and small providers) may be based on a pro-rata formula, similar to other calculations applied throughout the PRF.
The redetermination of Phase 3 eligibility is great news for many providers looking for reconsideration of these payments. Toyon is in the process of updating a model to assist with Phase 3 redeterminations and will be sharing it with our clients over the coming weeks.
Lastly, the 60-day grace period is certainly welcome for many providers. However, uncertainty remains concerning the impact of being “out of compliance” as well as PRF portal availability from October 1 through November 30. Toyon will share any additional information on these concerns if it becomes available.
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[1] HHS notes there will be some limited exceptions for some services provided predominantly in Medicaid and CHIP.
[2] Consolidated Appropriations Act, 2021 (H. R. 133—740) “any funds recovered from health care providers after the date of enactment of this Act, shall be for any successor to the Phase 3 General Distribution allocation to make payments to eligible health care providers based on applications that consider financial losses and changes in operating expenses occurring in the third or fourth quarter of calendar year 2020, or the first quarter of calendar year 2021, that are attributable to coronavirus…”
[3] Details (e.g., beds, discharges, visits, NPSR, etc.) related to the measurements used to determine small, medium and large providers are still to be determined.
