Children’s Hospitals Say They Were Excluded From Covid Funding

Children’s hospitals and behavioral health providers are sounding the alarm after the Department of Health and Human Services released another round of Covid-19 relief aid, claiming that they were once again left out.

The HHS allocated $15 billion to Medicaid and Children’s Health Insurance Program providers who haven’t yet received funding. It also said it’s giving $10 billion in funds to safety-net hospitals, which primarily serve uninsured and poorer patients.

But some provider groups say they don’t qualify for the Medicaid relief aid because they accepted smaller amounts of funding early on. They say that stops them from receiving what would have been a much larger amount now.

“These are the most important children’s hospitals in the country, providing almost all of the complex care for kids, and about half of their patients are on Medicaid,” Mark Wietecha, president and CEO of the Children’s Hospital Association, said. “And they’ve been almost entirely overlooked in the relief fund distributions so far.”

Although accounting for around 2.6% of total hospital revenue each year, the nation’s 30 standalone children’s hospitals have received barely .5% of the provider relief funds so far—less than $1 billion, Wietecha said.

An HHS spokesperson told Bloomberg Law that children’s hospitals were eligible for payments equal to 2% of their revenue from the general distribution fund. The spokesperson also said that the agency hasn’t excluded any particular group or set of providers in its distributions.

Earlier Relief Disqualifies

Because all hospitals have at least one Medicare claim, and therefore previously received at least minimal aid, children’s hospitals aren’t eligible for funding from the latest Medicaid funding pot, Wietecha said. They also were shut out of $80 billion in loan support provided to adult hospitals in the form of advance Medicare payments, he added.

Some behavioral health providers similarly say they are ineligible for the Medicaid relief funds because they received aid earlier. That’s because the new Medicaid relief funds are intended for providers that have received nothing at all to date—and there’s no going back on that earlier decision, Chuck Ingoglia, president and CEO of the National Council for Behavioral Health, said.

Community Health Resources, one of the largest behavioral health providers in Connecticut, got an automated payment of about $39,000 in April, only to learn earlier in June that money made them ineligible for the latest batch of federal funds, according to president and CEO Heather Gates.

Community Health Resources probably would have received far more money from the later round if it had rejected the earlier relief, Gates said.

Funding Eligibility

Congress allocated around $175 billion to provide Covid-19 related relief to hospitals and other health providers in the CARES Act, and HHS has announced distributions of around $112 billion to date.

The funding is aimed at compensating providers for their increased costs to provide Covid-19 care, and to make up for lost revenue caused by the halt to non-emergency procedures.

Most of the distributions so far have been built around the Medicare system, sending money to providers based on their previous Medicare revenues. That has put children’s hospitals at a disadvantage, since they typically have no adult patients and receive almost no Medicare revenue, Wietecha said.

The HHS spokesperson acknowledged that there are likely no hospitals that meet the test for the Medicaid relief funds.

Children’s hospitals also can’t meet the conditions required to get the aid separately designated for safety-net hospitals because the agency defined eligibility in a way that excludes most hospitals for kids, Wietecha said. The conditions for that funding pot require hospitals to have an average uncompensated care amount per bed of $25,000, and a profit margin of 3% or less, according to the HHS.

Standalone children’s hospitals don’t typically have a large uncompensated care burden because almost all children not covered by private insurance are covered under Medicaid or CHIP, Wietecha said.

And children’s hospitals operate with a profit margin well over 3%, he said. That’s because, unlike adult safety-net hospitals, they’re not supported directly by local taxes, and must arrange for private financing of their capital expenditures for buildings and equipment.

—With assistance from Alex Ruoff