The federal government will deliver $30 billion to hospitals Friday in the first round of what will ultimately be $100 billion in hand outs to help hospitals defray costs associated with Covid-19 and treating uninsured patients.
The funding comes from the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into law last month. The distribution of the $30 billion will go to Medicare hospitals and be delivered electronically based on account information the government and its partners have on file. The Department of Health and Human Services is pairing with UnitedHealth Group to distribute the money. Health providers that normally get paper checks will receive their payments via check in a few weeks.
“HHS and the Administration are working rapidly on additional targeted distributions to providers that will focus on providers in areas particularly impacted by the COVID-19 outbreak, rural providers,” and hospitals that have low Medicare reimbursement rates, the agency said in a statement.
Hospitals have to attest they aren’t billing any Covid-19 patients using out-of-network rates as a condition of receiving the $100 billion from the federal government.
Medicare pays hospitals based on a bundled rate for each patient that is tied to labor and supply costs. Those rates are adjusted depending on the hospital’s location because wages are different across the country. When a patient uses care that’s especially expensive, hospitals get paid for those “outlier” cases so they don’t have to absorb the extra cost to their bottom lines.
Teaching hospitals get paid more to make up for indirect costs of training new doctors, and hospitals that treat a lot of low-income patients get an additional funding bump from the government.