Provider Relief in the New American Rescue Plan Act of 2021

Background: The Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed in March 2020, established the Provider Relief Fund (PRF) to reimburse providers for COVID-19-related expenses and lost revenues. To date, $178 billion has been appropriated to the fund. Approximately $153 billion has been allocated to providers, and about $25 billion remains to be allocated. This $25 billion does not account for PRF distributions that have been or may yet be returned to the US Department of Health and Human Services (HHS) by recipients that rejected the financial support, so the actual amount remaining could be larger. The remaining funds are subject to spending limitations for providers for the second half of 2020 and the first quarter of 2021 due to provisions in the appropriations bill passed at the end of 2020.

Provision in American Rescue Plan (ARP): Despite stakeholder requests to add as much as $35 billion to the general PRF, the ARP provides only $8.5 billion, and does so through a “look-a-like” PRF specifically for rural entities serving Medicare and Medicaid beneficiaries.  HHS will allocate this funding to eligible rural providers for healthcare-related expenses and lost revenues attributable to COVID-19 not reimbursed (or obligated to be reimbursed) by other sources. Although these funds are not directed to the existing PRF, the ARP’s language largely aligns with previous PRF appropriations language. For example, the ARP definitions of lost revenues and healthcare-related expenses attributable to COVID-19 are similar to those used in the Consolidated Appropriations Act 2021 appropriating additional funds to the PRF and are similar to HHS’s PRF guidance documents defining those terms. Although it appears that Congress intends for these funds to be consistent with the PRF, it is unclear whether HHS will treat the $8.5 billion in a completely consistent manner. The HHS Secretary also has authority to include other rural providers or suppliers as eligible. Unlike the PRF’s targeted rural distributions, which were distributed directly to select providers by HHS, rural providers and suppliers seeking the ARP funds must submit an application to HHS. This definition of “rural” captures traditionally rural providers and suppliers, but also is broad enough to potentially render eligible a number of urban providers and suppliers that have undergone redesignation to be considered rural, or that may be in urban areas, but treat rural patient populations. And that is before accounting for the Secretary’s additional broad authority to define rural for eligibility purposes.

Note: ACA will apprise members on how to apply for these rural relief funds when information becomes available

Sources: HR 1319; House Committee Report 117-7 (PDF); American Rescue Plan Act of 2021, Key Healthcare Provisions. McDermott+ Consulting (PDF)