Last week, HHS launched the application for both Provider Relief Fund (PRF) Phase 4 and American Rescue Plan (ARP) Rural payments. As described in the September 13, 2021 Health Headlines, HHS made $25.5 billion in new funding available for healthcare providers affected by the COVID-19 pandemic—$8.5 billion is available for select rural providers, and the remaining $17 billion is set aside for PRF Phase 4 payments. Additionally, HHS released additional information on the PRF Phase 4 payment methodology and launched the PRF Phase 3 reconsideration process.
PRF Phase 4 and the ARP Rural Payments Application
HHS announced $25.5 billion in new funding for healthcare providers on the frontlines of the pandemic. This funding includes $8.5 billion in ARP resources for providers that serve rural Medicaid, CHIP, or Medicare patients, and an additional $17 billion for PRF Phase 4 for a broad range of providers that can document revenue loss and expenses associated with the pandemic.
Providers can apply for both programs in a single application, and the application closes on October 26, 2021 at 11:59 p.m. ET. Applications must undergo a number of validation checks before financial information is submitted so providers are encouraged to begin their application as soon as possible to ensure they are able to meet the deadline. Application information is available here.
Payment Methodology
HRSA published detailed payment methodology for PRF Phase 4 and ARP Rural payments.
PRF Phase 4
Phase 4 consists of two components:
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Base Payments: Approximately 75% of the funding will be allocated to providers based on their reported changes in revenues and expenses for the period from July 1, 2020 to March 31, 2021. Smaller and medium-sized providers (based on annual net patient care revenues) will receive relatively higher percentages of their changes in revenues and expenses from this period.
Once the application cycle closes, HRSA will begin pre-payment risk mitigation and cost containment activities. HRSA will first calculate an initial loss ratio as follows:
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Quarterly Losses = Sum of Operating Revenues from Patient Care (see Applicant Instructions Fields 13.1-13.6) MINUS Sum of Operating Expenses from Patient Care (see Applicant Instructions Fields 14.1-14.6)
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Loss Ratio = Quarterly Losses DIVIDED BY Annual Net Patient Care Revenues (see Applicant Instructions Field 12)
Next, HRSA will employ several pre-payment risk mitigation and cost containment safeguards to ensure that information is accurate and legitimate and that HRSA is making payments equitably. These may include:
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New providers in 2019 or 2020 that began delivering patient care between January 1, 2019 and December 31, 2020.
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Pharmacies and Durable Medical Equipment (DME) suppliers.
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Anomalous financial information.
HRSA will make payment adjustment determinations based on the provider applications that have been received and associated flags. The payments adjustments and caps methodology is available here.
ARP Rural Payment
Payments will be based on Medicare, Medicaid, and CHIP administrative claims data from January 1, 2019 through September 30, 2020. To reduce administrative burden and streamline application processing, providers will not provide claims data in the application. HRSA will use data to which it already has access.
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Step 1: HRSA will price Medicaid and CHIP claims data at national Medicare rates, to eliminate any impact from the disparities between Medicare and Medicaid/CHIP reimbursement rates with limited exceptions.
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Step 2: HRSA will calculate the number and type of Medicare, Medicaid, and CHIP claims per billing/subsidiary TIN from January 1, 2019 through September 30, 2020 and multiply them by the relevant prices from Step 1.
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Step 3: HRSA will adjust the claims-based payments to the amount of funding available for ARP Rural (approximately $8.5 billion).
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Step 4: HRSA will then aggregate billing TINs' payments to the filing TIN.
The methodology is available here.
Phase 3 Reconsideration Process
HHS opened its Phase 3 Payment Reconsideration program. The deadline to submit the reconsideration request form is November 12, 2021, but HRSA encourages providers to apply early. More information on reconsideration is available here.
