With the coronavirus’s delta variant fueling a fourth pandemic surge, health-care institutions, lobbyists and lawmakers have ratcheted up complaints to senior Biden administration health officials, imploring them to decide how the money will be divided and when it will be distributed.
“There’s just no good reason for the administration to be sitting on these funds,” said Mark Parkinson, president and chief executive of the American Health Care Association, a trade group that represents nursing homes and assisted-living facilities. Many are running short on money, he said, because the virus’s heavy concentration in long-term-care centers early in the pandemic is still causing potential patients and residents to stay away.
Parkinson said he has had four conversations since February with the agency in the Department of Health and Human Services that is in charge of the money, and one last month with senior aides to HHS Secretary Xavier Becerra.
“Each conversation, we came away with the feeling it would be that month,” Parkinson said. “And we’ve been wrong.”
The aid bottleneck is inconsistent with one of the first commitments Biden made when he took office in January. The day after he was sworn in, the president signed an executive order to make it easier for Americans to get treatment if infected with the novel coronavirus, saying his administration “shall promptly . . . provide targeted surge assistance to critical care and long-term facilities.”
Federal health officials declined to discuss reasons for the delay, but HHS said in a statement: “We continue to work expeditiously to get these funds out the door and will be announcing another distribution of funds soon. Plans are being finalized.”
Becerra has been asked repeatedly on Capitol Hill about the provider fund. In his most recent testimony, in June, he said that during the Trump administration, “there wasn’t enough transparency in the process, how the money was allotted. . . . We’re trying to provide that transparency, make sure we direct the money where it’s needed.”
The secretary did not address how the money could be redirected or when it might be released.
Pandemic relief laws that created the fund last year said the money should be used to help compensate health-care institutions and practitioners for extra expenses and loss of revenue attributable to the coronavirus. The laws do not specify how quickly the money must be spent.
About one-fourth of the $178 billion Provider Relief Fund remains, according to March and July reports by the Government Accountability Office, which urge HHS to tell Congress when it plans to give out the money.
Hospital executives and health-care advocates say the inaction this year has been especially problematic in parts of the country where the pandemic arrived relatively late.
That is because all of the money released so far was distributed on the basis of providers’ financial condition and coronavirus burden during the first half of 2020. That was useful for early hot spots, such as New York, while putting at a disadvantage hospitals and other sources of care in states such as Arizona, California and Texas, where surges of patients with covid-19, the illness caused by the virus, did not emerge until a summer ago.
The timing “has felt like a mismatch for us,” said Carmela Coyle, president of the California Hospital Association, which commissioned a consultants’ study that shows the state’s hospitals have received about $8 billion from the fund — about half of their losses.
The lack of federal money to help buffer the financial shock after June 2020 is hurting places such as Katherine Shaw Bethea Hospital in Dixon, Ill., a rural community about 100 miles west of Chicago that was Ronald Reagan’s boyhood home. Early last winter was the first time during the pandemic that KSB, as it is known, had more patients than beds. But its losses and expenses did not wait that long to manifest themselves.
Even before it received a single covid-19 case, the hospital lost 40 percent of its typical patients in spring 2020 as the state ordered a halt to elective surgeries and some people just stayed away. KSB spent $2 million on pandemic preparations: converting patient rooms to negative air pressure (a germ-containment measure), paying steep prices for scarce protective gear, and erecting a triage tent that turned out not to be needed.
KSB received nearly $14 million between April and June last year for the hospital and its physicians practice. And it accepted almost $11 million in spring 2020 in advance Medicare payments that it must now repay.
“I don’t want to seem non-grateful,” said David L. Schreiner, the hospital’s president and chief executive, “but it didn’t come close to what we needed.” Last summer, the Illinois hospital furloughed 124 of its roughly 1,000 employees and cut the pay of doctors and administrators by 10 percent.
Lately, KSB has been losing about $1 million a month as hopes for a return of other patients were thwarted first by the winter coronavirus surge and now by the fast-spreading delta variant.
The hospital just sold a building used for business offices and plans to move into rental space in October, saving about $10,000 a month. It has suspended plans to renovate obstetrics rooms. For the first time, it has taken out a line of credit.
The 80-bed hospital plans to cut some services, Schreiner said. He does not know whether to set it in motion. For months, he said, he has been waiting to find out whether KSB will get more provider-relief money or aid from the $8.5 billion in rural health aid that is part of the American Rescue Plan that became law in March. “It’s like there is a secret sauce that no one is sharing,” he said.
The stress from not knowing how much more federal help might arrive is “10 on a scale of 1 to 10,” Schreiner said. “Not knowing that, I have to assume it’s not coming, and I am hurting people — both patients and employees — by not having those dollars. I don’t want to close down programs and then the dollars come, and I would have left them open.”
'The tough part'
In the waning months of the Trump administration, health officials devised a plan to spend all the money that was left.
HHS in April 2020 had begun to give money away in batches. As a way to get money out fast, the first batch was based on a hospital’s volume of Medicare patients — and ended up favoring health-care providers that had many patients who were privately insured or on the federal insurance system for older Americans. Substantial payments went to several large, well-heeled health systems that gave some of the money back.
There were distributions for places that at the time were coronavirus hot spots and for health-care providers in rural places, nursing homes and hospitals treating many low-income patients.
Last fall, Trump administration health officials set up a new method — Phase 3, it was called — in which hospitals that already had received payments could apply for more. Four-fifths of the recipients of that $24.5 billion got their Phase 3 payments by the end of 2020, though information from the Health Resources and Services Administration (HRSA), the HHS agency overseeing the money, says some aid allocated in that phase arrived as late as March.
It was November when Trump administration health officials began work on what they envisioned as a fourth and final phase. For the first time, they would allow applications that were based on pandemic-related losses and expenses from the second half of 2020. The plan was sent for review by the White House Office of Management and Budget, according to a senior HHS policy official from the Trump administration who spoke on the condition of anonymity to describe internal dynamics.
When the Biden team arrived, the former Trump official said, “they stopped work on Phase 4. . . . This was the tough part. We had made promises to all these people that . . . their phase was coming.”
Joanna Hiatt Kim, the American Hospital Association’s vice president for payment policy, noted that most of the U.S. covid-19 cases and hospitalizations happened after June 30, 2020. “The massive winter wave, and now the massive wave we are in, none of those have been targeted for funds,” she said.
Early this year, amid an unprecedented surge, some big health networks such as Grady Health System in Atlanta feared the financial repercussions.
One of the nation’s largest health-care systems, Grady received $125 million for its hospital and $31 million for running Georgia’s biggest nursing home, treating uninsured patients and providing other services. All the money was spent by June 2021.
“We thought there would be more forthcoming, based on the fact there was still a significant amount of funds sitting in the Provider Relief Fund,” said John M. Haupert, Grady’s president and chief executive. “There wasn’t much communication.”
Recognizing that the pandemic is not ending anytime soon, Haupert worries about Grady’s financial scenarios for next year, with its forecasts suggesting it could lose up to $100 million. Because deep financial problems nearly forced it to close more than a decade ago, Grady is required by its board at least to break even.
So Grady developed a plan to improve revenue and reduce expenses.
“We have begun implementing part of that plan,” Haupert said, “but then you go into another surge like this, and you need to do what you need to do to take care of people.”
'Please get it out'
Originally, hospitals, nursing homes and others faced a June deadline to spend the money they had received. Much of the health-care industry complained that it needed more time, and, late this spring, the Biden administration granted the extra time.
That rule change, however, did not say when any of the remaining money would be released. Still, the industry expected that federal health officials would soon let the money flow — until the provider fund was nearly diverted altogether for a different purpose: to help pay for a $1 trillion infrastructure package that was one of Biden’s main domestic priorities.
In the end, the infrastructure bill that passed the Senate last month did not touch that money. And the health-care industry and its advocates are now leaning harder than ever on HHS to release the undistributed funds.
According to the HRSA, the $43.7 billion in the provider fund includes $24 billion that health officials have not allotted for a particular purpose or have on hand, in part because of money that some well-off health systems returned.
“Our message has been a simple one: There’s money left. It’s needed. Please get it out,” the California Hospital Association’s Coyle said.
Scores of House members have sent a letter to Becerra on behalf of long-term-care facilities. Forty-one senators just dispatched their own letter, asking him to release the funds “without any further delay.”
The American Hospital Association has written to Becerra several times. Its most recent letter, from the middle of last month, noted that the current increase in coronavirus cases and covid-19 hospitalizations is producing staffing shortages and driving up other costs. Hospitals and health systems, it said, are finding “their resources — human, infrastructure and financial — are being stretched to the brink.”
Acting HRSA administrator Diana Espinosa offered a vague explanation of her agency’s work on the fund in a July letter responding to LeadingAge, a coalition serving older Americans.
Echoing Becerra’s words on Capitol Hill, Espinosa wrote, “As we continue navigating this pandemic, HHS strives for greater transparency and proactive communication” about the fund. As for timing, Espinosa wrote, “HHS is committed to distributing the remaining provider relief payments as quickly and equitably as possible, while utilizing effective safeguards to protect taxpayer dollars.”
Earlier last month, the White House issued a document describing ways in which the administration was working to improve the health of rural communities through the American Rescue Plan, with $8.5 billion from the March law expected “in the coming weeks.”
American Hospital Association officials said they are unaware of any description of how the money will be distributed, let alone of money being sent.
Schreiner, debating whether to cut programs at the rural hospital in western Illinois, said he has not heard anything about it.
Correction: A previous version of this article misstated the name of a coalition serving older Americans. It is LeadingAge, not Leading Edge. The article has been corrected.