On October 1, 2020, the U.S. Department of Health and Human Services (HHS), through the Health Resources and Services Administration (HRSA), announced $20 billion in new funding for providers on the frontlines of the coronavirus pandemic. This HW&Co. article has the basic details of the Phase 3 General Distribution.

Providers will have from October 5, 2020 through November 6, 2020 to apply for Phase 3 General Distribution funding. The application is available on the enhanced provider relief portal.   The application instruction and a sample form are available in the following links:

The application for Phase 3 is essentially the same as the Phase 2 application, but they are requesting additional information relative to Quarter 1 and Quarter 2 2020 and 2019 “operating revenue” and “operating expenses”.  This is to determine if providers have experienced additional lost revenue or increased expenses relating to COVID 19 in the first half of 2020 compared to the same period in 2019, and are eligible for more funding.  Each provider must determine if they feel they would be eligible for any additional payments based on their unique situation and whether the effort of gathering this information is worth the benefit.  Please contact your HW&Co. Healthcare Advisor if you would like assistance.

HHS has updated the FAQs to include Phase 3 guidance.  A few items to note are as follows:

  • Phase 3 of the General Distribution will take into account documentation of financial impact of COVID-19, as reported by applicants. The payment methodology will ensure a provider has received 2% of annual revenue from patient care either as part of the previous phases of the General Distribution or under a Phase 3 payment. Phase 3 will also take into account a provider’s change in operating revenues from patient care, minus their operating expenses from patient care. Additionally, Phase 3 payment considers account funds received and kept under prior General and Targeted Distributions. While HHS has made payments on a rolling basis under the previous general distributions, Phase 3 final payment amounts for applicants who have already received payments equaling 2% of annual patient care revenue will be determined on a pro-rata basis once all applications have been received and reviewed.
  • HHS considers “operating revenues from patient care” to be net patient service revenue from the delivery of health care services directly to patients. “Net patient service revenue” is defined as gross charges for patient services delivered, minus contractual adjustments from all third party payors, charity care adjustments, bad debt, gains and/or losses on investments, prior Provider Relief Funds received, and any adjustments necessary to arrive at net patient service revenue.
  • HHS considers “operating expenses from patient care” to be the operating expenses incurred as part of the delivery of care, including salaries, benefits, medical supplies, contracted and/or employed physicians, interest, and depreciations. Operating expenses from patient care do not include any non-operating expenses, such as costs incurred on any rental property as well as contributions made, gains, and/or losses on investments.

This Phase 3 distribution requires calculations before payments can begin so providers will not receive funding shortly after submitting their information as they did in Phase 2.  HHS is urging all eligible providers to apply early in order to expedite HHS’s review process and payment calculations, and ultimately accelerate the distribution of all payments.

All payment recipients will be required to attest to receiving the Phase 3 General Distribution payment and accept the associated terms and conditions.  More information on reporting requirements is available in this HW&Co. article.

HRSA is holding a Provider Relief Fund – Phase 3 Informational Webcast on October 15, 2020 at 3:00pm ET.  Register here.

The HHS guidance on the provider relief funds has been ever changing and often conflicting. The FAQs  continue to be updated frequently.    HW&Co. is here to assist you in any way we can. Please visit the HW&Co. COVID-19 resource center on our website for additional resources or contact your HW Healthcare Advisor if you need assistance.

Disclaimer:  Information in this article is subject to change and is based upon our current understanding as of the issue date. This is a constantly evolving process as HHS has been issuing new or changed guidance on a frequent basis.