Targeted Distribution FAQs
Rural Targeted Distribution
The payment formula varied depending on hospital location and Medicare designation. For hospitals with a special Medicare payment designation of Sole Community Hospitals (SCH) or Medicare Dependent Hospitals (MDH), and for hospitals in small metro areas with a designation of Rural Referral Center (RRC), the payment amount was based on 1% of operating expenses (calculated based on their most recent Medicare Cost Report) with a minimum payment of $100,000, a supplement of $50 for each rural inpatient day, and a maximum payment of $4.5 million. HHS also provided a supplemental payment of $1,000,000 for 10 isolated urban hospitals that are 40 or more miles away from another hospital open to the public. HHS estimated the number of inpatient days provided by these hospitals to rural residents by calculating the proportion of patient days attributed to Medicare patients from rural zip codes using the Hospital Service Area File, calendar year 2018 (the most recent data available), multiplied by the total number of patient days as reported in the hospital's Medicare cost report.
For small metro area hospitals without a special Medicare designation, the payment amount was based on 1% of operating expenses (calculated based on their most recent Medicare cost report) with a minimum payment of $100,000 and a maximum of $2 million each.
The payment formula for rural specialty hospitals (Psychiatric, Rehabilitation, and Long Term Acute Care) used the previous Rural Targeted Distribution methodology (graduated base payment + approximately 2% of operating expenses) adjusted for the rural patient share (calculated as percent of inpatient days provided to rural patients) with a minimum payment of $100,000 and a maximum of $4.5 million. Operating expenses were determined based on the most recent Medicare Cost Report. Rural patient share was estimated using the proportion of patients from rural zip codes as reported in the Hospital Service Area File.
"Small metropolitan" was defined as a metro area with less than 250,000 in population as identified by the county-level Rural-Urban Continuum Codes developed by the U.S. Department of Agriculture.
Eligible rural specialty hospitals included Inpatient Psychiatric Facilities (IPFs), Inpatient Rehabilitation Facilities (IRFs), and Long-Term Acute Care Hospitals (LTACHs) located in a geography that meets the following rural definition:
- All non-Metro counties.
- All Census Tracts 1 within a Metropolitan county that have a Rural-Urban Commuting Area (RUCA) code of 4-10. The RUCA codes allow the identification of rural Census Tracts in Metropolitan counties.
- 132 large area census tracts with RUCA codes 2 or 3. These tracts are at least 400 square miles in area with a population density of no more than 35 people per square mile.
Rural/Small Metropolitan Areas Targeted Distribution payments were limited to hospitals in small cities and rural areas that had not previously received payment in the Rural Targeted Distribution.
Payments were calculated based on hospitals' most recent Medicare cost reports and patient residence identified in the Hospital Service Area File.
Rural Distribution payments were made to rural acute care general hospitals and Critical Access Hospitals (CAHs), Rural Health Clinics (RHCs), and Community Health Centers located in rural areas. Hospitals and RHCs will each receive a minimum base payment plus a percent of their annual expenses. This method accounts for operating cost and lost revenue incurred by rural hospitals for both inpatient and outpatient services. The base payment will account for RHCs with no reported Medicare claims, such as pediatric RHCs, and CHCs lacking expense data, by ensuring that all clinical, non-hospital sites receive a minimum level of support no less than $100,000, with additional payment based on operating expenses. Rural acute care general hospitals and CAHs will receive a minimum level of support of no less than $1,000,000, with additional payment based on operating expenses.
For the Rural Distribution, HHS used the Federal Office of Rural Health Policy's definition of rural, which includes:
- All non-Metro counties.
- All Census Tracts within a Metropolitan county that have a Rural-Urban Commuting Area (RUCA) code of 4-10. The RUCA codes allow the identification of rural Census Tracts in Metropolitan counties.
- 132 large area census tracts with RUCA codes 2 or 3. These tracts are at least 400 square miles in area with a population density of no more than 35 people per square mile.
COVID-19 High Impact Area Targeted Distribution
HHS made payments in this second round of COVID-19 High Impact Area Targeted Distribution based on a formula for hospitals with a COVID-19 admission count over 160 between January 1 and June 10, 2020, or the facility experienced an above average intensity of COVID admission per bed (at least 0.54864). Hospitals were paid $50,000 per eligible admission from January 1 through June 10. HHS also took into account previous High Impact Area payments for those hospitals that received initial payments from this Targeted Distribution.
HHS is distributing $10 billion in payments to over 1,000 hospitals in areas heavily impacted by COVID-19 in this second round of targeted distribution payments.
This round of Targeted Distribution payments provides relief for over 83% of inpatient COVID-19 admissions through June 10 at $50,000 per admission, taking into account previous High Impact Area payments. Those hospitals treating inpatient COVID-19 positive admissions have experienced a large increase in expenses due to staffing costs, personal protective equipment costs, protocol changes, re-training, and general system changes.
The first round of funding was based on a formula that distributed funds to hospitals with 100 or more COVID-19 admissions between January 1 and April 10, 2020 and paid $76,975 per eligible admission. The second round of funding was based on a formula for hospitals with over 161 COVID-19 admissions between January 1 and June 10, 2020, or one admission per day, or that experienced a disproportionate intensity of COVID admissions (exceeding the average ratio of COVID admissions/bed). Hospitals will be paid $50,000 per eligible admission. This previous high impact payments were also taken into account when determining each hospital's payment in this second round distribution.
In allocating the funds, the Administration is working to address both the economic harm across the entire healthcare system due to COVID-19 and the economic impact on providers directly treating patients with COVID-19. The distribution takes into consideration the challenges faced by facilities serving a significantly disproportionate number of low-income patients and that inpatient admissions are a primary driver of costs to hospitals related to COVID-19.
Providers should update their capacity and COVID-19 census data to ensure that HHS can make timely payments in the event that the provider becomes a High Impact Area provider. Providers can continue to update their information through the same method they used previously.
Skilled Nursing Facilities Targeted Distribution
HHS will distribute $4.9 billion in additional funding (over and above General Distributions received) to more than 13,000 skilled nursing facilities. Eligible facilities range in size of between six and 1,389 beds. This represents a range of distributions between $65,000 and $3,255,500 and a national average distribution of ~$315,600 per facility. Each Skilled Nursing Facility received a fixed distribution per facility of $50,000 plus distribution of $2,500 per bed.
HHS allocated funding for certified Skilled Nursing Facilities with a capacity between six and 1,389 beds.
Indian Health Service Targeted Distribution
HHS allocated funding for IHS, Tribal, and Urban Indian Health programs. This includes IHS and Tribal hospitals.
HHS allocated $500 million to IHS, Tribal, and Urban Indian Health programs. Approximately 4% of the $500 million in available funding was allocated for Urban Indian Health programs, consistent with the percent of patients served by Urban Indian Organizations (UIOs) in relation to the total IHS active user population, as well as prior allocations of IHS COVID-19 funding. IHS divided remaining funding equally between hospitals (48%) and clinics (48%).
HHS used different formulas for each of the different facility types.
- IHS Hospitals and Tribal Hospitals
- Per hospital allocation = $2. 815 million base + (Total Operating expenses * 3%)
- IHS and Tribal Clinics/Programs
- Per IHS clinic allocation = Base amount of $187,000 + 5% of (estimated service population * average cost per user)
- IHS Urban Programs
- Per IHS Urban Indian health allocation = Base amount of $181,250 + 6% of (estimated service population * average cost per user)
HHS analyzed the following files to determine the allocation for IHS Distribution to IHS and tribal hospitals:
- Provider of Services Files, December 2019 update.
- Healthcare Cost Report Information System (HCRIS), 1/17/2020 update, contains the most recent cost report data available. For most hospitals, this is the 2018 fiscal year.
- Total operating expenses are reflected in Worksheet B PART I COL 26 of the cost report.
HHS identified the service population for most service units, and estimated an operating cost of $3,943 per person per year based on actual IHS spending per user from a 2019 IHS Expenditures Per Capita and Other Federal Health Care Expenditures Per Capita.
Safety Net Hospitals Targeted Distribution
To be eligible, a children's hospital must meet the following criteria:
- Be an inpatient prospective payment system (IPPS)-exempt facility as defined by the Centers for Medicare & Medicaid Services (CMS), or
- Be a Children's Hospital Graduate Medical Education (CHGME) facility.
Children's hospitals that meet these criteria are free-standing facilities not affiliated with larger hospital systems. In contrast to affiliated children's hospitals, these facilities have not, with minor exceptions, qualified for targeted relief to the same degree as system-affiliated children's hospitals.
As the revenue from children's hospitals was included in the calculations (particularly with regard to general distributions) when paying the larger hospital systems, HHS expects that in kind, the systems will ensure that resources are being provided to ensure patient access and care for parents seeking care for their children.
Eligible facilities received a payment that equals 2.5% of the annualized net patient revenue. Facility's calculated payment amount below $5,000,000 were adjusted to $5,000,000 and any values above $50,000,000 were adjusted to $50,000,000.
HRSA used the children's hospitals' most recent CMS Cost Report to determine eligibility. HRSA used Worksheet G-3, line 3 of the cost report to determine payment amounts. Net patient revenues were annualized prior to payment calculation. For those hospitals that do not file Cost Reports, HRSA calculated net patient revenue from tax information and audited financial statements submitted by those affected children's hospitals.
Working with stakeholders and Congress, HHS learned that certain acute care hospitals did not qualify for the initial Safety Net Targeted Distribution that HHS believed were the target of the allocation. To address this, community hospitals meeting an expanded profitability threshold will now be eligible for payment.
HHS is expanding the eligibility criteria for payment qualification under the second round of Safety Net Hospitals Targeted Distribution so that certain acute care hospitals that have (1) a profit margin threshold of less than or equal to 3% averaged consecutively over two or more of the last five cost reporting periods and (2) an annualized uncompensated care cost (UCC) of at least $25,000 per bed in the most recent cost report. The other criterion (Medicare Disproportionate Patient Percentage (DPP) of 20.2% or higher) for acute care hospitals remains the same.
HHS used the same formula for determining payments from the previous Safety Net Hospitals Targeted Distribution.
HHS used hospitals' last two to five Medicare cost report filings for determining eligibility based on profit margin and the latest Medicare cost report filing for determining eligibility based on annualized UCC per bed and Medicare DPP.
Safety net payments are allocated to acute care and children's hospitals that serve a disproportionate number of Medicaid patients and provide large amounts of uncompensated care.
Qualifying acute care hospitals will have:
- Medicare Disproportionate Patient Percentage (DPP) of 20.2% or higher.
- Uncompensated Care (UCC) of at least $25,000 per bed. (For example, a cost report would need to have 100 beds and $2,500,000 in Uncompensated Care to meet this requirement.)
- Profit Margin of 3% or less.
Qualifying children's hospitals will have:
- A Medicaid-only Ratio of 20.2% or greater.
- Profit Margin of 3.0% or less.
The distribution amount for an eligible safety net hospital is the proportion of the individual facility score (number of facility beds multiplied by DPP for an acute care facility or number of facility beds multiplied by Medicaid only ratio for a children's hospital) to the cumulative facility scores for all safety net hospitals, times the $10 billion safety net distribution. Hospitals with a calculated distribution amount of less than $5,000,000 received a minimum amount of $5,000,000, and those with a calculated distribution amount of more than $50,000,000 received a maximum amount of $50,000,000.
HHS pulled the cost reports on May 27, 2020. The latest available cost report period available for a respective facility was used.
HHS pulled the data from the CMS Hospital Cost Reports:
|DPP:||W/S E Part A, Line 32, Col. 1|
|Hospital Beds:||W/S S-3 Part I, Line 14, Col. 2|
|Net Patient Revenue:||W/S G-3, Line 3, Col. 1|
|Total Other Income:||W/S G-3, Line 25, Col. 1|
|Total Revenue:||Net Patient Revenue + Total Other Income|
|Net Income:||W/S G-3, Line 29, Col. 1|
|Profit Margin:||Net Income / Total Revenue|
|Medicaid Only Days:||Worksheet S-3, Part I, column 7, line 14, plus line 2 and line 32, minus the sum of lines 5 and 6.|
|Total Days:||Worksheet S-3, Part I, column 8, line 14; plus line 32; minus the sum of lines 5 and 6; plus employee discount days reported on line 30.|
|Medicaid Only %:||Medicaid Only Days / Total Days|
Profit margin of 3.0% or less was used as one of the criteria to determine whether a hospital was eligible for payment. The calculations were based on total margins. The calculation is "Net Patient Revenue" plus "Total Other Income", which equals "Total Revenue". The calculation is "Net Patient Revenue" plus "Total Other Income", which equals "Total Revenue". The "Net Income" divided by "Total Revenue" is the "Net Profit Margin" percent.
The most recent cost report was used to calculate eligibility for the Safety Net Hospital Targeted Distribution. For most hospitals, the 2018 Medicare cost report was used because the verified 2019 cost report was not yet available.
Nursing Home Infection Control Distribution
The infection gateway criterion specifically excludes facilities that are found to have an infection rate exceeding the estimated infection rate in their county during the performance period. County infection rates are measured using daily COVID-19 community profile reports (CPRs) disseminated under the HHS Protect data program. CPRs contain information on the rate of COVID-19 infections for all residents in each county. County infection rates are not the same as county positivity rates.
The Terms and Conditions for the Nursing Home Infection Control limit use of payments to certain infection control expenses, including hiring staff, whether employees or independent contractors, to provide patient care or administrative support. Is "hiring" limited to only brining on new staff or may funds be used for existing staff? (Added 10/5/2020)
Payments from the Nursing Home Infection Control Distribution may be used to cover "hiring" expenses related to both recruiting new hires and the continued payment and retention of existing staff to provide patient care or administrative support.
Nursing homes will not have to apply to receive a share of this incentive payment allocation. HHS will be measuring nursing home performance and distributing payments based on required nursing home data submissions. To be eligible to receive an incentive payment, a facility must have an active certification as a nursing home or skilled nursing facility (SNF) and must also receive reimbursement from the Centers for Medicare & Medicaid Services (CMS). HHS will review nursing home certification status through the Provider Enrollment, Chain and Ownership System (PECOS) to identify and remove facilities that have a terminated, expired, or revoked certification or enrollment. Facilities must also report data to Certification and Survey Provider Enhanced Reports (CASPER), which will be used to establish eligibility and collect necessary provider data to inform payment.
Additionally, nursing homes must meet two criteria in order to be eligible for payment. First, a facility must demonstrate a rate of COVID-19 infections that is below the rate of infection in the county in which they are located. Second, facilities must also have a COVID-19 death rate that falls below a nationally established performance threshold for mortality among nursing home residents infected with COVID-19.
No. The same Terms and Conditions and restrictions on use of funds apply to the quality incentive payments received by nursing homes as under the Nursing Home Infection Control Distribution. Quality incentive payments may only be used for the infection control expenses, as that term is defined in the Terms and Conditions. These include costs associated with administering COVID-19 testing for both staff and residents; reporting COVID-19 test results to local, state, or federal governments; hiring staff to provide patient care or administrative support; incurring expenses to improve infection control, including activities such as implementing infection control "mentorship" programs with subject matter experts, or changes made to physical facilities; and providing additional services to residents, such as technology that permits residents to connect with their families if the families are not able to visit in person.
The incentive payment program is scheduled to be divided into four performance periods (September, October, November, December), lasting a month each with $400 million available to nursing homes in each period. All nursing homes or SNFs meeting the payment qualifications will be eligible for each of the four performance periods. Nursing homes will be assessed based on a full month's worth of data submissions, which will then undergo additional HHS review and auditing before payments are issued the following month. These four individual performance periods would be followed by an aggregate performance period that would measure performance across the entire four month period from September to December. The aggregate performance period would have an available incentive pool of at least $400 million.
Facilities will have their performance measured on two outcomes. First, facilities will be evaluated based on their overall COVID-19 infection rate among residents. Second, facilities will be evaluated based on their performance for COVID-19 mortality among residents.
Performance measurements for each facility will be evaluated based on the population-wide rate of COVID-19 infection in the geographic area in which a facility is located. The goal is to appropriately evaluate facility performance by measuring the baseline level of infection in the community in which a facility is located.
In order to measure facility COVID-19 infection and mortality rates, the incentive program will make use of data from the National Healthcare Safety Network (NHSN) Long-term Care Facility Component COVID-19 Module. Within the NHSN module, the program will incorporate weekly reported data on COVID infections, COVID mortality, and the total count of occupied beds.
In addition, admissions of COVID-19-positive patients will be considered in order to focus accountability on infections acquired among existing residents. Using this weekly information, each facility will receive measurements of their COVID-19 infections per resident and COVID-19 deaths per resident in each performance month.
There will be an additional measurement of the baseline level of COVID-19 infection in the general community in which a facility is located. In order to measure the baseline infection rate, the program will make use of weekly updates of data included in CDC's Community Profile Reports (CPRs). Data from the CPRs includes county-level information on total confirmed and/or suspected COVID infections per capita, which will be used to measure the baseline infection rate for all eligible facilities located in that county.
Given their congregate nature and resident population of older adults – often with underlying chronic medical conditions – nursing homes are high risk environments that have been disproportionately affected by COVID-19. HHS is distributing $5 billion to nursing homes and skilled nursing facilities to build skills and enhance response to COVID-19, including enhanced infection control. Of this amount, HHS will provide approximately $2.5 billion in upfront funding to nursing homes to support increased testing, staffing, and personal protective equipment (PPE) needs. HHS plans on distributing another $2 billion to nursing homes later this fall based on certain performance indicators that will be shared in the future.
HHS is distributing an initial $2.5 billion of the Nursing Home Infection Control Distribution funding to support nursing homes and skilled nursing facilities in conducting appropriate testing, acquiring necessary personal protective equipment (PPE), investing in staff, to improve infection control. Eligible nursing homes and skilled nursing facilities will receive a per-facility payment of $10,000 plus a per-bed payment of $1,450 in the first round of this distribution.
Additionally, $2 billion in funding will be distributed at a later time for nursing home performance in improving safety and minimizing COVID-19 spread and COVID-19 related fatalities among residents and training, mentorship, and instruction on infection prevention and control in nursing homes across the country. Please check back on this website for updates.
Nursing homes and skilled nursing facilities that are not revoked, have an active CMS certification, and have at least 6 certified beds, were deemed eligible to receive payments.
The Nursing Home Infection Control Distribution can only be used for the infection control expenses defined in the Terms and Conditions. These include costs associated with administering COVID-19 testing for both staff and residents; reporting COVID-19 test results to local, state, or federal governments; hiring staff to provide patient care or administrative support; incurring expenses to improve infection control, including activities such as implementing infection control "mentorship" programs with subject matter experts, or changes made to physical facilities; and providing additional services to residents, such as technology that permits residents to connect with their families if the families are not able to visit in person.
This distribution supplements the $4.9 billion that was previously distributed to skilled nursing facilities. This distribution provides nursing homes and skilled nursing facilities upfront funding to address critical needs in nursing homes including hiring additional staff, implementing infection control programs, increasing testing, and providing additional services, such as technology so residents can connect with their families if they are not able to visit. Because of the limits on use of funds, the Terms and Conditions for this distribution differ from those placed on the Skilled Nursing Facility Targeted Distribution and other Targeted Distributions payments under the Provider Relief Fund. The Terms and Conditions for the Nursing Home Infection Control Distribution specifically prohibit recipients from taking any actions inconsistent with the best interests of its patients in order to increase potential future outcomes-based payments based on the recipients' successful infection control outcomes.