Past Targeted Distributions

$10 Billion to 395 Hospitals in COVID-19 High-Impact Areas

Payment Allocation per Hospital = Number of COVID-19 Admissions* x $76,975 *Hospitals must have 100 or more COVID-19 admissions.

$2 Billion to 395 Hospitals in High-Impact Areas with Medicare Disproportionate Share

Additional Payment Allocation per Hospital = $2 Billion x (Hospital Medicare Funding / Sum of Medicare Funding for 395 Hospitals)

HHS made COVID-19 High-Impact Area payments to hospitals that had a high number of confirmed COVID-19 positive inpatient admissions. Payments were made at the billing TIN level. Billing TINs that include one or more hospitals entered the total count for all confirmed COVID-19 positive inpatient admissions across all of the billing TIN's hospital facilities (four walls).

$10 Billion COVID-19 High-Impact Area Distribution

Inpatient admissions were a primary driver of costs related to COVID-19. A portion of the Provider Relief Fund was distributed to hospitals that have treated a large number of COVID-19 inpatient admissions.

In response to an HHS request for information, 5,598 hospitals submitted the number of COVID-19 inpatient admissions they encountered through April 10, 2020. 184,037 COVID-19 inpatient admissions were reported.

From this data, HHS identified those facilities with 100 or more COVID-19 admissions. These facilities encountered 129,911 admissions, or over 70% of the total number of COVID-19 inpatient admissions reported. The number of admissions encountered by these hospitals was used to determine the allocation of Relief Funds across the pool of eligible recipients. Each recipient received funding equal to $76,975 per admission.

Note: Payments to these facilities on this basis was not intended to reimburse the facilities for the specific cost of these admissions. Rather, COVID-19 admissions was used as a proxy for the extent to which each facility experienced lost revenue and increased expenses associated with directly treating a substantial number of COVID-19 inpatient admission.

$2 Billion COVID-19 High-Impact Area Distribution

HHS recognizes that not all facilities are equally prepared to withstand the impacts of the coronavirus. Facilities that serve large Medicare or uninsured populations often do not have the same level of financial resources as other facilities. In recognition of this fact, HHS distributed $2 billion in additional funding to these facilities in proportion to each facility's share of Medicare Disproportionate Share funding.

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 COVID-19 High Impact Area payments for those hospitals that received initial payments from this Targeted Distribution.

Rural Acute Care Hospitals and Critical Access Hospitals

Payment Allocation per Hospital = Graduated Base Payment* + 1.97% of the Hospital's Operating Expenses

*Base payments ranged between $1 million to $3 million.

Independent Rural Health Clinics (RHC)

Payment Allocation per Independent RHC = $100,000 per clinic site + 3.6% of the RHC's Operating Expenses

Community Health Centers (CHC)

Payment Allocation per CHC = $100,000 per rural clinic site

Providers eligible for the targeted Rural Health Relief Fund distribution had to be located in a geography that meets the following rural definition:

1. All non-Metro counties.
2. 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.
3. 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.
4. For independent Rural Health Clinics: the authorizing statute applies the Census Bureau definition, which defines a Rural Health Clinic as being located outside of an Urbanized Area as defined by the U.S. Census Bureau.
5. For Critical Access Hospitals: CAHs have a unique safety net role and statutory charge per Section 1820 of the Social Security Act. That statute initially gave state governors the authority to designate necessary provider CAHs, a number of which did not make a distinction between rural and urban designations.

RUCA Codes

(Code Definitions: Version 2.0)

1. Metropolitan area core: primary flow within an Urbanized Area (UA)
2. Metropolitan area high commuting: primary flow 30% or more to a UA
3. Metropolitan area low commuting: primary flow 10% to 30% to a UA
4. Micropolitan* area core: primary flow within an Urban Cluster (UC) of 10,000 through 49,999 (large UC)
5. Micropolitan* high commuting: primary flow 30% or more to a large UC
6. Micropolitan* low commuting: primary flow 10% to 30% to a large UC
7. Small town core: primary flow within an Urban Cluster of 2,500 through 9,999 (small UC)
8. Small town high commuting: primary flow 30% or more to a small UC
9. Small town low commuting: primary flow 10% through 29% to a small UC
10. Rural areas: primary flow to a tract outside a UA or UC (including self)

This funding recognizes that rural hospitals, health clinics, and health centers function with lower operating margins than urban and suburban providers and thus are at greater risk of closure as a result of reduced volumes attributable to the coronavirus. Targeted distributions to rural hospitals, health clinics, and health centers were made according to the following methodology.

Recipients fall into three categories:

• Rural acute care general hospitals and Critical Access Hospitals (CAHs)
• Rural Health Clinics (RHCs)
• Community Health Center sites located in rural areas

Hospitals and RHCs each received a minimum base payment plus a percent of their annual expenses. This expense-based method accounted for operating cost and lost revenue incurred by rural hospitals for both inpatient and outpatient services. The base payment accounted 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 received a minimum level of support of no less than $1,000,000, with additional payment based on operating expenses.

Eligible providers received the funds via direct deposit, based on the physical address of the facilities as reported to the Centers for Medicare and Medicaid Services (CMS) and HRSA, regardless of their affiliation with organizations based in urban areas.

Rural acute care hospitals and Critical Access Hospitals (CAHs):

The methodology provided hospitals with supplemental funds based on a graduated base amount plus an additional amount to account for a portion of their usual operating costs and the volume of care they regularly provide, according to the following formula. The most recent, publicly available Medicare hospital cost reports were used to identify operating costs:

• Per Hospital $ Allocation = Graduated Base payment + 1.97%* of the hospital's operating expenses

The graduated base payment is calculated as:

• 50% of the first $2 million of expenses (payment of up to $1,000,000)
• 40% of the next $2 million of expenses (payment of up to $800,000)
• 30% of the next $2 million of expenses (payment of up to $600,000)
• 20% of the next $2 million of expenses (payment of up to $400,000)
• 10% of the next $2 million of expenses (payment of up to $200,000)

Rural hospitals with annual operating expenses greater than $10,000,000 received a base payment of $3,000,000.

Rural hospitals with no operating expense data received a base payment of $1,000,000.

The total calculated amount was then multiplied by 1.03253231** to determine the actual payment per rural provider.

*The actual value used in the formula was 1.967728428%.

Rural Health Clinics (RHCs):

Provider-Based RHCs: RHCs connected with rural hospitals had their allocations included with their hospital's allocation, and the hospital was responsible for allocating dollars to support its RHC services.

Independent RHCs: A base amount plus a percentage of total operating costs were calculated for independent RHCs not associated with a hospital using RHC Cost Report data according to the following formula:

• Per Independent RHC $ Allocation = $100,000 per clinic site + 3.6% of the RHC's operating expenses

Community Health Centers:

Health Centers in rural areas: The allocation for health centers in rural areas was a flat payment amount per health center site of $100,000. Funds are distributed to each FQHC organization based on the number of individual rural clinic sites it operates.

• Per FQHC $ Allocation = $100,000 per rural clinic site

The total calculated amount for RHCs and health centers was then multiplied by 1.03253231** to determine the actual payment per rural provider.

**This adjustment was applied to ensure that the total value of distributions equaled $10 billion.

Rural/Small Metropolitan Area:

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 city 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:

1. All non-Metro counties.
2. 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.
3. 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.

Payment Allocation per Facility = Fixed Payment of $50,000 + $2,500 per Certified Bed*

*Facilities must have six or more certified beds to be eligible for a payment.

Eligible facilities received a per-facility payment of $10,000 plus a per-bed payment of $1,450. A facility has to have at least 6 certified beds to be deemed as eligible for payment.

There were four performance periods in September, October, November, and December, 2020, for which funds were distributed between November 2020 and February 2021. Originally, an aggregate payment was scheduled to be distributed in February of 2021, but because of a methodology shift funds the aggregate payment was canceled.

In order for a facility to be eligible for the incentive payment, they had to pass two initial gateway qualification tests on both their rate of infection and rate of mortality.

• First, a facility had to demonstrate a rate of COVID infections that is below the rate of infection in the county in which they are located. This benchmark requirement for infection rate reflects the goal of the incentive program to recognize and reward facilities that established a safer environment than the community in which they are located.
• Second, facilities also had to have a COVID death rate that fell below a nationally established performance threshold for mortality among nursing home residents infected with COVID.

Due to the high COVID-19 rates, beginning in the November performance cycle, HHS initiated a cap on infection performance scores and revised its methodology so that all nursing homes who met the overall performance thresholds could receive a payment within the program’s budget. This cap was reflected in the November and December payments.

For full details of methodology, refer to the following documents:

Nursing Home Quality Incentive Program Methodology Rounds 1 and 2 (PDF - 1.23 MB)

Nursing Home Quality Incentive Program Methodology Rounds 3 and 4 (PDF - 1.38 MB)

IHS and Tribal Hospitals

Payment Allocation per Hospital = $2.81 Million + 2.58% of Total Operating Expenses

IHS and Tribal Clinics and Programs

Payment Allocation per Clinic/Program = $187,500 + 5.43% (Estimated Service Population x Average Cost per User)

IHS Urban Programs

Payment Allocation per Program = $181,250 + 6.25% (Estimated Service Population x Average Cost per User)

IHS and Tribal Hospitals

IHS and tribal hospitals received a $2.81 million base payment plus 2.58 percent of their total operating expenses.

IHS and Tribal Clinics and Programs

IHS and tribal clinics and programs received a $187,500 base payment plus 5.43 percent of the estimated service population multiplied by the average cost per user.

IHS Urban Programs

IHS urban programs received a $181,250 base payment plus 6.25 percent of the estimated service population multiplied by the average cost per user. HHS allocated approximately 4% of available funding 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. The remaining funding was divided equally between hospitals and clinics.

HHS allocated approximately 4% of available funding 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. The remaining funding was divided equally between hospitals and clinics.

The distribution amount for eligible safety net hospitals was 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. Eligible hospitals received 2.5 percent of their net revenue from patient care.

HHS extracted information from CMS Hospital Cost Reports to identify acute care facilities and children's hospitals that met each of the following criteria, respectively:

Acute Care Facilities

1. A Medicare Disproportionate Patient Percentage (DPP) of 20.2% or greater
2. Annual uncompensated care (UCC) of at least $25,000 per bed
3. Profit Margin of 3.0% or less

Children's Hospitals

1. A Medicaid-Only Ratio of 20.2% or greater
2. Profit Margin of 3.0% or less

HHS determined each acute care facility's bed-weighted DPP score by performing the following calculation: Acute Care DPP Score X Number of facility beds.

HHS determined each Children's Hospital's bed-weighted Medicaid-Only Days score by performing a similar calculation: Medicaid-Only Ratio X Number of facility beds. For children's hospitals, Medicaid-Only Ratios were used because these hospitals do not report DPP. Since a hospital's Medicaid-Only Ratio enters the DPP calculation for acute care hospitals, we used the Medicaid-Only Ratio for children's hospitals instead.

Each acute care or children's hospital's individual score was expressed as a percentage of the total sum of bed-weighted facility DPP scores and Medicaid-Only Ratios. This percentage was multiplied by $10 billion.

A minimum Distribution value of $5,000,000 was applied to each facility with an unadjusted Distribution value less than $5,000,000, and a maximum Distribution value of $50,000,000 was applied to each facility with an unadjusted Distribution value greater than $50,000,000.