By Amy Goldstein,
For The Washington Post
Federal aid could help Katherine Shaw Bethea Hospital in Dixon, Ill., weather pandemic-related financial strain.
Tens of billions of dollars designated by Congress to help hospitals, nursing homes and other health-care providers stave off financial hardship from the coronavirus pandemic are sitting unused, because the Biden administration has not released the money.
As many hospitals bulge again with covid-19 patients, a wide swath of the health-care industry is exasperated that federal health officials have not made available any more of the aid since President Biden took office. About $44 billion from a Provider Relief Fund created last year remains unspent, along with $8.5 billion Congress allotted in March for medical care in rural areas.
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 prompting potential patients and residents to stay away.
Parkinson said he has had four conversations since February with the agency within the Department of Health and Human Services in charge of the money, and one last month with senior staff 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 bottleneck of aid 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, 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 about the provider fund on Capitol Hill. 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 lost revenue because of the coronavirus. The laws do not specify how quickly it 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 has been distributed based on 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.
For The Washington Post
Last winter, during the pandemic’s deadliest months, Katherine Shaw Bethea had more patients than beds.
The lack of federal money to help buffer financial strain 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 marked 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.
Even before 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, paying steep prices for scarce protective gear, 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 pay back.
“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 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 has a plan 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 had begun in April 2020 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 a lot of 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 batches 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.
For The Washington Post
An employee enters the pharmacy at the hospital Aug. 24.
It was November when Trump administration health officials began work on what they envisioned as a fourth and final phase. For the first time, applications would be allowed 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 “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 of 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 more for running Georgia’s biggest nursing home, treating uninsured patients and providing other services. All the money was spent by this past June.
“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 to at least 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 it needed more time and, late this spring, the Biden administration gave it to them.
That rule change, however, did not say when any of the remaining money will be released. Still, the industry expected 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 what remains unspent.
According to the HRSA, the $43.7 billion in the provider fund includes $24 billion that health officials have never 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 covid-19 cases and 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 Leading Edge, a coalition serving older Americans.
For The Washington Post
As part of an expansion of the hospital pharmacy, a special air system is being installed.
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 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.
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