The money comes out of a $175 billion fund Congress passed a few months ago to help providers that have been slammed by a financial crisis caused by the COVID-19 pandemic.
“Children’s hospitals have seen decreasing patient visits and increased costs,” the Department of Health and Human Services (HHS) said in a statement Friday. “This distribution will help to ensure children’s hospitals receive relief funding proportional to other hospitals across the nation and providers caring for children are able to continue operating safely in some of our most vulnerable communities.”
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To get the funding, a free-standing children’s hospital must be either exempt from the Centers for Medicare & Medicaid Services’ inpatient prospective payment system or be defined as a children’s hospital graduate medical education facility by the Health Resources and Services Administration.
“Eligible hospitals will receive 2.5% of their net revenue from patient care,” HHS officials said. “Qualifying free-standing children’s hospitals will begin receiving funds next week.”
This is the latest targeted distribution of the $175 billion provider relief fund passed by the CARES Act. HHS originally distributed money to providers based on their Medicare payments, but providers have complained that doesn’t help those that rely on other revenue sources.
HHS already gave out nearly $15 billion to safety hospitals and $11 billion to rural healthcare providers. The agency is also allocating funding to hospitals that have seen a high number of COVID-19 cases.
The American Hospital Association (AHA) praised the new targeted funding.
“We continue to urge the Administration to distribute additional relief to all hospitals and health systems, as well as those in so-called ‘hot spots,'” the AHA said in a statement.
The pandemic has hit hospitals hard as states canceled elective procedures back in March to preserve capacity and supplies to combat COVID-19. While patient volumes have slowly rebounded in some hospital systems, hospitals are still trying to recover.
Major hospital systems such as Tenet Healthcare, HCA Healthcare and Universal Health Services reported profits in the second quarter despite the major drops in patient volumes in March and April. A pivotal reason was funding from a $175 billion fund included in the CARES Act passed by Congress a few months ago.