HHS Grants Much-Needed Cash Infusion to Rural Providers

The news coincided with the sudden worldwide emergence of the new omicron COVID-19 variant.

An influx of cash couldn’t have come at a better time for the nation’s rural healthcare system.

The U.S. Department of Health and Human Services (HHS) last week announced that the Health Resources and Services Administration (HRSA) has begun distributing $7.5 billion in American Rescue Plan (ARP) payments to providers and suppliers serving rural Medicaid, Children’s Health Insurance Program (CHIP), and Medicare beneficiaries.

“The Biden-Harris Administration is committed to providing much-needed relief to rural providers who historically operate on thin margins and have had their financial challenges further exacerbated during the (COVID-19) pandemic,” the agency said in a press release.

“Healthcare providers in rural communities have been hit hard by the COVID-19 pandemic, and they continue to experience significant financial hardships,” HHS Secretary Xavier Becerra echoed in a statement. “The infusion of these funds will be critical to ensuring rural communities maintain access to high-quality healthcare and addressing urgent needs like workforce recruitment and retention.”

The payments varied wildly, with the average sum set at slightly more than $170,000, but individual sums ranging from $500 to $43 million. More than 40,000 providers in all 50 states, Washington, D.C., and six U.S. territories are set to receive the payments.

The financial challenges faced by rural providers have been well-documented in recent years. A recent report by the Cecil G. Sheps Center for Health Services Research at the University of North Carolina found that a whopping 137 rural hospitals in the U.S. have closed since 2010, with the vast majorities of the closures affecting the South and the lower Midwest. A 2019 report by the American Hospital Association (AHA), “Challenges Facing Rural Communities and the Roadmap to Ensure Local Access to High-Quality, Affordable Care,” found that likewise, 380 rural hospital mergers took place from 2005 to 2016, with some rural hospitals merging more than once.

All this while one in five Americans lives in a rural area.

“Rural providers play an integral role in the Administration’s focus on addressing health equity,” HHS said in its press release. “Research has found that 47 percent of rural providers were operating in the red pre-pandemic, and this Administration has heard from providers on the ground that the pandemic worsened this reality. To help mitigate some of these pandemic-related financial losses, providers were invited to begin applying for this ARP rural relief funding starting September 29, 2021, and asked to complete their applications by November 3, 2021.”

In just three weeks, HHS noted, HRSA processed nearly 96 percent of the more than 55,000 applications submitted. Many of the recipients will also be eligible for additional funding through the $17 billion Provider Relief Fund (PRF) Phase 4 initiative that was also made available during the same time period; providers were able to apply for both opportunities through a single application.

The payments were based on claims from January 2019 through September 2020, to account for both pre- and post-pandemic operating conditions.

“Rural providers serve a disproportionate number of Medicaid and CHIP patients who often have more complex medical needs. To provide equitable relief to these providers, ARP rural payment calculations were generally based on Medicare reimbursement rates, regardless of whether the service was provided to a Medicare, Medicaid, or CHIP patient,” HHS said. “Every eligible provider that serves at least one rural Medicare, Medicaid, or CHIP beneficiary will receive funding.”

Officials noted that the funds are intended to help providers “keep their doors open” via addressing workforce challenges, lost revenues, and increased expenses exacerbated by global supply-chain issues. The funds can be used to pay for salaries, recruitment, or retention of staff, along with supplies, equipment, capital investments, information technology investments, or other expenses related to COVID.

“HRSA has a deep and longstanding commitment to supporting health providers in rural communities,” HRSA Acting Administrator Diana Espinosa said in a statement. “The billions of dollars of funding we are distributing today will provide vital support to rural communities on the front lines of this pandemic.”

The news coincided with the global emergence of the omicron COVID variant, which initial reports described as being more transmissible, if not more severe, than previously seen variants. Experts cautioned that more data on the variant is needed to render a more comprehensive understanding of its effects.

A state-by-state breakdown of the ARP rural payments is available online at: https://www.hrsa.gov/provider-relief/data/targeted-distribution/arp-rural

A public dataset of providers that have received ARP payments is available at: https://data.cdc.gov/dataset/American-Rescue-Plan-ARP-Rural-Payments/8v6a-z6zq

For additional information, visit https://www.hrsa.gov/provider-relief.