Health Care

Senators push for $8.5B rescue fund to go to rural providers only

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A bipartisan group of senators is not happy with how the Biden administration is doling out the $8.5 billion in American Rescue Plan funding they intended to go to rural providers.

At issue is the Health and Human Services Department’s approach to implementing the law, which is to base ARP payments on the amount of care providers delivered to patients who live in rural areas, not whether the providers themselves are rural. The lawmakers say that opens the funding to large hospitals in cities like Chicago and New York instead of providers in states like West Virginia, Montana and Colorado.

“We urge HHS to follow the letter of the law with respect to the ARPA-Rural funding, not willfully ignore Congress’ express direction,” Sens. Joe Manchin (D-W.V.), Susan Collins (R-Maine) and five others wrote in an letter to HHS Secretary Xavier Becerra on Wednesday. “Rural healthcare providers must remain at the forefront of our efforts to combat COVID-19 and need this assistance now.”

The letter points to a section of the American Rescue Plan Act that offers several options for defining rural providers. It highlights a specific option that says a provider “that serves rural patients (as defined by the secretary), which may include, but is not required to include, a metropolitan statistical area with a population of less than 500,000.”

The lawmakers said that line was carefully negotiated with the Biden administration. They said it is aimed at ensuring funds are set aside not only for providers located in rural areas, but also for those in small metropolitan areas, who predominately serve rural patients and neighboring rural areas.

“Large metropolitan areas with populations above 500,000 have had access to the majority of allocations of the PRF,” the letter said. “Of the $178 billion in the PRF, just over 6% has been allocated directly for rural providers. Far below their need, and the 20% of Americans they serve.”

Other “rural provider” definition options in the law include being located in a rural area as defined in the Social Security Act, being a rural health clinic and being a provider who provides home health services to patients who live in rural areas.

The letter was also signed by Sens. Jeanne Shaheen (D-N.H.), Jon Tester (D-Mont.), Maggie Hassan (D-N.H.), Angus King (I-Maine) and Michael Bennet (D-Colo.).

HHS’ Health Resources & Services Administration, the agency responsible for distributing the funds, did not immediately return a request for comment Wednesday. In an Oct. 1 email, an agency spokesperson highlighted the same section of the law the senators emphasized in their letter, which says a provider is rural if it serves rural patients. The spokesperson also noted that the law says the 500,000 or less metric to be considered rural is not a requirement.

It’s an important distinction because large health systems have indicated they plan to apply for the funding alongside small rural providers. Among them is 140-hospital CommonSpirit Health, a Chicago-based system that drew more than $33 billion in revenue in the year ended June 30. CommonSpirit’s finance chief said in a recent investor call that the system will apply for the rural funds “as soon as possible,” and noted that it typically receives about 1% of total distributions, given its size.

A CommonSpirit spokesperson said the health system has 45 rural hospitals. Despite being headquartered in Chicago, it does not have operations in Illinois.

The senators wrote that at least 19 rural hospitals closed in 2020, exacerbating access to care issues in rural America that already threatened critical lifelines for almost 60 million Americans. Despite the need, the letter said rural providers are often excluded from accessing federal funds by flawed definitions of “rural” used by the Federal Office of Rural Health Policy to determine whether providers are eligible to receive rural health grants from HRSA.

A page on HRSA’s website outlines eligibility for ARP’s rural fund. To be eligible, it says an applicant or at least one of its subsidiaries must be a rural health clinic, a provider located in a rural area or a provider that billed Medicare, Medicaid or the Children’s Health Insurance Program between January 1, 2019 and September 30, 2020 and operates within the FORHP’s definition of a rural area, which includes being located in a non-metro county or in one of the roughly 300 outlying metro counties. The amount of ARP rural payments providers get will be based on the amount and type of Medicare, Medicaid and CHIP services they provided to rural patients.

ARP rural payment recipients will need to certify that they will allocate the payments to the providers associated with the applicable subsidiary, according to HRSA’s website.


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