HHS Distributes $30B to FFS Medicare Providers - McDermott+Consulting

HHS Distributes $30B to FFS Medicare Providers

On April 10, 2020, the US Department of Health and Human Services (HHS) began distributing $30 billion from the $100 billion Public Health and Social Services Emergency Fund to Medicare Fee-for-Service (FFS) providers. The Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136) established the fund to provide financial relief to and support for healthcare providers affected by the Coronavirus (COVID-19) pandemic.

Key Takeaways

  • HHS distributed $30 billion, leaving $70 billion yet to distribute.


  • Funds were allocated using a formula that generally conveyed 6.2% of an eligible recipient’s 2019 Medicare FFS revenue.


  • Funds were directly deposited into accounts if providers have electronic fund transfer arrangements with Medicare; providers that are paid with paper checks will receive their share of the funds by paper checks, and that may take a few weeks to be processed and received.


  • By accepting payment, a recipient must agree to a set of terms and conditions within 30 days of receipt of payment. The electronic portal for a fund recipient to accept these funds is not yet available, and the terms and conditions may change between now and when that portal becomes available. Fund recipients should carefully review the Terms and Conditions that they are asked to accept.


  • HHS used 2019 Medicare revenues as both a proxy for allocating funds and a means for distributing funds quickly Providers with little or no Medicare FFS revenue were disadvantaged by this approach. HHS indicated that the distribution of the remaining $70 billion will focus on providers in hotspot COVID-19 areas, rural providers and providers that may not have been eligible for this first round of funding, including providers with lower shares of Medicare reimbursement or that predominantly serve the Medicaid population.

Helpful Links

Eligible Recipients

Recipients of the first wave of funding included hospitals, physicians and others who had FFS Medicare reimbursement in 2019. According to the current version of the Terms and Conditions (TC), an eligible provider must meet the following criteria:

  • The provider currently provides diagnoses, testing or care for individuals with possible or actual cases of COVID-19.
  • The provider is not currently terminated from participation in Medicare and has billing privileges.
  • The provider is not currently excluded from participation in Medicare, Medicaid and other federal healthcare programs.

Payment Calculation and Distribution

Unlike some of the other funding sources available to providers in response to the COVID-19 pandemic (e.g., Medicare Accelerated and Advance Payment Program), the payments from the fund are not loans, and providers will not be required to repay them. HHS is distributing the funds in a rapid fashion, with payment generally arriving through direct deposit on April 10.[1] Providers must certify to the TC within 30 days of accepting the funds.

Payment Calculation

For the distribution of the $30 billion, HHS has calculated payments based on the recipient’s share of 2019 Medicare FFS payments relative to total 2019 Medicare FFS payments ($484 billion). Recipients can estimate their payment by dividing their 2019 Medicare FFS payments by $484 billion and multiplying that ratio by $30 billion.

Payment Formula

Total 2019 Medicare FFS Reimbursement x 0.062

As an example, HHS estimated that a hospital that received $121 million in Medicare FFS payments in in 2019 would receive a payment of $7.5 million ($121 million x 0.062 = $7.5 million).

The calculation of the $30 billion targeted at Medicare FFS providers was relatively straightforward, but HHS may face challenges as it tries to expand the distribution beyond this initial group of providers for the remaining $70 billion where the Administration has indicated that non-Medicare FFS providers will be a priority. Medicare claims data provides a data-driven, relatively straightforward and transparent means to allocate funds. HHS likely opted for this approach because there is no similar data source for Medicaid providers or Medicare Advantage providers, or for services provided to the uninsured. HHS may need to get creative to devise a methodology to target some portion of future allocations towards providers that do not typically bill original Medicare.

Distribution Mechanism

HHS is partnering with UnitedHealth Group to distribute the funds. Providers were paid via Automated Clearing House account information on file with UnitedHealth Group, UnitedHealthcare or Optum Bank, or information used for reimbursements from the Centers for Medicare & Medicaid Services. All relief payments are made to providers according to their tax identification number (TIN). Large organizations and physician group practices will receive relief payments from their billing TINs. Physician group practices will receive payments under the TIN at which they receive payments from Medicare. Employed physicians will not receive an individual payment; the payment will go to their billing organization.