Federal health officials adjusted their initial plans for how $50 billion in COVID-19 relief funding would be spent after initial objections surfaced.

The Department of Health and Human Services determined the entire distribution will be based on providers’ 2018 net patient revenues. 

HHS officials had previously planned to calculate the Tranche 1 funding distribution based on 2019 Medicare fee-for-service revenues.

“Some providers complained that 2019 Medicare revenues were a poor proxy for their overall lost revenues or increased expenses due to COVID-19 because they are more dependent on Medicaid, for example,” explained Brian Ellsworth, vice president for public policy and payment transformation with Health Dimensions Group. “So HHS switched the basis for final distribution to 2018 net patient revenues.” 

Because those revenues are older data, they should theoretically be more reflective of an overall financial picture than just Medicare revenues, he added. 

“Older cost reports are more complete and are more likely to have been audited, but sometimes will not reflect more recent programmatic changes undertaken by a provider, such as expanding into a new service line,” Ellsworth said. “HHS has had to balance speed of distributing funds with accuracy.”