In response to the COVID-19 emergency, the federal government distributed billions of dollars in CARES Act relief funding to health care providers, including Medicare-certified home health agencies.
In some cases, though, the funds are being held up due to the distribution process. That’s a costly hold-up for providers, many of which are using the relief funding as a financial lifeline to help mitigate COVID-19 costs and disruption.
Specifically, buyers that purchased health care companies in January found themselves placed on the backburner. In other words, a home health agency that acquired a competitor in late 2019 may not have gotten CARES Act relief money tied to that business.
“I have several clients who did not receive those general fund payments,” Randy Glenn, an attorney at Austin, Texas-based law firm Glenn Rogers, told Home Health Care News. “They amount to about a half-million dollars on average, from what I’ve seen.”
In April, the Department of Health and Human Services (HHS) sent a first tranche of CARES Act funds to providers directly based on 2019 Medicare reimbursements. The money was wired to the bank accounts associated with the taxpayer identification number (TIN) on record.
This meant that owners that took over Medicare licenses in late 2019, or early 2020, did not receive relief money. Instead, the funds automatically went to previous owners who no longer operated these companies.
Further complicating the issue, former owners are not permitted to send the money directly to new owners. HHS requirements stipulate that the funds must be returned to the federal government.
The funds are to be reallocated in the next round of distribution, which could take months or longer, according to Glenn.
“There’s no guarantee that these funds are ever going to find their way to these providers who assumed these Medicare contracts in late 2019, or early 2020,” he said.
While being placed in “Medicare purgatory” is largely a phenomenon that is taking place in the skilled-nursing space, home health providers and other Medicare contractors are not immune, according to Glenn.
“I believe that this does impact all Medicare contractors,” he said. “This can happen to anyone who has a Medicare contract and is providing care under that contract.”
For home health providers dealing with the financial fallout of the public health emergency, waiting for the next round of relief fund distribution may prove difficult.
And providers that have not received funds are operating at a competitive disadvantage, according to Glenn.
Many providers have seen cost increases since the start of the COVID-19 emergency. The most obvious cost of doing business is the rising price tag on personal protective equipment (PPE).
Amedisys Inc. (Nasdaq: AMED), for example, reported $1 million in increased costs due to the public health emergency in the first quarter of 2020. The costs were associated with increased training expenses, quarantine pay and PPE.
Meanwhile, Chicago-based in-home care franchises company BrightStar Care acquired $2 million in PPE alone.
In April, Moorestown, New Jersey-based Bayada Home Health Care told HHCN that the company used a year’s worth of supplies in just one week. This led the company to launch a fundraising campaign for, among other things, supplies.
Additionally, several providers saw their bottom lines take a hit due to a decline in home health admissions.
Moving forward, Glenn believes that there is a clear path forward for HHS when it comes to solving the issue of misdirected funds.
“I believe this can be pretty quickly and easily solved,” Glenn said. “Someone at HHS who has the authority to take this on and see it through to the end [should] just dig into this and get the funds to the right place. HHS is under pressure because of COVID-19 and their resources are stretched, but there’s no doubt that this a pretty simple fix.”