HHS to change coronavirus funding after Miami hospitals get less than expected

The Department of Health and Human Services said Monday it will change its system for distributing $100 billion to hospitals for coronavirus relief, after South Florida was shortchanged during the first $30 billion installment.

The money for healthcare providers was originally handed out based on their share of 2019 Medicare fee-for-service spending. But that spending calculation hurts hospitals in Miami — including Jackson Health System — that rely more on money from Medicare Advantage plans, which are offered by private companies that contract with Medicare.

Jackson CEO Carlos Migoya sent a critical letter to HHS Secretary Alex Azar last week, saying the funding method could jeopardize “the very existence” of health systems like Jackson, which has already grappled with the possibility of pay cuts and furloughs in the midst of the pandemic.

And Miami Democratic Rep. Donna Shalala, who ran HHS during the Clinton administration, called the allocation of money particularly hard on South Florida, where the majority of COVID-19 hospitalizations in the state have occurred so far.

HHS defended the decision, arguing that it was imperfect but the best way to get money to hospitals immediately.

A spokesperson for Jackson said Jackson Memorial Hospital, despite its status as the third largest hospital in the country, only received $16.5 million from HHS as a part of the $2 trillion coronavirus relief bill that included $100 billion for hospitals.

Jackson announced furloughs and pay cuts April 3, but reversed course the next week after an outcry from unions that represent healthcare workers at the hospital. The unions and Jackson eventually worked with the Miami-Dade County commission to receive a $150 million line of credit to continue operating.

But the hospital, which is losing millions of dollars a month now that all elective surgeries have been canceled, said it needs more help from the federal government.

“A one-time infusion of $16.5 million naturally does not offset an going revenue loss of $25 million per month,” Jackson Vice President and Chief Marketing Officer Matthew Pinzur said in an email.

Shalala said the decision by HHS to dole out $30 billion to hospitals based on Medicare fees particularly hurt South Florida. “Two-thirds of the people in Miami-Dade are in Medicare Advantage plans, not fee-for-service plans,” she said. “[HHS] knew that. The governor’s office told them that. I think that they didn’t care. I think they just wanted to get the money out quickly.”

In Migoya’s letter to Azar on April 9, he argued that the funding calculations left Miami’s hospitals, which are fighting the state’s largest COVID-19 outbreak, at a disadvantage because they use less of the “fee-for-service model that is currently contemplated to allocate some of the federal relief funds.”

“If anything, public, mission-driven, safety net organizations like ours are even more dependent upon our elective business: that small share of our volume funds a huge share of work,” he wrote. “A failure to address that reality in the allocation of these relief funds could jeopardize the very existence of luminary health systems like Jackson.”

Shalala and an HHS spokesperson said Monday that the funding measures will be changed for the next batch of money that will be released to hospitals. It’s not clear when the second round of funding will be sent out. Hospitals began receiving money from the first round of funding on Friday.

When asked about the distribution of the money, an HHS spokesperson on Monday pointed to Centers for Medicare & Medicaid Services director Seema Verma’s comments at the April 7 White House coronavirus briefing.

“The most important thing was to get these dollars out as quickly as possible,” Verma said. “But we recognize that, in terms of getting these dollars out, because it’s based on Medicare revenues, there are providers out there — pediatricians, children’s hospitals, OB-GYNs, even our nursing homes — that a lot of their revenue comes from other sources.“

She added that those kinds of providers would be addressed in the second round of funding.

Shalala said she wants HHS money to be allocated on the number of licensed beds in a given area, with extra funding going to hard-hit areas like New York City. Migoya said he supports a distribution formula that takes into account a hospital’s “mix of Medicaid and unfunded/charity-care work.”

Shalala also said Florida Gov. Ron DeDantis’ office was aware that Florida would get less money compared to other states and raised concerns to HHS and the White House. Florida politicians first informed the White House and HHS of the issue two weeks ago but, despite that, the funds went out last week based on Medicare fee-for-service spending.

“It’s the original amateur hour,” Shalala said of the White House. “To deliberately do that after they were told that Medicare-for-fee ... is a weak measure. This is not the fault of the governor or the healthcare leadership of our state.”

This story was originally published April 13, 2020 at 5:31 PM.