COVID Relief Funding for Medicaid Providers The COVID-19 pandemic has created financial strains for many health care providers due to the increased costs of treating patients with virus-related illnesses and decreased revenue from disruptions to the health care delivery system, such as delays in elective procedures and other routine services. Safety-net providers that serve a high share of Medicaid and uninsured patients are particularly vulnerable because prior to the pandemic they often had low operating margins and because Medicaid patients have been disproportionately affected by COVID-19. 1 In March 2020, Congress created a provider relief fund intended to help cover expenses and lost revenue attributable to COVID-19 through the Coronavirus Aid, Relief, and Economic Security Act (CARES Act, P.L. 116-136). In April 2020, Congress enacted the Paycheck Protection Program and Health Care Enhancement Act (P.L. 116-139), which increased the size of the provider relief fund to a combined total of $175 billion. Both Medicare- and Medicaid-enrolled providers are eligible to receive funds, but they have received relief funding at different times and through different processes. The U.S. Department of Health and Human Services (HHS) began distributing relief funds to Medicare-enrolled providers automatically in April 2020. It did not begin distributing funding to Medicaid and State Children’s Health Insurance Program (CHIP) providers who were not enrolled in Medicare until June 2020.2 This issue brief reviews the distribution of provider relief funds to Medicaid and CHIP providers based on a review of applications submitted as of November 26, 2020 (after the deadline for the most recent general distribution of relief funds). Overall, we find that many Medicaid and CHIP providers who are not enrolled in Medicare have not received any provider relief funds, which has particularly affected provider types that serve a high share of Medicaid patients, such as pediatric practices, home- and community-based services (HCBS) providers, and behavioral health providers.3 In December 2020, Congress enacted the Consolidated Appropriations Act (P.L. 116-260), which added an additional $3 billion to the provider relief fund and directed HHS to distribute at least 85 percent of the unspent funds appropriated under the CARES Act to providers based on their financial performance in the second half of calendar year 2020 and the first quarter of 2021. As of the week of January 11, 2021, approximately $58 billion in provider relief funds remained unspent (HHS 2021a). Allocation of Provider Relief Funds The statute provides the Secretary of HHS with broad authority to determine which providers are eligible for provider relief funding and how much funding individual providers may receive. To date, HHS has allocated $150.4 billion in funding through a variety of general distributions available to most provider types and targeted distributions available to specific types of providers (HHS 2021b). Additionally, HHS has allocated approximately $3 billion in funding to reimburse providers for COVID -19 testing and 2 treatment of uninsured individuals (HHS 2021a). More information about each provider relief fund allocation to date is provided in Appendix A. Initial distributions from the provider relief fund prioritized making payments quickly over providing funds in a targeted manner. On April 10, 2020, two weeks after the CARES Act was passed, HHS made an initial distribution of $30 billion to all Medicare-enrolled providers based on their Medicare fee-for-service (FFS) revenue. On April 24, HHS increased this general distribution to $50 billion total and developed a new formula for targeting payments to providers based on their patient care revenue across all payers. HHS has referred to these initial disbursements as the Phase 1 general distribution. Approximately 62 percent of Medicaid and CHIP providers are also enrolled in Medicare and thus received funds in Phase 1 (HHS 2020). In response to concerns that the initial distributions did not adequately target funding to providers with the greatest need, HHS subsequently made additional distributions to particular provider types, such as safety-net hospitals, nursing facilities, and rural providers. For each provider type, HHS developed methods to determine which providers were eligible and how much funding they would receive. For example, safetynet hospitals received payments based on their Medicare disproportionate share hospital (DSH) patient percentage and nursing facilities received payments based on their number of certified beds.4 In addition to the targeted distributions, HHS also made another general distribution (Phase 2) in June 2020 for Medicaid and CHIP providers who were not eligible for Phase 1, as well as dentists and assisted living facilities. 5 Funds were distributed using the same method as in Phase 1 (i.e., 2 percent of providers’ patient care revenue). Unlike the initial distributions based on Medicare revenue, eligible providers had to formally apply and submit detailed financial information to receive funds in the Phase 2 general distribution. The application deadline for the Phase 2 general distribution was extended several times and ended on September 13, 2020. In October 2020, HHS created a Phase 3 general distribution that was open to all previously eligible providers as well as additional