HSS watchdog to audit $50 billion CARES act Provider Relief Fund

Updated: Jul 21



The Office of the Inspector General (OIG) at the Department of Health and Human Services (HSS) revealed an audit will be conducted and completed before the end of 2020 regarding the allocation of $50 billion in relief funds granted to hospitals and health providers to help them withstand the financial stress caused by the novel Coronavirus.


The funds were originally released under the Provider Relief Fund and appropriated as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act. The audit is to examine the effectiveness of HSS controls over the distribution of the relief funds based on the allocation methodology.


The Provider Relief Fund:


Through the CARES Act, Congress allocated around $175 billion to hospitals and other healthcare organizations in order to help offset the significant costs stemmed by the 2019 Coronavirus outbreak. Approximately $50 billion was put into the Provider Relief Fund. On April 10, 2020, $30 billion was automatically distributed to health providers by HSS in order to help withstand financial losses incurred by the epidemic and to fight the unprecedented health crisis. The remaining $20 billion was distributed, late April, to healthcare providers upon CMS cost reports showing financial losses sustained due to the pandemic.


Allocation Methodology:


The formula used by HSS to calculate the funds’ allocation has been criticized by some health providers as they claimed the plan disadvantaged hospitals and providers on the front lines that are in greater need of funding. The audit will also scrutinize the lack of formal application process to allow access to the funds., Top health officials have defended the formula as well as the application process, arguing the funds needed to be distributed, as quickly as possible, to healthcare facilities impacted by the novel 2019 Coronavirus. However, a recent analysis of over 4,500 hospitals carried out by the Kaiser Family Foundation showed that the HSS formula was biased towards health providers with the highest share of net private patient revenue and the larger operating margins. Facilities treating Medicare and Medicaid patients and therefore receiving lower rates would have, thus, been disadvantaged.


In its Strategic Plan, OIG indicated that the audit of the Provider Relief Fund will be conducted in order to ‘’prevent, detect, and remedy waste or misspending of COVID-19 response and recovery funds’’.


To assist you in reviewing your Provider Relief Fund allocation and the possible implications for your business, we are offering a FREE Organization Assessment.

If you have further questions, contact Jim Johnson at Jim@LiveCompliance.com or (980) 999-1585.

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