Providers: $25.5 billion in Provider Relief Fund & American Rescue Plan rural funding is now available. Submit your application by October 26, 2021.

Payment Methodology

Complete Your Application by November 3, 2021 for Phase 4 and ARP Rural Distributions

Complete your application via the Provider Relief Fund Application and Attestation PortalHRSA Exit Disclaimer Applicants who submitted their Tax Identification Number (TIN) for validation prior to the deadline now have until November 3, 2021 at 11:59 PM EST to submit a completed application.

Provider Relief Fund Phase 4 Payment Overview

In the interest of transparency, HRSA is publishing the methodology that will be used to determine the payment amounts for Provider Relief Fund (PRF) Phase 4. Exact figures are not provided in some steps as they will depend on analysis of the applications received. After applications have been received and analyzed, HRSA will publish the final figures used to calculate payments.

PRF Phase 4 consists of two components:

  1. Base Payments: Approximately 75% of the funding will be allocated to providers based on their reported changes in revenues and expenses for the period from July 1, 2020 to March 31, 2021. Smaller and medium-sized providers (based on annual net patient care revenues) will receive relatively higher percentages of their changes in revenues and expenses from this period.
  2. Bonus Payments: Approximately 25% of the funding will be used to make bonus payments to providers based on the provider’s level of participation in Medicaid, the Children’s Health Insurance Program (CHIP), and Medicare.

Section 1: Application Review Process

Step 1: TIN Validation

IRS Validation: Once a provider applies for a Phase 4/ARP Rural payment, the provider's Tax Identification Numbers (TINs) are validated against Internal Revenue Service (IRS) data in order to ensure that the TIN submitted is a valid, registered TIN and is associated with the correct name on the provider's tax return. The most common reason that providers fail IRS validation is that their application does not list their tax name exactly as it appears on their W-9. Entities that do not pass the IRS validation are ineligible for a Phase 4 payment.

TIN Validation: Once a provider passes IRS validation, HRSA will also verify that the entity is a known provider as a program oversight safeguard. HRSA has compiled a list of 1.4 million TINs associated with valid Medicare, Medicaid, Children’s Health Insurance Program (CHIP), dental, behavioral health, and other eligible providers (i.e., the "curated list of providers"). If a provider is not on the list, HRSA sends the provider's filing TIN and subsidiary/billing TINs to state/territorial Medicaid/CHIP agencies, the Substance Abuse and Mental Health Services Administration, or other relevant entities, in order to validate the provider. If the provider is validated, their TIN is added to the curated list. Entities that are not on the curated list of providers or those that are determined to be not valid by HRSA are ineligible for a Phase 4 payment.

Step 2: Calculation of Initial Loss Ratio And Provider-Type Loss Ratios

Once the application cycle closes, HRSA will begin pre-payment risk mitigation and cost containment activities.

Initial Loss Ratio: HRSA will calculate an initial loss ratio in the following manner:

  1. Quarterly Losses = Sum of Operating Revenues from Patient Care (see Applicant Instructions Fields 13.1-13.6) MINUS Sum of Operating Expenses from Patient Care (see Applicant Instructions Fields 14.1-14.6)
  2. Loss Ratio = Quarterly Losses DIVIDED BY Annual Net Patient Care Revenues (see Applicant Instructions Field 12)

Provider-Type Loss Ratio: The Phase 4 application includes a field for self-selected provider type. For each provider type, HRSA will calculate the loss ratio mean, median, and standard deviation from applicants in that provider type.

Step 3: Identifying Flags

HRSA will employ several pre-payment risk mitigation and cost containment safeguards to ensure that information is accurate and legitimate and that HRSA is making payments equitably. HRSA will employ the following flags to identify providers for different treatment or additional review:

  1. New providers in 2019 or 2020 that began delivering patient care between January 1, 2019 and December 31, 2020.
  2. Pharmacies and Durable Medical Equipment (DME) suppliers.
  3. Anomalous financial information
    • Single quarter of revenues or expenses greater than X% of the applicant's total annual revenues*
    • Loss ratio greater than Nth percentile for their provider type**
    • High potential payment

    *Percentage will be determined after analysis of applicants received during the application period.
    **Percentile will be determined after analysis of applicants received during the application period.

  4. Duplicate or Related Applications.

Note: HRSA does not conduct in-depth reviews of applications flagged as "New Providers in 2019 and 2020" or "Pharmacy and DME supplier" unless the application is flagged for another reason. (See Section 2, Step 1 for treatment of new providers and pharmacy and DME providers.)

Step 4: In-Depth Review

If C. or D. of the Step 3 flags is raised, HRSA will conduct an in-depth review of the application and supporting documentation:

  • Anomalous Financial Information—Applications with this flag will be reviewed for documentation that reasonably supports the reported figures.
  • Duplicate or Related Applications—HRSA will review the applications to determine if they are duplicate or related applications.

Step 5: Payment Adjustment Determinations

At this step of the payment process, HRSA will make payment adjustment determinations (see Section 2) based on the provider applications that have been received and associated flags.

Section 2: Payment Adjustments, Caps, And No Payment

Step 1: Automatic Payment Adjustments

For New Providers and pharmacy/DME flags that do not undergo a manual review, HRSA will make the following adjustments to the applications' reported financial figures:

Flag Adjustments to
Annual NET Patient Care REVENUES
Adjustments to
Quarterly Losses
New provider in 2019 or 2020 Sum of Operating Revenues from Patient Care (see Application Instruction Fields 13.1-13.6) Median Provider-Type Loss Ratio MULTIPLIED BY  Annual Net Patient Care Revenues (see Application Instructions Field 12)
Pharmacies and DME suppliers Capped at 10% of Total Annual Revenues (see Application Instruction Field 10) Capped by the same ratio by which Annual Net Patient Care Revenues was adjusted

Step 2: Payment Adjustments Based on Manual Review

HRSA will make the following adjustments to an applicant’s reported financial figures based on the in-depth manual review:

Anomalous Financial information Resolved
(documentation fully supports reported figures)
Not Resolved - Reasonable
(some inaccuracies in supporting documentation)
Not Resolved - Insufficient (missing or inaccurate information)
Loss ratio greater than Nth for their provider type Paid based on
submitted figures
Adjusts Quarterly Losses to Nth percentile based on provider type No Payment
Single quarter revenues or expenses greater than X% of the applicant's total annual revenues Paid based on
submitted figures
Caps Quarterly Losses at mean Provider-Type Loss Ratio No Payment
High potential payment Paid based on
submitted figures
Caps Quarterly Losses at mean Provider-Type Loss Ratio No Payment

Section 3: Calculation of Payments

Of the $17 billion Phase 4 allocation, approximately 75% will be used for Base Payments, and 25% will be used to make Bonus Payments. 

Step 1: Calculating Base Payment

After the payment adjustments are calculated, HRSA will calculate the Base Payment, which is a percentage of a provider's change in quarterly operating revenues and expenses.  Provider size categories (Small, Medium, and Large) will be based on annual net patient care revenues, and will be established after the close of the Phase 4 application and any payment adjustments are made.

Large providers will receive a Base Payment amount that is X%* of the change in their operating revenues and expenses summed across all three quarters (after payment adjustments have been considered). For example, in Phase 3, that amount was 88 percent. Base Payments for medium and small providers will include X% of the change in their quarterly operating revenues and expenses (after payment adjustments have been considered) plus a supplement payment equivalent to an additional percentage (to be determined) of the sum of their change in revenues and expenses for the three quarters, with small providers receiving the greatest amount. No provider will receive a Base Payment that exceeds 100% of their change in quarterly operating revenues and expenses.

* Percentage will be determined after analysis of applicants received during the application period.

Base Payment for New Applicants: New applicants are defined as having no TINs, including at the subsidiary level, that have received a General Distribution payment in any of the previous three phases or a Targeted Distribution payment.  New applicants will receive a payment that is the greater of:

  • 2% of Annual Net Patient Care Revenues, or
  • Their calculated Base Payment. 

Step 2: Deductions of Prior PRF Payments From Base Payments

HRSA will deduct prior Provider Relief Fund payments that were not previously deducted in Phase 3.  This will allow providers that have never benefitted from the Provider Relief Fund to receive greater financial support.

Step 3: Calculating Bonus Payments

Approximately 25% of the Phase 4 funding will be used to make Bonus Payments to providers based on Medicare, Medicaid, and CHIP administrative claims data from January 1, 2019 through September 30, 2020. To reduce administrative burden and streamline application processing, providers will not provide claims data in the application. HRSA will use data to which it already has access.

  1. HRSA will price Medicaid and CHIP claims data at Medicare rates, in order to promote equity between Medicare and Medicaid/CHIP reimbursement rates.  There will be some limited exceptions for certain services provided predominantly in Medicaid and CHIP, when those services are not typically provided (and therefore not priced) by Medicare.
  2. HRSA will calculate the number and type of Medicare, Medicaid, and CHIP claims per billing TIN, and multiply them by the relevant prices from Step 1.
  3. HRSA will adjust the Bonus Payments to the portion of funding set aside for bonus payments.
  4. HRSA will then aggregate billing TINs' payments to the filing TIN (i.e., the applicant).

American Rescue Plan (ARP) Rural Payment Overview

In the interest of transparency, HRSA is publishing the methodology that will be used to determine the payment amounts for American Rescue Plan (ARP) Rural payments. Exact figures are not provided in some steps as they will depend on analysis of the applications received. After applications have been received and analyzed, HRSA will publish the final figures used to calculate payments.

The $8.5 billion in ARP Rural payments will be made to providers based on the amount and type of services they provide to Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) patients who live in rural areas, as defined by the Federal Office of Rural Health Policy. In other words, eligible providers who may not live in an area classified as rural, but who serve rural patients, may receive ARP Rural payments.

Section 1: Application Review Process

Step 1: TIN Validation

IRS Validation: Once a provider applies for a Phase 4/ARP Rural Distribution payment, the provider's Tax Identification Numbers (TINs) are validated against the Internal Revenue Service (IRS) data in order to ensure that the TIN submitted is a valid, registered TIN and is associated with the correct name on the provider's tax return. The most common reason that providers fail IRS validation is that their application does not list their tax name exactly as it appears on their W-9. Entities that do not pass the IRS validation are deemed ineligible for an ARP Rural payment.

TIN Validation: Once a provider passes IRS validation, HRSA will verify that the entity is a known provider as a part of program oversight. HRSA has compiled a list of 1.4 million TINs associated with valid Medicare, Medicaid, Children’s Health Insurance Program (CHIP), dental, behavioral health, and other eligible providers (i.e., curated list of providers). If a Medicare, Medicaid, or CHIP provider is on the curated list, the applicant is eligible to apply via the PRF application portal for ARP Rural payments.

Step 2: Flags and Payment Adjustments

HRSA will conduct an analysis to flag applications to ensure information is accurate.  HRSA will flag applicants that appear to be duplicate or related.  HRSA will conduct an in-depth review of the applications and supporting documentation to determine if they are duplicate or related applications.

  • If an applicant's TIN is duplicate, then HRSA will only pay the last application submitted.
  • If an applicant's TIN is unique, but the billing TIN (i.e., TIN that submitted the claim for healthcare services) is duplicate, then HRSA will remove the billing TIN from payment calculation and the billing TIN will be classified as "No Pay."

Section 2: Calculation of Payments

Payments will be based on Medicare, Medicaid, and CHIP administrative claims data from January 1, 2019 through September 30, 2020. To reduce administrative burden and streamline application processing, providers will not provide claims data in the application. HRSA will use data to which it already has access.

Step 1. HRSA will price Medicaid and CHIP claims data at national Medicare rates, to eliminate any impact from the disparities between Medicare and Medicaid/CHIP reimbursement rates. There will be some limited exceptions for certain services provided predominantly in Medicaid and CHIP, when these services are not typically provided (and therefore not priced) by Medicare.

Step 2. HRSA will calculate the number and type of Medicare, Medicaid, and CHIP claims per billing/subsidiary TIN from January 1, 2019 through September 30, 2020, and multiply them by the relevant prices from Step 1.

Step 3. HRSA will adjust the claims-based payments to the amount of funding available for ARP Rural (approximately $8.5 billion).

Step 4. HRSA will then aggregate billing TINs' payments to the filing TIN (i.e., applicant).

Date Last Reviewed:  October 2021


Phase 4 General Distribution And ARP Rural Payments Application Instructions