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The Biden administration on Friday said it plans to release more than $25.5 billion in funding to help hospitals and other health providers with costs associated with the COVID-19 pandemic.

The money comes from the $178 billion Provider Relief Fund, which was created last year. But it’s been 11 months since the last round of funding was released, and bipartisan lawmakers and industry groups have been pressuring the Department of Health and Human Services (HHS) to release more.

According to a government watchdog report from May, about $44 billion remains unspent, along with $8.5 billion Congress allotted in March for medical care in rural areas. The report called on HHS to tell Congress when it planned to distribute the money

The funding announced Friday includes the $8.5 billion for rural providers, as well as an additional $17 billion for a broad range of providers who can document revenue loss and expenses associated with the pandemic.

“This funding critically helps health care providers who have endured demanding workloads and significant financial strains amidst the pandemic,” HHS Secretary Xavier BecerraXavier BecerraWhite House plan backs Medicare drug price negotiation Nursing homes warn vaccine mandate could lead to staff shortages Medicare reserves unchanged despite COVID-19 pandemic MORE said in a statement. “The funding will be distributed with an eye towards equity, to ensure providers who serve our most vulnerable communities will receive the support they need.”

Payments will be based on providers’ lost revenues and expenditures between July 1, 2020, and March 31, 2021, according to HHS. That time frame excludes hospitals that are currently struggling due to the delta variant and the influx of patients.

HHS said the newest funding will reimburse smaller providers — who tend to operate on thin margins and often serve vulnerable or isolated communities — at a higher rate compared to larger providers.  

The first deadline for providers to report how they used grants they have already received is Sept. 30, but HHS on Friday announced a 60-day grace period “in light of the challenges providers across the country are facing due to recent natural disasters and the Delta variant.”

Under the plan for the funds that was drawn up by the Trump administration, the initial tranche was sent out quickly, and was based on a hospital’s volume of Medicare patients. As a result, much of that first wave bypassed hospitals in states on the front lines of the areas hardest hit by the coronavirus.

Subsequent funding distributions were specifically targeted at providers in hot spots, as well as nursing homes. 

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