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The federal government announced Tuesday morning an early holiday gift to healthcare providers hit with pandemic-related losses in the form of $9 billion in Phase 4 Provider Relief Fund distributions.

The Department of Health and Human Services, through its Health Resources and Services Administration, said that eligible providers would begin receiving payments later this week, averaging $58,000 for small providers, $289,000 for medium providers and up to $1.7 million for large providers. 

The funds are part of the $25.5 billion earmarked for healthcare providers to recruit and retain staff members, buy masks and other personal protective equipment, modernize facilities, and other activities needed to respond to COVID-19. 

Approximately $8.5 billion in American Rescue Plan Rural payments were announced last month for providers who serve Medicaid, Children’s Health Insurance Program and Medicare beneficiaries.

More than 69,000 providers in all 50 states, Washington, D.C., and eight territories will receive Phase 4 payments. HRSA said it is reviewing the remaining Phase 4 applications and will make the remainder of Phase 4 payments in 2022.

“While we have made over half a million relief payments to healthcare providers throughout this pandemic, we know that many continue to face COVID-19-related financial challenges,” Acting HRSA Administrator Diana Espinosa said in a statement. 

According to the Phase 4 payment methodology HRSA released in September, approximately 75% of Phase 4 funding is being distributed based on expenses and decreased revenues from July 1, 2020, to March 31, 2021. 

The Phase 4 payments also include new elements specifically focused on equity, according to HRSA. Smaller providers will be reimbursed for their changes in operating revenues and expenses at a higher rate compared to larger providers because they “generally entered into the COVID-19 pandemic on worse financial footing, have historically operated on slimmer financial margins, and typically care for vulnerable populations.

Bonus payments are based on the amount of service providers provide to Medicaid / Children’s Health Insurance Program and Medicare beneficiaries. 

A state-by-state breakdown of the Phase 4 payments is available on the HRSA site.