HHS Increases Phase 3 Provider Relief Funding, Starts Distributions

The U.S. Department of Health and Human Services (HHS) has increased the amount of money it’s giving to health care organizations as part of its third phase of distributions from the Provider Relief Fund (PRF). It will send $24.5 billion to 70,000 providers, $4.5 billion more than the department originally planned to distribute in this tranche of funding.

HHS announced the news on Wednesday, when payment distributions began. It will continue to send out money through January 2021.

Created by the CARES Act, the PRF is designed to help certain health care providers offset COVID-19-related losses and costs, in most cases giving them up to 2% of their annual revenue from patient care in federal relief.


PRF payments don’t have to be repaid; however, providers who receive them must follow certain rules and spend the money on COVID-19-related expenses.

HHS decided to implement the $4.5 billion funding increase in response to the need of Phase 3 applicants, whose lost revenues and net changes in expenses exceeded the $20 billion originally budgeted for allocation. The additional money will help satisfy nearly 90% of each applicant’s COVID-19-related losses and expense changes from the first half of 2020, according to a press release announcing the news.

It’s unclear how many behavioral health providers will benefit from this round of funding distributions. However, in October, HHS announced that this tranche of funding would be opened to previously ineligible behavioral health providers — meaning a wider swath of organizations, including private pay and commercially covered providers, are likely benefiting from the funding.


Under Phase 3, most behavioral health providers “confronting the emergence of increased mental health and substance use issues exacerbated by the pandemic” were deemed eligible for relief payments. Before that, only behavioral organizations paid by Medicare or Medicaid could apply.

Specifically, the Phase 3 rules allowed behavioral health providers that billed insurance as of March 31 to apply, as well as those who are private pay and billed patients for health care-related services as of March 31. Plus, behavioral health organizations that opened into 2020 became newly eligible.

Behavioral health providers who bill Medicare and Medicaid were also able to apply for more funding if they had not yet received the amount of aid they needed. 

“We’re thrilled at the announcement of an additional $4.5 billion made available to help close existing revenue gaps, Reyna Taylor, vice president of public policy for the National Council for Behavioral Health, told BHB in a statement. “Every bit of support counts – we’re grateful HHS continues to prioritize mental health and substance use disorder recovery providers and organizations.”