Hospitals Await $1 Billion+ in Unpaid FEMA COVID-19 Relief Funds

More than a billion dollars in federal reimbursements remain unpaid to hospitals and health systems for COVID-19 related expenses incurred as far back as 2020, a situation lawmakers are calling a strain on already burdened healthcare finances. The delays, impacting facilities across all 50 states, are compounded by a recent partial government shutdown at the Department of Homeland Security.

The funds are owed through the Federal Emergency Management Agency’s (FEMA) Public Assistance Program, designed to support local governments and hospitals responding to disasters. According to a FEMA employee, over 1,000 COVID-related projects are currently awaiting reimbursement. Hospitals covered significant costs during the pandemic, including hiring additional medical staff, procuring beds and ventilators and securing personal protective equipment (PPE).

U.S. Representative Andrew Garbarino (R-NY), chair of the House Committee on Homeland Security, initiated an inquiry in late January 2026 regarding over $1 billion in unpaid reimbursements to New York health systems. He stated he is “still working with” FEMA to obtain documentation and investigate the holdup. “It’s a lot of work that they did, and they were promised the reimbursement for,” Garbarino said. “And they’ve jumped through all the hoops. They’ve proven all the money that they were owed. And now they’re just waiting to get back. So, it really does affect their bottom line.”

The issue extends beyond New York, according to Garbarino, affecting hospitals nationwide. The delays are further complicated by the partial government shutdown, and a new rule implemented by Homeland Security Secretary Kristi Noem requiring her approval for all expenses exceeding $100,000. Garbarino questioned the sustainability of this rule, stating, “You want to go after waste, fraud and abuse, I’m all for that. It can’t all just fall on her. She’s got to rely on some of her deputies.”

Representative Bennie Thompson (D-MS), the ranking member of the House Committee on Homeland Security, reported that Mississippi hospitals are also missing “tens of millions of dollars” in promised reimbursements. “Our hospitals are depending on this promised funding and each day of delay is setting our States back,” Thompson said in a statement. “If Secretary Noem thinks that withholding or delaying releasing these funds is improving Government efficiency, she is fooling herself and doing a disservice to the American people.”

The financial strain is acutely felt by individual hospitals. Matt Elsey, an executive at Prisma Health in South Carolina, reported that his organization is awaiting reimbursement for three COVID-19 response projects totaling approximately $116 million. These projects, reviewed and awaiting final approval since early 2025, have not received the same responsiveness as projects under $100,000.

FEMA responded to inquiries by stating that any delays are “a direct consequence of the ongoing government shutdowns and the refusal by Democrats in Congress to provide the necessary funding to secure our nation.” The agency also asserted This proves “meticulously reviewing every outstanding request for eligibility” to restore integrity to disaster relief operations and ensure responsible fund management.

These reimbursement delays occur against a backdrop of broader financial challenges for hospitals. Last year, Republican-led legislation resulted in over $1.1 trillion in cuts to Medicaid, further straining hospital budgets. Jonathan Cooper, senior vice president of government affairs at the Greater New York Hospital Association, highlighted the timing, stating, “It’s long overdue…And you see what’s going on at all the hospitals now post the One Big, Beautiful Bill Act, and what’s about to happen with this huge number of uninsured about to occur, and Medicaid being cut, and everything else.”

The cuts to Medicaid have already led to service reductions in some areas, with a rural hospital in Georgia citing them as a reason for closing its delivery unit. The Congressional Budget Office estimates that approximately 11.8 million people could become uninsured by 2034 as a result of these changes.

Cooper emphasized the importance of the FEMA reimbursements, stating, “I would say that the money is more important than ever to really help provide hospitals, safety net hospitals across the state with the resources they need to deal with the current situation.”

The American Hospital Association (AHA) echoed these concerns, noting that its members are facing challenges receiving reimbursements for work completed years ago. A spokesperson for the AHA stated that hospitals are not only awaiting payment for approved projects but are also facing requests from FEMA to return funds previously approved and disbursed. The AHA expressed its willingness to collaborate with FEMA to resolve these issues.

The process has not been uniformly slow. East Alabama Medical Center received $4.7 million in reimbursement at the end of 2024, but only after a local emergency management director traveled to Washington, D.C. To advocate for the funds. Similarly, California hospitals received $460 million in reimbursements at the end of 2025, but Representative John Garamendi noted that the funds could have been received earlier without Secretary Noem’s review requirement for grants exceeding $100,000.

Garamendi explained the impact of the delays on California hospitals: “Well for the hospitals themselves, they had to find the money to pay for the services when people showed up sick at the emergency rooms…So, there was a lot of expenditures that the hospitals had to make. They were busily borrowing money to make the payments that they had to so that left the hospitals with a funding crisis…And that funding crisis just made it impossible for the hospitals to expand their services.”