United States: HHS Issues Additional Guidance Regarding CARES Act Provider Relief Fund Reporting

HHS's most recent guidance specifies the deadlines within which health care providers must use and report on Provider Relief Fund payments and provides much needed additional clarification concerning how and when health care providers can use such payments to offset permissible health care-related expenses and lost revenues attributable to coronavirus.

In the CARES Act that became law on March 27, 2020, $100 billion was set aside for "health care-related expenses or lost revenues that are attributable" to the COVID-19 pandemic. Commonly referred to as the "Provider Relief Fund," this $100 billion fund was supplemented with an additional $75 billion pursuant to the Paycheck Protection Program and Health Care Enhancement Act and another $3 billion pursuant to the Coronavirus Response and Relief Supplemental Appropriations Act of 2021. The stated purpose of the Provider Relief Fund (PRF) is to address the economic harm suffered by health care providers that have incurred (or will incur) additional expenses and have lost (or will lose) significant revenue as a result of the pandemic. PRF payments have been made from either the "General Distribution" tranche or various "Targeted Distributions". Terms and Conditions attached to such payments require recipient health care providers to, among other things, submit reports to the U.S. Department of Health and Human Services (HHS) in such form and including such content as specified by the HHS Secretary.

Deadlines to Use and Report on Use of PRF Payments Identified

On June 11, 2021, HHS identified (1) the deadlines by which providers must use PRF payments for eligible purposes based on the date on which they received, or will receive, such payments (each such deadline concludes a "Period of Availability of Funds"), and (2) the corresponding deadlines by which providers that have received, or will receive, one or more PRF payments exceeding $10,000 in the aggregate (whether from the General Distribution, the Targeted Distribution, or both) within a single Payment Received Period must submit reports to HHS on the use of such funds.¹ The applicable periods and deadlines are as follows:

A PRF payment is deemed received on the deposit date for automated clearinghouse (ACH) payments or on the date on which the check is cashed, as applicable. Recipients are required to submit a report for each Payment Received Period in which they received one or more payments exceeding, in the aggregate, $10,000 (the reporting trigger is not whether a provider received $10,000 in PRF payments in the aggregate across all Payment Received Periods). Recipients that do not report within the applicable Reporting Time Period will be deemed out of compliance with payment Terms and Conditions and, as a result, applicable PRF payments may be subject to recoupment.

PRF Payment Reporting Requirements Updated

Also on June 11, 2021, HHS issued its most recent notice detailing the post-payment reporting requirements applicable to health care providers that have received, or will receive, one or more PRF payments exceeding $10,000 in the aggregate (whether from the General Distribution, the Targeted Distribution, or both) within an applicable Payment Received Period. In conformance with the stated purpose of the PRF, such health care providers are broadly required to report (using their normal method of accounting, whether cash, accrual or modified accrual):

1. health care-related expenses attributable to coronavirus, including G&A (General and Administrative) expenses and "other health care-related expenses"; and
2. patient care lost revenues attributable to coronavirus.

FAQ guidance issued by HHS in June of 2000 stated that, in determining lost revenue, providers could "use any reasonable method of estimating revenue during March and April of 2020 compared to the same period had COVID-19 not appeared." However, guidance issued by HHS on September 19, 2020, changed the meaning of lost revenue to: "a negative change in year-over-year net patient care operating income." Responding to a significant backlash among policymakers and providers, on October 22, 2020, HHS reversed course and again permitted providers "to apply [PRF payments] against all revenues without limitation." In its January 15, 2021 notice, HHS detailed three (3) alternate options that providers may utilize to calculate lost revenues attributable to coronavirus, against which they may apply PRF payments. In its most-recent June 11, 2021 notice, HHS maintained these three (3) alternate options, but changed the descriptions of the first two options.

Alternate Options of Calculating Lost Revenues Redefined

In its June 11, 2021 notice, HHS again set forth three (3) alternate options for calculating lost revenues attributable to coronavirus, but removed references to calendar years 2019 and 2020 in describing the first two options. PRF recipients are now instructed to calculate lost revenues attributable to coronavirus utilizing one of the following three options:

Option 1: the difference between actual patient care revenues (rather than the difference between their 2019 and 2020 actual patient care revenues);

Option 2: the difference between budgeted (prior to March 27, 2020) and actual patient care revenues (rather than the difference between their 2020 budgeted and 2020 actual patient care revenues);

Note: If recipients elect to use 2020 budgeted patient care revenue to calculate lost revenue, they must use a budget that was established and approved prior to March 27, 2020, and will be required to submit an attestation to this effect (as further described below).

Option 3: any reasonable method of estimating revenues (this description has remained the same).

Note: If a recipient wishes to use an alternate "reasonable" methodology to calculate lost revenue, (i) the recipient faces an increased likelihood of an audit by the Health Resources & Services Administration (HRSA), (ii) HRSA will notify the recipient if its proposed methodology is not reasonable, including because it does not establish with a reasonable certainty that claimed lost revenues were caused by coronavirus, and (iii) if HRSA determines that a recipient's proposed alternate methodology is not reasonable, the recipient will be required to resubmit its report within 30 days of notification using either Option 1 or 2.

Recent Clarifications Should Benefit Health Care Providers

Recent clarifications provided by HHS in FAQ guidance should benefit health care providers in two significant ways:

1. Lost Revenue Calculation Clarified: After removing reference to calendar years 2019 and 2020 in describing the first two options for calculating lost revenue in its June 11, 2021 notice (thereby leaving unclear which time periods should be compared to calculate permissible lost revenues against which PRF payments can be offset), HHS issued FAQ guidance in July of 2021 clarifying that, in connection with both Options 1 and 2: (a) lost revenues can be calculated for each quarter during the applicable Period of Availability of Funds, "as a standalone calculation," with "[q]uarters from 2019 serv[ing] as the baseline period of comparison", and (b) PRF payments "may be used to cover those quarters where patient care revenue losses occurred as long as those losses were attributable to coronavirus" even if the provider only experienced revenue losses during some, but not all, of the quarters during an applicable Period of Availability of Funds. These clarifications should benefit health care providers as they will be able to use PRF payments to offset all permissible lost revenues in a particular quarter within an applicable Period of Availability of Funds even if they actually achieved positive revenues in other quarters within such Period of Availability of Funds.
2. Expense and Lost Revenue Carry Forward Capability Clarified: After identifying four (4) separate payment received periods in its June 11, 2021 notice (thereby leaving unclear whether permissible expenses and lost revenues suffered by health care providers in one payment received period can be carried forward to and offset by PRF payments received in subsequent payment received periods), HHS also issued FAQ guidance in July of 2021, clarifying that such carry forward is permissible. This clarification should also benefit health care providers, many of whom incurred substantial expenses and suffered substantial lost revenues in the first or second Payment Received Periods, when stay-at-home and other orders were initially instituted in most states, but received PRF funds over multiple payment received periods. To be clear, however, the reverse is not true. That is, PRF payments received in an earlier Payment Received Period that are not fully expended on permissible expenses and lost revenues by the deadline to use funds corresponding to that Payment Received Period cannot be carried forward to offset permissible expenses or lost revenues incurred or experienced in subsequent Payment Received Periods. Rather, any such unused funds must be returned to HHS.

Data Elements To Be Reported Further Detailed

The June 11, 2021 notice now requires providers to report the following specific data elements:

1. Reporting Entity Overview, specifically: the Tax Identification Number (TIN) of the Reporting Entity (identified in accordance with the following chart) as well as the Reporting Entity's Business Name, DBA Name (optional), Address, Contact Information, Provider Type and Provider Subtype.

Note: A parent entity may report on its subsidiaries' General Distribution payments regardless of whether (a) the subsidiary TINs received the General Distribution payments directly from HRSA or whether General Distribution payments were transferred to them by the parent entity and (b) the parent or the subsidiary attested to the applicable Terms and Conditions. Also, the original recipient of a Targeted Distribution is always the Reporting Entity regardless of whether (a) the parent or subsidiary received the Targeted Distribution payment and (b) the original recipient subsequently transferred this payment.

2. Subsidiary Questionnaire, specifically: certain information dependent on whether the Reporting Entity (a) has subsidiaries or (b) is a subsidiary and otherwise has information to report in accordance with the June 11, 2021 notice.

3. Acquired/Divested Subsidiaries, specifically: certain information if the Reporting Entity acquired or divested a subsidiary(ies) during a Period of Availability of Funds.

Note: If the Reporting Entity itself was acquired or divested, it should self-report the change in ownership to HRSA.

4. Interest Earned on PRF Payment(s), specifically: the dollar amount of any interest earned on PRF payments.

5. Tax and Single Audit Information, specifically: Federal Tax Classification, Exempt Payee Code (optional), Exempt from FATCA Reporting Code (optional), Fiscal Year-End Date, and certain single audit status information (if subject to single audit requirements pursuant to 45 CFR part 75, Subpart F).

6. Other Assistance Received, specifically: other assistance received during a Period of Availability of Funds from the following sources: Treasury and/or Small Business Administration (SBA) Assistance, including Paycheck Protection Program (PPP) Assistance; FEMA Assistance; HHS CARES Act Testing Assistance; Local, State, and Tribal Government Assistance; Business Insurance; and the "total amount of other federal and/or coronavirus-related assistance received by the Reporting Entity during the [Period of Availability of Funds]."

Note: Patient care revenue should not be reported as part of "Other Assistance Received" as it is a source of revenue, not a source of other assistance, as defined by Provider Relief Fund reporting requirements.

7. Use of SNF and Nursing Home Infection Control Distribution Payments (if applicable). Again, this is not the focus of this article. For further detail, please refer to the June 11, 2021 notice.

8. Use of General and Other Targeted Distribution Payments, specifically:

Reporting Entities that have received between $10,001 and $499,999 in aggregated PRF payments (whether from the General Distribution, the Targeted Distribution, or both - but excluding SNF and Nursing Home Infection Control Distribution Payments) in a single Payment Received Period must report on their use of General and Other Targeted Distribution Payments to pay (a) G&A expenses attributable to coronavirus and (b) other health care-related expenses attributable to coronavirus, each of which are not otherwise reimbursed (or reimbursable) by other sources; and

Reporting Entities that have received $500,000 or more in aggregated PRF payments (whether from the General Distribution, the Targeted Distribution, or both - but excluding SNF and Nursing Home Infection Control Distribution Payments) in a single Payment Received Period must report their (a) G&A expenses attributable to coronavirus and (b) other health care-related expenses attributable to coronavirus, each of which are not otherwise reimbursed (or reimbursable) by other sources, but also further broken down into:

The following G&A expenses: mortgage/rent, insurance, personnel, fringe benefits, lease payments, utilities/operations, and "[other] [G&A] expenses... not [otherwise] captured...that are generally considered part of G&A expenses"; and

The following health care-related expenses: supplies, equipment, information technology, facilities and any "[o]ther health care-related expenses...not [otherwise] captured...that were paid to prevent, prepare for, or respond to coronavirus".

9. Net Unreimbursed Expenses Attributable to Coronavirus, specifically: the unreimbursed health care expenses attributable to coronavirus, net of other reimbursed sources, broken down into (a) G&A expenses attributable to coronavirus and (b) other health care-related expenses attributable to coronavirus.

10. Lost Revenues Attributable to Coronavirus, specifically:

To the extent that a Reporting Entity utilizes Option 1 to calculate lost revenues attributable to coronavirus (an Option 1 Reporting Entity), the Option 1 Reporting Entity must report:

Actual Total Revenues²/Net Charges from Patient Care³ Related Sources (prior to netting with expenses) broken down by quarter for each quarter during the applicable Period of Availability of Funds: Medicare Part A or B; Medicare Part C (Medicare Advantage); Medicaid/Children's Health Insurance Program (CHIP); Commercial Insurance; Self-Pay (no insurance); and "revenues/net charges from other sources received for patient care services and not included in the list above";

To the extent that a Reporting Entity utilizes Option 2 to calculate lost revenues attributable to coronavirus (an Option 2 Reporting Entity), the Option 2 Reporting Entity must report:

Actual and Budgeted Total Revenues⁴/Net Charges from Patient Care⁵ Related Sources (prior to netting with expenses) broken down by quarter for each quarter during the applicable Period of Availability of Funds: Medicare Part A or B; Medicare Part C (Medicare Advantage); Medicaid/Children's Health Insurance Program (CHIP); Commercial Insurance; Self-Pay (no insurance); and "revenues/net charges from other sources received for patient care services and not included in the list above"; and

Additional Revenue Information, specifically, (i) a copy of the applicable budget, which must have been approved before March 27, 2020, and (ii) an attestation from the Reporting Entity's Chief Executive Officer, Chief Financial Officer, or similar responsible individual, attesting under 18 USC § 1001 that "the exact budget being submitted was established and approved prior to March 27, 2020".

To the extent that a Reporting Entity utilizes Option 3 to calculate lost revenues attributable to coronavirus (an Option 3 Reporting Entity), the Option 3 Reporting Entity must report:

Additional Revenue Information, specifically, (1) a narrative document describing the methodology used, an explanation of why the methodology is reasonable, and a description establishing how lost revenues were attributable to coronavirus, as opposed to a loss caused by any other source; and 2) A calculation of lost revenues attributable to coronavirus using the methodology described in the narrative document.

11. Personnel, Patient, and Facility Metrics, specifically: personnel metrics - total number of clinical and non-clinical personnel by labor category (full time, part time, contract, furloughed, separated, hired); patient metrics - total number of inpatient admissions; outpatient visits (in-person and virtual); emergency department visits; and facility stays (for long-term and short-term residential facilities); facility metrics - total number of staffed beds for medical/surgical, critical care, and other.

12. Survey, specifically: Reporting Entities will be required to answer various questions regarding the impact of PRF payments during an applicable Period of Availability of Funds.

Conclusion

Health care providers that received PRF payments exceeding $10,000 in the aggregate (whether from the General Distribution, the Targeted Distribution, or both) before June 30, 2020 (i.e., within the first Period of Availability of Funds), will be the first group of health care providers required to submit reports to HHS and will need to do so on or before September 30, 2021. If health care providers have not already done so, it is recommended that they register in the PRF Reporting Portal as soon as possible to ensure that they receive any additional PRF reporting guidance that HHS issues directly to registered health care providers.

Footnotes

1 In its June 11, 2021 notice HHS also specifically addressed reporting requirements for providers that have received (or will receive) Skilled Nursing Facility (SNF) and Nursing Home Infection Control Distributions (which are considered Targeted Distributions), not addressed in this article.

2 Net of uncollectible patient service revenues recognized as bad debts.

3 HHS defines "patient care" as "health care, services and support, as provided in a medical setting, at home/telehealth, or in the community." HHS further advises that patient care revenue "should not include non-patient care revenue such as insurance, retail, or real estate revenues (exception for nursing and assisted living facilities' real estate revenues where resident fees are allowable); prescription sales revenues (exception when derived through the 340B program); grants or tuition; contractual adjustments from all third party payers; charity care adjustments; bad debt; and any gains and/or losses on investments".

4 See fn. 3, supra.

5 See fn. 4, supra.

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