On January 15, 2021, the Department of Health and Human Services (“HHS”) issued updated guidance on reporting requirements related to use of Provider Relief Fund (“PRF”) monies. HHS will be issuing further updates, which will impact how providers are required to report and whether providers will be allowed to retain all of the PRF monies that they have received. In view of the relatively tight timetable, providers who received PRF assistance need to attend to this matter without delay. Although HHS in its January 15th guidance spoke to a February 15th initial reporting deadline, as discussed below, HHS has not yet operationalized the reporting portal, nor has it announced a new deadline for the initial report.
By way of background, the PRF was established as part of the Coronavirus Aid Relief and Economic Security (“CARES”) Act, which vested HHS with authority to disburse much-needed financial assistance to healthcare providers responding to the COVID-19 pandemic. The purpose of the PRF is to reimburse providers for healthcare related expenses and lost revenues attributable to coronavirus and the COVID-19 pandemic. Many providers received an initial, unsolicited PRF disbursement in April of 2020. To-date, three Phases of general PRF disbursements have been implemented, in addition to targeted payments for certain providers. Providers that received and retained PRF funds, including the initial unsolicited disbursement in April 2020, are required meet certain reporting requirements regarding the proper use of such funds. Importantly, providers that received $10,000 or more in PRF funds will be required to file online reports regarding usage of the funds. The initial report must account for all PRF fund usage as of December 31, 2020.
HHS’ previous guidance stated that an online reporting portal would open on January 15, 2021, and that providers that received over $10,000 would be required to submit an initial report by February 15, 2021. However, HHS has not opened its portal for reporting and has stated the reporting deadline will be delayed. HHS has not yet announced the new deadline. In the interim, providers would be well served to compile information and documentation to support claims of lost revenues and increased expenses in preparation for reporting. Additionally, providers should use the following portal to register for reporting: https://prfreporting.hrsa.gov/s/.
HHS also issued new guidance on January 15th related to how PRF monies may be used. PRF funds may only be used for one of the following: (1) to cover healthcare-related expenses that are attributable to coronavirus and which have not been reimbursed from another source (and which no other source is obligated to reimburse); or (2) to cover lost revenues, calculated as the change in net patient care operating income from 2019 to 2020.
Notably, in its updated guidance, HHS has added flexibility for providers in the methods that they can use to calculate lost revenues. Under the new guidance, providers may select one of three options to calculate lost revenues due to coronavirus in 2020:
- The difference between 2019 and 2020 actual patient care revenue;
- The difference between the provider’s 2020 budgeted (if based on a budget that was established and approved prior to March 27, 2020) and 2020 actual patient care revenue; or
- Calculated by any reasonable method of estimating lost revenue.
To use the second option (i.e., the budget to actual method), providers will be required to submit a copy of the applicable budget and an attestation confirming that such budget was approved prior to March 27, 2020.
Providers that use the third option, which provides the greatest flexibility, will be required to provide a description of the methodology used and an explanation of why it accurately reflects revenues lost due to coronavirus (and not revenue lost for some other reason). Per HHS guidance, a provider that uses its own alternate methodology will have an increased likelihood of audit by the Health Resources and Services Administration (“HRSA”). In addition, HRSA may determine that the alternate methodology is not appropriate and require the provider to re-report using either the first option (year over year) or second option (budget to actual).
All recipients receiving more than $10,000 in PRF monies are also required to report healthcare-related expenses attributable to coronavirus that are not reimbursable by another source. Permissible expenses include general and administrative (“G&A”) expenses and healthcare-related operating expenses that were incurred to plan, prepare for, and respond to coronavirus. Eligible G&A expenses can include expenses from the following sub-categories: (1) monthly payments related to mortgage or rent for a facility; (2) insurance premiums paid for property, malpractice, business insurance or other insurances relevant to business operations; (3) workforce-related expenses paid to prevent, prepare for, or respond to COVID-19; (4) fringe benefit costs (i.e., extra benefits to supplement an employee’s salary); (5) equipment and/or software lease payments; (6) utilities and/or operations expenses (e.g., lighting, HVAC, cleaning); and (7) any other overhead expenses not falling into one of the above categories. Eligible healthcare-related expenses include the following sub-categories: (1) expenses paid for supplies used to prevent, prepare for, or respond to COVID-19; (2) expenses for purchasing equipment used to prevent, prepare for, or respond to COVID-19 (e.g., ventilators, updates to HVAC systems); (3) expenses paid to expand or preserve IT or interoperability systems (e.g., electronic health records systems, telehealth infrastructure, or bandwidth); (4) expenses paid for facility-related costs used to prevent, prepare for, or respond to COVID-19; and (5) any other actual healthcare-related expenses not covered by the above categories. Note that providers that received $500,000 or more in PRF funds must report expenses in greater detail by reporting the level of expenses in each of the sub-categories that are identified above.
Providers that have not yet used all PRF monies to cover qualifying increased costs or lost revenues as of December 31, 2020, may continue to use their PRF monies for those purposes through June 30, 2021. Under current HHS guidance, any PRF monies that are not used for qualifying purposes will need to be returned after June 30, 2021, with a final report due by July 31, 2021.
Please note that there are additional audit requirements (referred to as single audits) for providers that received $750,000 or more in PRF monies (or which expended $750,000 or more in certain federal grant monies in any fiscal year). Single audits are conducted pursuant to certain government standards and reports must be submitted to the federal government. The reports for single audits are generally due nine months following the conclusion of a provider’s fiscal year. However, an automatic three-month extension has been granted to providers that would otherwise have reports due between October 1, 2020, and June 30, 2021.
As noted above, HHS will be updating its guidance further and providers are encouraged to “stay tuned.”
For more information regarding PRF reporting requirements, please contact Adrienne Dresevic at firstname.lastname@example.org, or Carey Kalmowitz at email@example.com, or Robert Dindoffer at firstname.lastname@example.org, or your regular HLP attorney, or Partners@thehlp.com, or call (212) 734-0128 or (248) 996-8510.