Update (June 21, 2021): Healthcare providers receiving Provider Relief Fund payments will have to report to the government on using such payments before certain newly announced spending deadlines. The first spending deadline is June 30, 2021, with a 90-day reporting period beginning July 1, 2021, to report on funds received in the first half of 2020. For the most recent updates on future deadlines and further guidance on Provider Relief Fund reporting, visit our Provider Relief Fund reporting page.
The U.S. Department of Health and Human Services (HHS) announced on Jan. 15, 2021, that it was delaying both (i) the deadline for the initial final report from recipients of the Public Health and Social Services Emergency Fund (Provider Relief Fund) and (ii) the opening of the applicable reporting portal. However, HHS did open registration for its reporting portal and provide additional guidance discussed in this alert for Provider Relief Fund recipients. This delay comes in light of legislative changes in the recent spending and COVID-19 relief package (H.R. 133), discussed in a Jan. 4, 2021, McGuireWoods alert, which allocated an additional $3 billion in funding for the Provider Relief Fund.
The Provider Relief Fund was created through congressional appropriations now totaling $178 billion to reimburse providers’ eligible expenses and lost revenues attributable to COVID-19 (as discussed in previous McGuireWoods legal alerts). HHS developed the Provider Relief Fund through multiple rounds of payments, including General Distributions and Targeted Distributions to certain providers. HHS also published answers to frequently asked questions (FAQs) and other program announcements, such as the announced delay discussed above. In November 2020, HHS issued updated reporting and auditing guidance, as discussed most recently in a Nov. 3, 2020, McGuireWoods alert, before the recent legislative enactment. This guidance requires any recipient of at least $10,000 from the Provider Relief Fund to report healthcare-related and general and administrative expenses and lost revenue attributable to COVID-19, with more detailed expense reporting for each provider receiving $500,000 or more.
This alert summarizes the key Provider Relief Fund updates healthcare providers should keep in mind as they prepare their reports.
- No new deadline was announced for submission of the initial report.
HHS stated it “wanted to give recipients ample time to familiarize themselves with the updated reporting requirements well in advance of required submission deadlines,” and would no longer require final reports on Feb. 15, 2021. HHS did not announce a new deadline for this first report, but its updated guidance still refers to the deadline for second mandatory report for expenditures and lost revenue as July 31, 2021. HHS stated it would announce a new deadline at a later date for recipients receiving at least $10,000 from the Provider Relief Fund. Likely due to the updated guidance necessitated by H.R. 133 discussed below, HHS also did not open the reporting portal itself.
- HHS updated reporting guidance to incorporate changes from H.R. 133, including “lost revenue” metrics and transfers between subsidiaries.
HHS issued an updated Post-Payment Notice of Reporting Requirements document superseding its Nov. 2, 2020, guidance, which largely tracks the prior guidance (as shown in this comparison document). The main changes to the guidance reflect the H.R. 133 requirement that HHS give recipients greater flexibility in calculating lost revenue. HHS’ guidance now allows three alternative methodologies to calculate lost revenue: (a) the difference between 2019 and 2020 actual patient care revenue; (b) the difference between 2020 budgeted and 2020 actual patient care revenue, as long as the budget was approved prior to March 27, 2020; and (c) calculation by any other reasonable method of estimating revenue, which HHS notes will lead to a higher likelihood of government audit. HHS will also allow providers to compare first and second quarters 2021 actual revenue against budgeted 2020 revenue for purposes of the second report showing 2021 expenditures. In exchange for this flexibility, HHS will require additional information from Provider Relief Fund recipients, including the recipient’s budget and an attestation regarding the same, or a description of its methodology with calculations and an explanation of why this methodology is reasonable and related to COVID-19.
In addition, HHS revised its guidance to reflect the H.R. 133 requirement that recipients be allowed to allocate funds from Targeted Distributions to the recipients’ subsidiaries. While HHS had allowed parent organizations to allocate General Distributions to eligible subsidiary providers within the same organizational structure, HHS previously did not allow this flexibility for Targeted Distributions paid to specific categories of providers because it wanted control and use to remain with the recipient entity (e.g., the safety-net hospital, rural provider, skilled nursing facility or high-impact COVID-19 hospital). HHS will still require the initial recipient of the Targeted Distribution to report on the use of funds and report the funds were transferred. HHS noted that this transfer of funds will also increase the likelihood of a government audit.
- HHS will require reporting two additional data elements.
While the updated guidance largely tracks prior guidance, as discussed above, HHS did include two additional data elements that Provider Relief Fund recipients will need to submit. First, if the recipient held payments in an interest-bearing account, that interest must be reported. Previously, HHS stated in its FAQs that interest may need to be returned if the underlying payments are returned based on failing to meet program requirements. Second, HHS will ask for information about the recipient’s reporting entity type, meaning whether the recipient qualifies in categories such as receiving only automatic Phase 1 payments, received Targeted Distributions, or whether the recipient has a parent organization. Finally, revenue information will need to include the recipient’s payor mix.
- Reporting portal’s registration is now open — providers should take action.
While delaying the reporting deadline and delaying the reporting portal’s opening, HHS did open registration for its reporting portal, which must be completed before the recipient can report on its use of funds, once the portal opens. To register (as explained in the new user guide), a recipient must provide its tax ID, business name, contact information that includes an email address for next-step notifications (recipients should add [email protected] to their safe sender lists), address, TIN of subsidiaries (which can be updated if this is not filled out correctly) and payment information for any one of the Provider Relief Fund payments received. In registering, providers can access a new FAQs document for more information about registration. Providers must register each recipient separately with a different user name in the form of an email address, but can then have the same contact email for multiple registered recipients. If any information regarding the payment TIN or subsidiary TINs is not entered correctly, providers will not be able to proceed to the next steps in the registration process.
- HHS has distributed nearly $120 billion of the Provider Relief Fund.
In its announcement, HHS noted that 644,091 provider TINs had received $116,956,445,191 through the General and Targeted Distributions of the Provider Relief Fund. HHS also said 30,074 providers had received an additional $3,013,189,068 for COVID-19 claims reimbursement for testing and treatment of the uninsured. As noted above, after H.R. 133, HHS has a total of $178 billion for the Provider Relief Fund. H.R. 133 also required HHS to create a successor General Distribution phase for eligible healthcare providers to “consider financial losses and changes in operating expenses occurring in the third or fourth quarter of calendar year 2020, or the first quarter of calendar year 2021, that are attributable to coronavirus.” While HHS’ numbers may adjust, this likely means there will be a substantial amount of money available for providers experiencing significant COVID-19-related challenges during the recent months of the pandemic.
HHS noted in its guidance that it may update its FAQs “to provide greater clarity about the reporting process.” Such an approach would be consistent with past developments, as HHS has frequently issued FAQ updates. As providers register to report, work to understand their requirements under the terms and conditions, and prepare their reports to document their eligibility and appropriate use of funds, McGuireWoods stands ready to assist with any questions about this updated information. McGuireWoods will also continue to monitor developments regarding reporting and auditing for those who received Provider Relief Fund payments.
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