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.
Update: On Oct. 1, 2020, the U.S. Department of Health and Human Services, through the Health Resources and Services Administrative (HRSA), announced $20 billion in new Phase 3 General Distribution Funding for providers from the Public Health and Social Services Emergency Fund (Provider Relief Fund). For more information, please see our Oct. 2, 2020, alert.
Update (May 22, 2020): Eligible providers have until June 3, 2020, to take action to be eligible to receive an additional payment from the Provider Relief Fund General Distribution, as discussed in a May 22, 2020 alert, which also discusses updated guidance.
On April 22, 2020, the U.S. Department of Health and Human Services (HHS) announced the release of the remaining $70 billion of the $100 billion Public Health and Social Services Emergency Fund (Provider Relief Fund) appropriated in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The Provider Relief Fund was created to reimburse providers for healthcare-related expenses and lost revenues attributable to the 2019 novel coronavirus (COVID-19) pandemic. As discussed in a previous McGuireWoods legal alert, $50 billion of the Provider Relief Fund was allocated for general distribution to Medicare facilities and providers impacted by COVID-19 (General Distribution). The initial $30 billion of the General Distribution was automatically distributed between April 10 and April 17 in proportion to providers’ Medicare fee-for-service payments in 2019 ($30 Billion Distribution).
HHS began distributing the remaining $20 billion on April 24 ($20 Billion Distribution) in two ways — (1) an automatic distribution to Medicare providers who previously submitted cost reports and (2) subsequent waves of distributions based on Medicare providers’ applications in the General Distribution Portal. HHS’ purpose with the $20 Billion Distribution is to augment providers’ allocations so that the entire General Distribution is allocated proportional to each provider’s share of 2018 net patient revenue. For example, certain providers (e.g., children’s hospitals) have a small Medicare proportion and therefore were allocated a small amount from the $30 Billion Distribution but have significant patient costs serving Medicaid populations and are intended to receive more from the $20 Billion Distribution. HHS has stated that it desires the General Distribution to replace a percentage of providers’ annual gross receipts, sales or program service revenue during this period.
On April 24, 2020, HHS opened the General Distribution Portal for the $20 Billion Distribution, with further guidance about the application process in the form of a FAQ document and a user guide released by HHS. Below are nine key considerations for providers who are requesting or confirming additional funds from the $20 Billion Distribution.
- Providers Required to Submit Information Through the General Distribution Portal. Providers that have received additional payments from the $20 Billion Distribution must submit an application through the General Distribution Portal. HHS based such automated payment amounts on the providers’ 2018 submitted cost report data. While the providers received the funds automatically, HHS will require such providers to submit their revenue information through the General Distribution Portal, so the cost report data can be verified. While not explicit, HHS’ general 30-day requirement to attest and confirm funds likely applies as a deadline for such recipient’s information submissions through the General Distribution Portal.
- Providers Who May Apply Through the General Distribution Portal. Both the $30 Billion Distribution and the $20 Billion Distribution have the same eligibility criteria. Therefore, providers who have not yet received any payment from the Provider Relief Fund (i.e., from the earlier $30 Billion Distribution) as of 5 p.m. (ET), April 24, are not eligible to use the General Distribution Portal or to apply for the $20 Billion Distribution. However, as discussed below, these providers may still be eligible for payments from specified targeted distributions or future distributions from the Provider Relief Fund, as discussed in a previous McGuireWoods legal alert. The eligibility criteria for the $20 Billion Distribution includes that the provider (a) billed Medicare in 2019; (b) provides or provided after Jan. 31, 2020, diagnoses, testing or care for individuals with possible or actual cases of COVID-19 (HHS broadly views every patient as a possible case of COVID-19); (c) is not terminated from participating in Medicare or precluded from receiving payment from Medicare Advantage or Part D; (d) is not excluded from Medicare, Medicaid or another federal healthcare program; and (e) does not have Medicare billing privileges revoked, as discussed in a previous McGuireWoods legal alert. Eligible providers who did not receive automatic payments can use the General Distribution Portal to apply for additional funds. The first step in their application is that they must complete the attestation accepting their portion of the $30 Billion Distribution before applying for the additional funding. As a result, those providers who were planning to attest by deeming acceptance will be required to attest formally to the terms and conditions prior to receiving additional funding.
- Timing for Application Processing for Non-Automatic Applying Providers. HHS announced it will be processing applications submitted through the General Distribution Portal in batches every Wednesday at 12 p.m. (ET). Consistent with the first distribution, the funds will not be disbursed on a first-come-first-served basis, although the funds likely will run out within a future application batch. Therefore, applicants will be given equal consideration regardless of when they apply before each processing deadline before the funds run out and will not be penalized for taking several days to collect the necessary information required by the application. HHS plans to issue payments on a weekly, rolling basis, as information is validated, estimating the first payments will go out 10 business days after the first submission deadline.
- Application by Tax Identification Number. HHS plans to use tax information to verify self-reported financial information, so providers must have filed a federal income tax return for 2017, 2018 or 2019 in order to apply for the $20 Billion Distribution. In addition, HHS will require that each separate provider entity with a past tax return to submit a separate portal application. Groups of corporate entities that file one consolidated return will have only the tax return filer apply. The FAQ document released by HHS provides examples of entities and organizational structures to guide providers through this process. Those entities with complex organizational structures should closely review HHS’ guidance to ensure they are submitting their applications properly.
- Information Required in the General Distribution Portal. Though providers were not required to submit information for the $30 Billion Distribution, HHS is requiring providers to submit certain information to allocate the remaining funds. Beyond statements that HHS intends to use the $20 Billion Distribution to augment allocations to replace a percentage of revenue, HHS has not stated how it will calculate these amounts. HHS could not allocate payments based on an overall percentage of patient revenue before receiving information from all providers without certain estimates and assumptions. It is also possible, based on some of the requests listed below, that HHS will exercise discretion before distributing funds to certain providers.
To prepare for the application, providers should gather the following information to submit with their applications requesting additional funds:
- Taxpayer Identification Numbers (TINs).
- The TIN for the entity that has received a portion of the $30 Billion Distribution.
- Additional TINs for subsidiary organizations that have received prior funds but do not file separate tax forms (i.e., subsidiary organizations accounted for in the parent organization’s tax filing and organizations that are consolidated with the applicant TIN). Providers should not list the TIN of a subsidiary that filed a separate federal income tax return, because the subsidiary is required to submit a separate application. HHS is collecting information about organizational structure and subsidiary TINs in order to prevent overpaying or underpaying providers who file tax returns covering multiple legal entities.
- Data Regarding Previous Fund Payments. To confirm funds were appropriately received, HHS requests the following information:
- Account numbers for accounts that previously received fund payments.
- Fund payment transaction numbers for automated clearing house deposits.
- Check numbers for paper check deposits.
- Recent Tax Returns.
- Copies of the provider’s most recently filed federal income tax forms.
- Either “gross receipt or sales” or “program service revenue” data from the tax forms. HHS has provided a Federal Tax Classification Matrix as a reference for what information will need to be provided depending on entity federal tax classification when completing the form. For example, if a provider is a Sole Proprietor/Disregarded Entity (LLC), the provider will be asked to enter the gross receipts or sales information from Box 1 of the IRS Form 1040, Schedule C, and will be required to upload the tax form. HHS is collecting this data to have an understanding of a provider’s usual operations and COVID-19 impact, and to verify the self-reported information.
- Estimates of Lost Revenues for March and April 2020.
- Lost revenue can be estimated by comparing year-over-year revenue, or by comparing budgeted revenue to actual revenue. For April 2020, an estimate of the total monthly loss based on data from the first few weeks in April or by extrapolation from March data would be acceptable.
- HHS aims to keep this process flexible for providers and seeks to understand the impact COVID-19 has had on providers. HHS does not want to keep providers with less sophisticated budgeting systems from applying for additional funds.
- Entity Information and Contact Information.
- Name and email of an individual authorized to sign the consent to receive fund payments. This person must have access to email to provide a verification code from “HRSA CARES Act Provider Relief” via DocuSign during the submission process.
- Medicare and Medicaid identification numbers for the submitting entity.
- Primary site of service address and payment address for the submitting entity.
- Form W-9 for each TIN that received fund payments.
- Updated Terms and Conditions. All providers retaining funds under the General Distributions must meet the Terms and Conditions associated with the payment. If these Terms and Conditions are not met, the provider will be subject to recoupment and other potential penalties. To this end, HHS has added specific language since publication of McGuireWoods’ prior alerts to help prevent fraud and misuse of the funds. Now, the Terms and Conditions make it clear that HHS can bring criminal, civil or administrative penalties, including but not limited to revocation of Medicare billing privileges, exclusion from federal healthcare programs and/or the imposition of fines, civil damages and/or imprisonment for any deliberate omission, misrepresentation or falsification of any information submitted in the application or in any future reports. Providers can expect HHS’ Office of the Inspector General (OIG) to conduct significant anti-fraud and abuse auditing.
HHS also updated the Terms and Conditions with respect to the $20 Billion Distribution. Notably, HHS included in the terms for the $20 Billion Distribution that payments a provider receives through the Provider Relief Fund can be made public. As a result, this disclosure may allow some third parties to estimate the provider’s gross receipts or sales, program service revenue or other equivalent information, and determine a provider’s 2018 net patient revenue. Importantly, information submitted through the General Distribution Portal could be made publicly available in the future. Otherwise, the Terms and Conditions with respect to the $20 Billion Distribution and the $30 Billion Distribution are nearly identical.
- Additional Consent for the $20 Billion Portion of the Fund. A consent that is distinct from the original attestation must be signed for providers to receive a portion of the $20 Billion Distribution. The consent must be signed by someone who has proper authority to sign on behalf of the submitting entity (e.g., president, CEO or CFO), and currently requires the following acknowledgments and consents by the provider:
- Acknowledgment of the release of the provider’s tax information to HRSA to verify the revenue information provided in the application.
- Consent to HHS making the payments received public, which may allow the public (including competitors and employees) to estimate a provider’s annual revenues.
- Consent to HHS performing audits of the information provided to obtain funds and to cooperate fully with HHS’ audit. The provider must also agree to provide any future consent needed by HHS to receive auditing information (including but not limited to tax return information) from third parties.
- Remaining Providers. As stated above, HHS makes it clear that providers who have not yet received payment from the Provider Relief Fund are not eligible to receive additional funds from this General Distribution. Such providers may still receive funds from the other target allocations, as discussed in a previous McGuireWoods legal alert. Additional allocations targeting dentists, skilled nursing facilities, and those who only accept Medicaid are forthcoming. In addition, as discussed in a recent McGuireWoods legal alert, HHS will have an additional $75 billion appropriation for use in the Provider Relief Fund.
- Providers Should Look to the Provider Relief Fund, not Medicare Advance Payments. In addition to the HHS announcements this weekend on the Provider Relief Fund, the Centers for Medicare & Medicaid Services (CMS) ended its Medicare Accelerated and Advanced Payment Program discussed in a recent McGuireWoods legal alert. CMS announced on April 26 that, in light of the further appropriation for the Provider Relief Fund, it would no longer fund further acceleration or advance payments. CMS noted it had funded over $100 billion in advances to Part A and Part B Medicare providers and suppliers.
HHS continues to release additional information on the General Distribution funding from the CARES Act Provider Relief Fund, and created a telephone help line at (866) 569-3522. McGuireWoods is continuously monitoring information released by HHS and the Trump administration regarding the Provider Relief Fund. Please contact the authors or any of the McGuireWoods COVID-19 Response Team members for additional information on the Provider Relief Fund and its availability to healthcare providers and for assistance with the documentation and attestation and reporting process.
In a series of video alerts, McGuireWoods’ healthcare lawyers address issues providers face and overcoming COVID-19 challenges.