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.
General Distribution Portal Submission Closing on June 3, 2020
The U.S. Department of Health and Human Services announced on May 20 that eligible providers have until June 3, 2020, to accept the Terms and Conditions and submit their tax documents and financial loss estimates to the General Distribution Portal to be eligible to receive an additional payment from the Public Health and Social Services Emergency Fund’s (Provider Relief Fund) $50 billion (the General Distribution). HHS also provided guidance clarifying how providers can access payments from the General Distribution for acquired entities and other entities that have been involved in recent transactions, as described further below.
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), as supplemented by the Paycheck Protection Program and Health Care Enhancement Act, appropriated $175 billion to the Provider Relief Fund to reimburse eligible providers for healthcare-related expenses and lost revenues attributable to the 2019 novel coronavirus (COVID-19). As discussed in the previous McGuireWoods alerts linked above, the $50 billion General Distribution was allocated to Medicare facilities and providers impacted by COVID-19. 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). On April 24, 2020, HHS began distributing an additional $20 billion to providers based on their share of net patient revenue, and began accepting submissions from eligible providers of their financial data for subsequent waves of distributions ($20 Billion Distribution). This second $20 Billion Distribution has a June 3, 2020, deadline for providers to apply for a portion of these additional funds or to submit information to confirm funds automatically received.
HHS’ deadline announcement reminds providers to complete several actions related to the General Distribution of the Provider Relief Fund:
- Sign the Attestation
- Providers that have been allocated a payment from the General Distribution must use the Payment Attestation Portal to (1) sign an attestation confirming receipt of the funds and the specific payment amount received, and (2) agree to the terms and conditions of the payment within 45 days of payment by ACH or 60 days of payment by check (a 15-day extension from the original 30-day attestation deadline). Although the terms and conditions do not yet reflect this update, and still reference the 30-day deadline, and HHS statements leave some ambiguity, HHS’ announcement and its HHS frequently asked questions (FAQs) document state that not returning a General Distribution payment within 45 or 60 days of receipt will be deemed an acceptance of the terms and conditions.
- Providers may also use the Payment Attestation Portal to reject payments, as discussed in the FAQs.
- Providers will not be eligible to submit financial data and request additional payments from the $20 Billion Distribution, discussed in No. 2 below, without first attesting to receipt of the $30 Billion Distribution and agreeing to the terms and conditions.
- According to HHS, for those providers that received funds on April 10 (the first day HHS began distributing payments from the General Distribution), the attestation deadline is Sunday, May 24, 2020.
- Submit Financial Data
- Providers that automatically received a $20 Billion Distribution payment prior to Friday, April 24, 2020, at 5 p.m. EST (i.e., those providers that were allocated a portion of the $20 Billion Distribution based on cost reporting data) must provide HHS with an accounting of their annual revenues by submitting requested tax forms and financial information through the General Distribution Portal.
- For providers that received payments from the initial $30 Billion Distribution but have not already received an additional $20 Billion Distribution payment, this submission portal also serves as the provider’s application for additional funding from the $20 Billion Distribution. The amount received from this application is discussed further below.
- Providers must complete these steps and provide the requested financial data to be considered for additional funds by June 3, 2020.
- Request Reimbursement
- Providers that have conducted COVID-19 testing or provided COVID-19-focused treatment for uninsured individuals on or after Feb. 4, 2020, may use the COVID-19 Uninsured Program Portal to request claims reimbursement. Additional information on this program, including enrolling in the program, is discussed in a McGuireWoods legal alert.
HHS will continue to review applications provided through the General Distribution Portal after its closure. For consideration for potential additional funding from the General Distribution, HHS must receive the application by June 3, 2020.
HHS Updates Provider Relief Fund General Distribution FAQs
HHS has also released updates to its Provider Relief Fund FAQ document that shed light on concerns and questions providers have with respect to the impact of provider transactions, mergers, and acquisitions on the allocation and calculation of General Distribution payments, as well as the required supporting financial information. These recent FAQs are part of the evolving updates that HHS periodically releases. Past updates are discussed in a McGuireWoods legal alert.
Below are seven key provisions from the recent FAQ updates that providers should consider:
1. Returning funds from entities not seeing patients after transactions. HHS released several FAQs clarifying the appropriate entity to retain and attest to General Distribution funds after a transaction. The following are transaction-related examples from the FAQs. This list is not exhaustive, and if a provider engaged in a transaction recently, the provider should carefully review the FAQs to determine the appropriate treatment.
a. Sale of a provider: HHS clarified that if, after the sale of a provider, the TIN that received the funds did not provide any diagnoses, testing or care for individuals with possible or actual cases of COVID-19 on or after Jan. 31, 2020, the provider must reject the General Distribution payment. The selling provider is not permitted to transfer payments received from the General Distribution to the buyer or another affiliate entity that may seek to retain the funds.
On the other hand, if a provider continues to see patients but sold a portion of its business in 2019 or January 2020, but received a General Distribution payment that reflects the 2019 Medicare fee-for-service billing of the portion of the practice it sold (or closed), HHS will allow the provider to retain the amount in full if it can meet the applicable terms and conditions. This means that such a provider would need to have COVID-19-related lost revenues or increased expenses exceeding the General Distribution payment. If not, the provider may not return a portion of the General Distribution payment, and instead should reject the entire amount. The provider could then submit the appropriate revenue documentations through the portal described above to receive the HHS-determined payment through the application process for the $20 Billion Distribution.
b. Mergers: HHS further clarified certain questions for businesses that merged or consolidated between Jan. 1, 2018, and Jan. 31, 2020. Effectively, the surviving entity can retain the funds, but the nonsurviving entity cannot. If the nonsurviving entity’s billing TIN received a General Distribution payment, but was not providing diagnosis, testing or care for patients with possible or actual cases of COVID-19 on or after Jan. 31, 2020, those providers should reject the General Distribution payment. However, if the surviving entity’s billing TIN received a General Distribution payment, it should accept the payment and then would be able to note that the merger occurred by submitting its adjusted gross tax receipts in the application process described above. As further discussed below, the merged entities could then get credit for both entities’ patient revenue with respect to the $20 Billion Distribution.
c. Pending transactions: HHS clarified that for any transaction in process, the provider’s application should be based on the status of the entities at the time of the application, not the combined entity after closing (i.e., submissions should not consider any expected loss revenue post-transaction). Providers engaging in a transaction should ensure the submissions and reports filed are for the existing providers and that such providers can each utilize the General Distribution in accordance with the applicable terms and conditions.
2. Requesting additional funds because of a transaction. While HHS guidance described in No. 1 will require providers to return funds from acquired entities not continuing to provide services after Jan. 31, 2020, organizations that completed acquisitions may submit updated figures to account for their larger size in the application for the $20 Billion Distribution to reflect their size at the time of the application. Organizations are able to calculate their adjusted gross receipts in 2018 for the application factoring in completed acquisitions, and if the adjusted gross receipts exceed the gross receipts in the original tax returns by more than 20 percent, the organization may enter the adjusted figure in the General Distribution Portal. Providers can also resubmit their application, as described below, if the new guidance changes render previous submissions inaccurate.
For those acquired entities that provide care as of Jan. 31, 2020, separately, and file their own tax returns, HHS clarified that the acquired entity would not be included in the acquiring organization’s gross receipts. These entities should submit their own applications because they file their own tax returns, and were separate as of this date. Organizations currently undergoing a change in ownership to purchase a practice should report only current gross receipts and exclude any potential acquisition, as specified above.
3. Cover letters on tax returns. In situations that a parent entity is submitting an application for the $20 Billion Distribution, and has a number of subsidiaries with different TINs, HHS instructs the parent entity to include a cover letter on the first page of the tax return indicating additional TINs. Further, the parent entity should also note any General Distribution payments that these subsidiaries may have received under their respective TINs. As a practical matter, providers that have completed past acquisitions may also wish to submit a cover letter with their financial statements indicating the recent acquisitions to aid HHS in calculating the payment.
4. Determination of additional payments clarified. HHS clarified that any additional payments from the $20 Billion Distribution made to providers are determined based on the lesser of 2 percent of that provider’s 2018 (or most recent complete tax year) net patient revenue or the sum of the provider’s incurred losses for March and April 2020. This latter prong (i.e., the incurred losses calculation) was not previously announced until discussion in the FAQs. In cases where providers received more than 2 percent of annual patient revenue from the $30 Billion Distribution, HHS stated that it does not intend to recoup funds so long as the provider’s lost revenue and increased expenses exceed the amount of funding it received, as discussed in a May 7, 2020, legal alert.
Furthermore, providers should recognize that while HHS is allowing providers to include acquired entities in the most recent annual patient revenue in calculating this number, as discussed above in No. 2, such combined revenue will still be compared to what the provider received from the $30 Billion Distribution such that the application with combined revenue may not actually provide additional funds.
5. Public reporting. Though HHS has not released further guidance with respect to Provider Relief Fund reporting obligations, HHS notes that the names of providers that have received payments will be publically posted on a bi-weekly basis on the CDC’s website. However, HHS does not plan to include information such as payment amount per distribution, NPI number or provider types. Currently, the CDC’s website includes the list of providers that have received one or more payments from the General Distribution (and the separate hospital Provider Relief Fund allocation discussed in a May 6, 2020, legal alert) and have attested to the payments. Though the website does not show a specific breakdown of each General Distribution payment received, each provider’s total payment is publicized.
6. Multiple entity distributions. For larger provider entities that have more than one facility operating under the same TIN, providers will have discretion in how they allocate the funds across the facilities. So long as the funds are used to support lost revenues and healthcare expenses related to COVID-19 and the organization can attest to the terms and conditions, providers have discretion in disbursing the funds across their facilities.
7. Application re-submissions. Providers may resubmit applications in the event information they included was incorrect or they wish to update any financial information due to this updated guidance. According to the FAQs, HHS will disregard the initial application and review the most recent request. As such, organizations with adjusted gross receipts exceeding the original tax returns by more than 20 percent may want to resubmit a revised application to have HHS utilize the larger adjusted gross receipts from the combined entities in determining the final General Distribution allocation.
On May 22, HHS also announced the targeted release of nearly $4 billion from the Provider Relief Fund for skilled nursing facilities (SNF) affected by COVID-19. HHS will begin distributing the funds immediately and each SNF is eligible to receive $50,000 plus $2,500 per bed. On May 20, HHS also announced $225 million for rural health clinics specifically for COVID-19 testing. McGuireWoods will monitor and provide more information on these and other targeted allocations from the Provider Relief Fund.
McGuireWoods is monitoring information released by HHS and the Trump administration regarding the Provider Relief Fund and updates to the HHS Provider Relief Fund website. 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, attestation and reporting process.
In a series of video alerts, McGuireWoods’ healthcare lawyers address issues providers face and overcoming COVID-19 challenges.