CARES Act Healthcare Provider Relief Fund Update: New Distribution and Extended Deadlines

August 10, 2020

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.

Previous McGuireWoods alerts discussing the CARES Act Provider Relief Fund cover general distributions (see alerts on April 10, April 14, April 23, April 27, May 7, May 22, June 11, July 13 and July 20); targeted distributions (see alerts on April 23, May 6, June 11, July 13 and July 20); Medicaid, CHIP and dental distributions (see alerts on June 11, July 13 and July 20); and the uninsured program (see April 29 alert).

On July 31, 2020 and August 10, 2020, the U.S. Department of Health and Human Services (HHS) issued press releases announcing a second chance to apply for funding for certain Medicare providers and extended application deadlines for certain providers. Beginning Aug. 10, 2020, Medicare providers that missed the opportunity to apply for additional funding under the second tranche of the Public Health and Services Emergency Fund (Provider Relief Fund) may apply for additional funding. HHS also unveiled a separate opportunity for certain providers that experienced a change of ownership in 2019 or 2020 to apply for payments under the Provider Relief Fund and announced an extension of the deadline for applications from eligible Medicaid, Medicaid managed care, children’s health insurance program (CHIP) and dental providers. The application and attestation portal for certain providers opened on Aug. 10, 2020 and the application deadline for each of these additional funding opportunities is Aug. 28, 2020.

Finally, on Aug. 7, 2020, HHS announced in a press release that it would allocate $5 billion to nursing homes through the Provider Relief Fund. An initial $2.5 billion will be distributed to providers in mid-August 2020, and the balance will be distributed to nursing homes based on performance as discussed further below.

By way of background, the Provider Relief Fund was created through an appropriation of collectively $175 billion in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and the Paycheck Protection Program and Health Care Enhancement Act to reimburse eligible expenses and lost revenues attributable to COVID-19. Information, guidance and application instructions can be found on the HHS Provider Relief Fund Page for Providers.

Below are five key takeaways from HHS’ recent announcements relating to the Provider Relief Fund.

1. Second Chance for Medicare Providers: Providers that received payments from the first tranche of general distribution funding under the Provider Relief Fund in April were eligible to apply for additional funding under the second tranche of funding. As discussed in a previous McGuireWoods legal alert, providers had until June 3, 2020, to apply for additional payments. Since providers were required to submit cost reports and revenue information to verify eligibility, many providers did not complete their applications by the deadline. Beginning Aug. 10, 2020, providers eligible to apply on HHS’ now live online portal for general distribution funding include: (i) providers that did not complete an application by the deadline to receive additional funds in the second tranche; (ii) providers that received less than 2 percent of their annual patient revenue during the first and second tranches of funding; and (iii) providers that rejected and returned funds during the first and second tranches of funding and now wish to re-apply. Providers will have until Aug. 28, 2020, to apply and are eligible to receive up to 2 percent of their annual patient revenues in the aggregate for both payments received and kept in the first and second tranches.

2. Payments for Providers That Had a Change of Ownership: As discussed in a previous McGuireWoods alert, HHS relied on 2019 Centers for Medicare & Medicaid Services payment data to determine automatic payments for the first tranche of general distribution funding under the Provider Relief Fund. Since 2019 data was used, some providers that experienced a change in ownership in 2019 or 2020 and did not receive payments from HHS (instead, payments were distributed to the previous owners). HHS previously advised that the prior owners must return the payments to HHS, if the prior owners cannot attest to providing diagnoses, testing or care for individuals with possible or actual cases of COVID-19 on or after Jan. 31, 2020. However, HHS did not reissue returned payments to the new owners or allow previous owners to transfer funds to new, qualified owners.

To address these concerns, HHS announced that, starting Aug. 10, 2020, providers that experienced a change in ownership in 2019 or 2020 under Medicare Part A (i.e., hospitals, certain SNF providers and other facilities, but not physician practices, surgery centers or other outpatient service providers) and did not have Medicare fee-for-service revenue in 2019 will have a separate opportunity to apply for funding. They may submit their revenue information, along with documentation proving a change in ownership, by Aug. 28, 2020, for consideration for Provider Relief Fund payments through the same HHS online portal as the second-chance applying providers discussed above. HHS is expected to provide further details regarding the application process for providers that had a change of ownership. McGuireWoods will also be seeking additional guidance on why the HHS announcement was limited to Part A providers, and will provide additional information if Part B providers that had undertaken a change of ownership are allowed to participate in a subsequent distribution.

3. Medicaid, CHIP and Dental Extension: In June, HHS announced that Medicaid, CHIP and dental providers were eligible to apply for up to 2 percent of their reported patient care revenue through the Provider Relief Fund. Though the deadlines were originally extended from July 20, 2020, to Aug. 3, 2020, (as discussed in a previous McGuireWoods legal alert), HHS further extended the application deadline to Aug. 28, 2020. HHS also mentioned it may release a simplified application, but did not announce when it would become available. Providers that participate in state Medicaid and CHIP programs should review the detailed eligibility requirements on the HHS Provider Relief Fund Page for Providers. Providers interested in learning more about the application process may register for HHS’ webinar this Thursday, Aug. 13.

4. Payments to Nursing Homes and Long-Term Care Facilities: On Aug. 7, 2020, HHS announced a $5 billion Provider Relief Fund distribution to protect residents of nursing homes and long-term care facilities from the impact of COVID-19. The $5 billion in funding will be distributed in two waves. The first wave will provide approximately $2.5 billion to support increased testing, staffing and PPE needs, as well as provide funding for establishing COVID-19 isolation facilities. The balance of the $5 billion will be distributed in a second wave based on the nursing home’s performance in controlling COVID-19. Unlike prior Provider Relief Fund distributions, this second wave will be based on factors such as the nursing home’s ability to minimize COVID-19 spread and COVID-19-related fatalities among its residents in light of the prevalence of the virus in the nursing home’s local geography. HHS announced that the initial approximately $2.5 billion distribution to nursing homes and long-term care facilities will occur in mid-August 2020, and the performance-based distributions will occur throughout the fall of 2020.

5. Auditing and Reporting Requirements: On July 20, 2020, HHS announced additional information about reporting requirements for recipients of payments from the Provider Relief Fund. Though specific details are expected to be released by Aug. 17, 2020, HHS published a notice of reporting requirements, stating that providers that received over $10,000 in the aggregate will be required to submit reports to HHS detailing their usage of the funds. An initial report will be due in February 2021. Further, according to HHS’ updated FAQs, each recipient of more than $750,000 in federal funding in a given year must submit audits in accordance with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, under 45 CFR Part 75. Though these requirements will not be new to nonprofit organizations that regularly receive federal funds, this obligation will impose additional burdens on private corporations that will be required to adopt protocols to comply with federal requirements. Providers that believe they will reach the $750,000 threshold should speak with their accounting firms to understand if their firms have the resources and expertise to satisfy the government standards and protocols, and understand what updates may be necessary in the providers’ accounting controls. They should also ensure they stay informed on HHS’ guidance to maintain compliance with the applicable requirements, which McGuireWoods anticipates will be further updated later this year.

HHS also announced plans to release funding to new providers in 2020, including providers that have yet to receive any funding (for example, non-dental providers that bill only commercial payors and providers that do not directly bill for the services they provide under the Medicare and Medicaid programs), although specific information regarding these funds has not yet been announced.

In recent weeks, HHS has continued to release a series of updates to its Provider Relief Fund FAQs document for the prior distributions. Still forthcoming is HHS’ additional guidance on auditing and reporting requirements. As providers continue to prepare their applications, work to understand their requirements under the Terms and Conditions and document their eligibility and appropriate use of funds, McGuireWoods stands ready to assist with any questions about this updated information. McGuireWoods will continue to monitor developments regarding the Provider Relief Fund.

McGuireWoods has published additional thought leadership analyzing how companies across industries can address crucial business and legal issues related to COVID-19.


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