New ‘terms and conditions’ added for providers accepting latest round of CARES funding

• HHS has added another page of requirements to its 10-page terms and conditions to which providers receiving CARES Act grants must agree.
• Providers have four basic options when considering the terms and conditions, legal analysts say.
• Overpayments from the earlier tranche of CARES funding will be recouped through reduced second-round funding.

Providers receiving some of the $20 billion in new COVID-19 assistance that the federal government began to distribute April 24 will find some new strings attached to it.

The new requirements, also issued April 24, apply to $20 billion in provider assistance that the U.S. Department of Health and Human Services (HHS) is distributing as part of the $100 billion provider fund included in the $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act.

The electronically distributed funding will be based on either Medicare cost report data or the net revenue data providers submit through the Provider Relief Fund homepage. Even if CMS uses a provider’s cost report to determine funding under this tranche, providers still must submit their net revenue data starting April 24.

The new funds will require providers to accept controversial terms and conditions within 30 days of receipt of payment. The new terms and conditions are similar to earlier terms and conditions issued for providers accepting the first $30 billion that HHS distributed in recent weeks from the CARES Act. But among several new provisions are:

• Requiring providers to submit general revenue data for calendar year 2018 to HHS
• Giving HHS consent to publicly disclose any payments providers may receive from the fund
• Acknowledging that payment disclosures may allow others to estimate providers’ “gross receipts or sales, program service revenue or other equivalent information”

Provider advocates and legal analysts raised concerns about many of the original terms and conditions, in part because those concerns had been raised and rejected when Congress was considering the CARES Act.  That led to apparent contradictions between the statutory language allowing hospitals to use the CARES Act funding to replace lost revenue and the terms limiting the use of the funds to preventing, preparing for and responding to the coronavirus.

HHS also changed the language included in both sets of terms and conditions regarding out-of-network charges. Providers will need to agree to “not seek to collect from the patient out-of-pocket expenses in an amount greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network” grant recipient.   

Creation of new terms and conditions for the second tranche of CARES funding suggested to some legal observers that HHS will add requirements to all future coronavirus-related payments.

Deciding whether to agree to terms

Although some legal advisers have questioned HHS’s legal authority to condition the CARES funding on administrative requirements, providers will need to decide whether to accept them.

The four options attorneys have identified for providers considering the 11-page latest terms and conditions are:

• Retaining the funds and attesting to the terms and conditions
• Keeping the funds and attempting to return a modified attestation that agrees only to those terms and conditions specified in the CARES Act
• Returning the funds to HHS
• Keeping the funds but not attesting to the terms and conditions

Not returning the payment within 30 days of receipt will be viewed as acceptance of the terms and conditions, according to an HHS provider page. As was required by the first set of terms and conditions, providers that review and reject the terms must return the full payment to HHS within 30 days of receipt.

Funding distribution details

The formula for determining a provider’s share of both the $20 billion in second-tranche funding and the earlier $30 billion tranche, according to an HHS official, is:

(Individual Provider 2018 Revenue/$2.5 Trillion) X $50 Billion = Expected General Distribution

The official clarified that any provider receiving any of the $50 billion will need to submit cost report data.

“This could mean they get additional money based on the formula,’” the official said.

Any providers that have received funding from the second tranche will not receive more from the $50 billion general pool, unless HHS had incomplete 2018 cost reports for them, the official said.

Overpayments from the first tranche will be recouped through underpayments on the second tranche, the official said. HHS also can recover any additional overpayments through CMS or through its contractor, UnitedHealth Group.