U.S. Department of Health & Human Services updates CARES Act Provider Relief Fund FAQs as of July 30

• The U.S. Department of Health & Human Services (HHS) provided two clarifications as of July 30 for the CARES Act Provider Relief Fund (PRF) payments.
• In the first clarification, HHS clarifies that parent entities must transfer a targeted distribution payment to any and all subsidiaries that qualified for the distribution.
• In the second, HHS clarified that it expects providers to have used all of the CARES Act PRF by July 31, 2021.

The U.S. Department of Health & Human Services (HHS) provided two clarifications as of July 30 for the CARES Act Provider Relief Fund (PRF) payments.

1. Parent organizations must pass targeted relief funds to intended sub-entities: In a July 30 addition, HHS clarifies that parent entities must transfer a targeted distribution payment to any and all subsidiaries that qualified for the distribution. Control and use of the funds must be delegated to the entity that was eligible for the targeted distribution payment if a parent entity received the targeted distribution payment on the behalf of an eligible subsidiary. The purpose of targeted distribution payments is to support the specific financial needs of the eligible healthcare provider.

Takeaway

This is a logical extension of last week’s clarification that while parent organizations could allocate general distribution payments, targeted distribution payments must stay with the entity that qualified for them. Based on my read of this, the classic example would be if a hospital that owns a skilled nursing facility (SNF) received the SNF’s targeted distribution, the hospital would need to ensure those funds were passed to the SNF. And only the SNF’s lost revenue and expenses would be counted against its distribution funds.

2. Time period for using CARES Act PRF: HHS clarified that it expects providers to have used all of the CARES Act PRF by July 31, 2021. That’s the date by which reports must be submitted to HHS on the fund’s use.

Takeaway

I would assume those funds technically need to be spent by June 30, 2021 for providers to capture expenses and lost revenue in the report due to HHS on July 31.