Everything you wanted to know about the CARES Act Provider Relief Funds but HHS wouldn’t answer until July 23

• The U.S. Department of Health & Human Services (HHS) addressed questions about the CARES Act PRF Reporting Requirements.
• HHS made an important distinction when clarifying that while general distribution funds can be reallocated to providers under common corporate ownership, targeted distributions must remain with the provider who received them.
• Although the current FAQs attempt to address what exactly counts as COVID-19-related lost revenue and expenses, the feedback HFMA has received from members is that it’s not specific enough to be useful.

U.S. Department of Health & Human Services (HHS) was busy last week. In addition to the key questions addressed below, the updated FAQs provided more technical clarity on reporting data to the portal for providers who are eligible for the Medicaid targeted distribution.

1. CARES Act PRF reporting requirements:  Earlier  last week, the HHS posted preliminary details (though still slim) on additional reporting requirements for the CARES Act Provider Relief Fund General and Targeted Distributions.

Recipients receiving $10,000 or more in aggregate payments from HHS are subject to the reporting requirements. This requires submitting reports to HHS through a portal on how the funds have been expended. HHS will issue detailed instructions regarding the reports and the portal by August 17, 2020, with the portal opening on October 1, 2020. This will be the process in lieu of the quarterly reports.

The Health Resource and Services Administration (HRSA) will host educational sessions for providers and explain the timing of the reports, which are noted below. As of July 24 details on the educational sessions are not available. The reporting system will become available to recipients for reporting on October 1, 2020.  In terms of timing, here’s what we currently know:

• All recipients must report within 45 days of the end of calendar year 2020 on their expenditures through the period ending December 31, 2020.
• Recipients who have expended funds in full prior to December 31, 2020 may submit a single final report at any time during the window that begins October 1, 2020, but no later than February 15, 2021.
• Recipients with funds unexpended after December 31, 2020, must submit a second and final report no later than July 31, 2021.
• Detailed PRF reporting instructions and a data collection template with the necessary data elements will be available through the HRSA website by August 17, 2020.

Takeaway

The “detailed instructions” will be this season’s “Must See TV” for healthcare finance professionals who are tasked with ensuring compliance with HHS’s terms and conditions and revenue recognition. And if HHS holds true to form, my guess is they’ll be lacking in detail. One of the items we’re working with HHS to clarify is what exactly counts as COVID-19-related lost revenue and expenses. While the current FAQs attempt to address each in turn, the feedback we’ve received is that it’s not specific enough to be useful.

2. Parent organizations reallocating PRF funds to subsidiaries: HHS clarified that while parent organizations can reallocate General Distribution funds to its subsidiaries, parent organizations cannot redistribute targeted distribution funds. For general distribution funds that are reallocated, the parent organization will still need “to substantiate that these funds were used for increased healthcare-related expenses or lost revenue attributable to COVID-19, and that those expenses or losses were not reimbursed from other sources and other sources were not obligated to reimburse them.”

3. Single audit requirement: Provider Relief Fund General and Targeted Distribution payments and Uninsured Testing and Treatment reimbursement payments are required to be included in determining if a recipient organization, other than commercial (for-profit) organizations, is required to have an audit in accordance with 45 CFR Part 75, Subpart F (i.e., reported annual total federal fund expenditures equal to or above $750,000).

Commercial organizations that receive $750,000 or more in annual federal awards have two options:

• A financial audit conducted in accordance with Generally Accepted Government Auditing Standards (45 CFR 75.216)
• A single audit in conformance with the requirements under 45 CFR 75 Subpart F

4. COVID-19 balance billing “clarification:” The prohibition on balance billing applies to “all care for a presumptive or actual case of COVID-19.” A presumptive case of COVID-19 is a case where a patient’s medical record documentation supports a diagnosis of COVID-19, even if the patient does not have a positive in vitro diagnostic test result in his or her medical record.

Takeaway

It would be nice if HHS would provide some examples of what constitutes a presumptive case. One would assume that an order for a COVID-19 test, even if there’s a negative result, would be a good indicator. If I were looking for a framework to define presumptive COVID-19 testing to determine when I can and can’t balance bill for services provided to a “presumptive” COVID-19 patient, I’d probably also look to the Medicare cost sharing waiver guidelines. Finally, given the optics of this, I would tend to be more conservative, and when in doubt, not balance bill.

Finally, on a somewhat related note, last week HHS and the IRS clarified that the CARES Act PRFs will be counted as gross income and therefore be taxable for for-profit entities. This week, we get a gentle reminder from Maine that, depending on your state, PPP forgiveness could create an additional state tax liability.