On September 19, 2020, the US Department of Health and Human Services (HHS) released guidance articulating how to account for lost revenues and expenses and addressing recipient reporting requirements for those receiving Provider Relief Fund (PRF) payments. The guidance applies generally to PRF recipients that received one or more PRF payments exceeding $10,000.
The $10,000 reporting threshold is a notable change from the statutory requirement in Section 15011 of the CARES ACT; which (and the Provider Relief Fund Terms and Conditions) had required recipients of more than $150,000 in total funds appropriated under the CARES Act to submit a report to HHS within 10 days following the end of each calendar quarter. While the new guidance lowers the reporting threshold to $10,000, it does not clarify if HHS’s public reporting will continue to satisfy the Section 15011 requirement and did not further specify how (or whether) the reporting information announced in the guidance relates to the Section 15011 requirement. We expect further guidance on the issue, and will report when additional guidance is released. Recipients should continue to monitor the PRF FAQs for additional clarifications on reporting requirements.
The new guidance stipulates that recipients will report on the use of their PRF payments by first submitting information on healthcare-related expenses that are directly attributable to coronavirus. This may include general and administrative expenses and/or healthcare-related operating expenses. Any PRF payment amounts that were not fully expended on healthcare-related expenses attributable to coronavirus are then applied to the provider’s “lost revenues,” which, under the new guidance, are now defined as “year-over-year net patient care operating income (i.e., patient care revenue less patient care related expenses).” This definition is more limited than previous HHS guidance which permitted “any reasonable method of estimating lost revenue;” providers could compare budgeted to actual, or use a year-over-year comparison. In addition, HHS appears to cap the application PRF payments toward lost revenues up to either the amount of a provider’s 2019 net gain from healthcare related sources or up to a net zero gain/loss in 2020, if the provider reported negative net operating income in 2019. HHS seems to have provided this clarification because, under previous guidance, if lost revenues could be applied to expenses irrespective of the impact on margin, it would have introduced the possibility of PRF funding making a healthcare provider more profitable in 2020 than it was in 2019. AOPA is concerned about the potential impact of this approach for some providers and will continue to monitor the issue.
Recipients that do not use the full amount of their PRF funds by the end of calendar year 2020 will have an additional six months to use the remaining amounts. The extra six-month reporting period (January–June 2021) will be compared to the same period in 2019 for the purposes of making calculations.
The new guidance stipulates that recipients will be required to report several data elements, including demographic information, information about their expenses attributable to coronavirus, information about their lost revenues, and other non-financial information (such as metrics on personnel, patients, and facilities). Recipients that received between $10,000 and $499,999 in aggregated PRF payments must report healthcare-related expenses attributable to coronavirus in two aggregated categories: (1) general and administrative expenses and (2) other healthcare-related expenses. Providers receiving $500,000 or more in PRF payments will report their expenses in greater detail within each of these categories.
The guidance has also pushed the reporting window, the reporting portal will be available in early 2021 (instead of on October 1, 2020). The other deadlines appear to remain unchanged, but these deadlines may be adjusted as the reporting mechanism is gradually rolled out. Important reporting deadlines include:
- All recipients must report within 45 days of the end of the calendar year 2020. (This would fall on Sunday, February 14; the actual deadline will likely be clarified as Monday, February 15.)
- Recipients who have expended funds in full prior to December 31, 2020, may submit a single final report at any time during the first reporting window (early 2021 through February 15, 2021).
- Recipients with funds still unexpended after December 31, 2020, must submit a second and final report no later than July 31, 2021.
Finally, the new guidance does not change HHS’ previous clarifications that payments from the PRF qualify as disaster relief payments and are therefore taxable income. AOPA continues to work with Congress on bipartisan legislation which would ensure that CARES Act PRF payments are not includible in gross income.
AOPA will continue to follow this and all CARES Act-related guidance. If you have any questions, please contact Justin Beland, Director of Government Affairs.