HHS Provider Relief Fund updates include clarifications, confirmations and redefinitions

• HHS has made a number of significant updates to the PRF FAQs and reporting instructions over the last two weeks.
• Some of these updates to the PRF FAQs and reporting instructions provide clarity on how recipients should report.
• Other updates confirm interpretations of prior guidance. And some fundamentally redefine the amounts, both positive and negative, providers are allowed to retain.

Over the last two weeks, the U.S. Department of Health & Human Service (HHS) has made a number of significant updates to the Provider Relief Fund (PRF) FAQs and reporting instructions. Some of these provide clarity on how recipients should report. Others confirm, hopefully once and for all, interpretations of prior guidance. And some fundamentally redefine the amounts (both positive and negative) providers are allowed to retain. All page references listed below are current as of November 4, 2020.

Clarity

Calculating expenses attributed to coronavirus: The FAQ update provides additional details, and in some cases simplistic examples, of how providers should calculate salaries/employee compensation (See page 16 of FAQ) and how expenses should be netted of reimbursement (See pages 17/18 of FAQ). It appears that HHS is allowing providers flexibility to report either at a patient level or a category level.     

Depreciation; not purchase price only for capital equipment: Providers who use accrual or cash basis accounting may report the relevant depreciation amount based on the equipment’s useful life, purchase price and depreciation methodology otherwise applied. (See FAQ page 18)

Home office counts as overhead: Providers that already have a cost allocation methodology in place, may allocate normal and reasonable overhead costs to their subsidiaries which may be an eligible expense if attributable to coronavirus and not reimbursed from other sources. (FAQ page 18)

No “one and done”: Even if recipients suffer sufficient lost revenue in April and May, to account for the PRF funds they’ve received, they must still report revenue and expense for the full calendar years 2019 and 2020. (FAQ page 24)

IGTs are allowable expenses: A portion of a PRF recipient’s state provider taxes may be eligible expenses, but only to the extent the PRF recipient owes incrementally increased state provider taxes, where the incremental increase is attributable to coronavirus. (FAQ page. 25)

Different lists, same expenses: The list of expenses in items two and three on the PRF reporting guidance contain slightly different items. HHS staff, in an email to HFMA, confirmed that despite these differences the expenses captured and reported under step two are the same that will be captured and reported in step three. So it seems the variance in the two can serve as providing further examples of expenses that can be claimed or should be reported.

Confirmation

Lost revenue capped at 2019 revenue: The amount of lost revenues eligible for reimbursement through the PRF is capped at the change in 2019 to 2020 actual revenue from patient care related sources, less the PRF  amount used to cover healthcare expenses attributable to coronavirus not reimbursed by other sources. Providers may not report their 2020 expenses. (FAQ page 19)

Reallocation allowed: The parent TIN may use General Distribution Funds and/or allocate the money to other subsidiary TINs, as it deems appropriate. Regardless of which entity (the parent or subsidiary) attested to the receipt of the general distribution payments, the parent entity can report on the use of the general distribution payment as part of the HHS reporting process. (FAQ pages 20/21)

PRF Is payer of last resort: The new FAQs confirm that providers are to expend PPP grants and FEMA funds on eligible expenses before any remaining expenses would be covered by the PRF.

Redefinition

No netting (Page 15 FAQ): Providers no longer need to net expenses attributable to the coronavirus not reimbursed by other resources (calculated in step one) from lost revenue attributed to coronavirus calculated in step two. This was the sole edit in the PRF instructions released on 11/2/20.

Cost-based reimbursement: Medicare providers whose reimbursement is cost based will not have their costs attributed to COVID-19 covered by the PRF. The FAQs state that since their reimbursement is cost based, there are no eligible expenses. In instances where a ceiling is applied to the cost reimbursement and the reimbursed amount does not fully cover the actual cost due to unanticipated increases in providing care attributable to coronavirus, those incremental costs that were not reimbursed are eligible for reimbursement under the PRF. Commentary: While the FAQ does not clearly state that this is limited only to the portion of a provider’s healthcare that is cost based, it is probably safe to assume that HHS will allow providers to claim COVID-19 related expenses related to other payers who do not reimburse based on cost.

Return the interest (Page 19 FAQ): If PRF are held in an interest bearing account, any amount that is unused and returned to HHS must be “calculated, reported and returned if not applied to a permissible use of funds.”

Increased revenue in 2020, PRF limited to COVID expenses: Recipients that reported increased revenue from patient care in 2020 as compared to 2019, are eligible to use PRF payments toward expenses attributable to coronavirus not reimbursed by other sources, however, they would not be considered to have lost revenues attributable to coronavirus for the initial reporting period (FAQ page 19). HHS’s guidance and FAQs have remained silent on how to normalize/adjust 2019 revenues, so they are comparable to 2020s on a whole host of issues (e.g., rate increases, addition/removal of services/providers, one-time settlement items, etc.).