Accounting and Financial Reporting

Public health emergency extended, $20 billion more in provider aid to be released

October 6, 2020 4:23 pm
  • HHS extended the public health emergency until 90 days past Oct. 23.
  • A new round of $20 billion in grants aims to cover ongoing pandemic-related provider expenses.
  • Among recipients of the $105 billion in PRF grants distributed thus far, 65% have accepted the terms and conditions.

The federal public health emergency (PHE) was extended into January, and an additional $20 billion in federal grants was announced to support healthcare providers through the pandemic.

On Oct. 2, Alex Azar, secretary of the U.S. Department of Health and Human Services (HHS), issued the latest 90-day extension of the PHE. The extension takes effect Oct. 23.

Initially issued Jan. 31 (retroactive to Jan. 27), the PHE was previously renewed on April 21 and July 23.

The latest renewal came three weeks before the PHE was set to expire — far earlier than the last renewal, which came just days before the expiration. Provider advocates said they were worried the last renewal was too close to the expiration.

The PHE has allowed for numerous waivers from CMS, including those allowing hospitals and health systems to expand access to COVID-19 testing and telehealth, create additional workforce capacity and establish additional treatment locations.

More provider assistance on the way

HHS also recently announced the release of a new round of $20 billion in provider relief funding for which providers can start to apply Oct. 5.

The funding is the third “general distribution” round issued through the $175 billion Provider Relief Fund (PRF). HHS has disbursed more than $100 billion of the PRF funding, which was provided through two pandemic response laws.

The latest funding is open to providers that have already received PRF payments. It aims to ensure they have received funding for 2% of their “patient care revenue” plus “an add-on payment to account for revenue losses and expenses attributable to COVID-19.”

The add-on payment calculation includes:

  • A provider’s change in operating revenues from patient care
  • A provider’s change in operating expenses from patient care, including COVID-19-related expenses
  • Payments already received through prior PRF distributions

The deadline to apply is Nov. 6. But HHS said applications will be processed as they arrive and urged early applications.

Applicants also must agree to the terms and conditions, which have caused some to reject their funds. As of Oct. 1, 346,420 providers, or 65% of the 530,916 that have received $105 billion in PRF grants, had attested to the terms and conditions, according to HHS.

Providers that began practicing in 2020 are newly eligible for the funding.

HHS also emphasized the availability of the latest round of funding to mental healthcare providers, including some that previously may not have been eligible.

Details of funding calculations in flux

The new funding comes amid uncertainty over mid-September changes to the definition of lost revenue as used to calculate PRF payments. The uncertainty over the change led many lower-income hospitals to not spend their federal COVID-19 grants and left others scrambling to find funding in case they need to repay the grants, according to industry watchers.

A growing number of hospitals and advocacy groups are lobbying HHS, the White House and Congress for HHS to reverse those rule changes.

HHS guidance also includes “very broad categories” of expenses that qualify as part of the funding calculations, said Dave Macke, FHFMA, CHFP, director of healthcare reimbursement services for VonLehman, an accounting firm that advises hospitals. Those expenses include any funds providers spent to “prevent, prepare for or respond to the pandemic,” according to the guidance.

Given the broad guidance, Macke advises hospitals to include all new expenses because it is preferrable to have some rejected in an HHS audit rather than miss out on potentially eligible expenses.

“If there’s a gray area and you can justify including it, I’d put it in,” Macke said in an interview.

Eligible expenses cover a wide range of outlays and, according to the HHS PRF website, include:

  • Supplies
  • Equipment
  • Workforce training
  • Reporting of COVID-19 test results to federal, state or local governments
  • Building or construction of temporary structures for COVID-19 patient care or care of non-COVID-19 patients in a separate area
  • Acquisition of additional resources, including facilities, supplies or staffing to expand or preserve care delivery
  • Development and staffing of emergency operation centers

Recipients of at least $10,000 in funding will be required to submit reports about the use of their PRF grants. Providers that have spent their entire PRF disbursement can report the spending details starting Oct. 1.

From Jan. 15 through Feb. 15, 2021, hospitals that continue to use the funds through the end of the year must first report through the provider portal their 2020 PRF grant spending, as well as other data. Details on the use of the funds during the first six months of 2021 must be reported by July 31.

Among the many remaining funding questions is whether HHS will reduce the payments by any amounts paid to hospitals through business interruption insurance. For now, HHS only is requiring PRF recipients to report whether they have such insurance.

The insurance issue stems from HHS rules barring PRF monies from covering expenses that already are covered by a health plan or other payment source.


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