Capital Sources and Allocation

Hospital groups urge changes to Provider Relief Fund distribution and reporting processes

September 30, 2021 9:14 pm

One area of concern is new guidance from HRSA that limits the opportunity to use PRF distributions for capital projects.

Hospital advocates say the U.S. Department of Health and Human Services (HHS) should offer more flexibility in requirements pertaining to the Provider Relief Fund (PRF) reporting process.

HHS also should distribute the scheduled PRF allocation as soon as possible, the American Hospital Association (AHA) wrote in a comment letter.

HHS recently announced a $25.5 billion distribution, including $17 billion in a Phase 4 general distribution, with processes in place to target more of the money to smaller providers. The remaining $8.5 billion was apportioned to rural providers by the 2021 COVID-19 relief legislation.

The application portal for the funding opens Sept. 29 and runs through Oct. 26. HHS posted a video with information on the application process and will host a webinar Oct. 5.

The AHA said prompt distribution of the funds is “particularly urgent” because all prior distributions were based on COVID-19-related expenses and lost revenues incurred by June 30, 2020. Yet resources, most notably clinical staff, continue to be stretched thin, and costs of labor, supplies and processes are “skyrocketing.”

In its comment letter, America’s Essential Hospitals (AEH) said the criteria for determining each organization’s distribution amount should better account for the needs of large safety-net hospitals.

“The methodology falls short of providing necessary support to the very providers the agency intends to help through this distribution — those committed to advancing equity and serving the most vulnerable communities,” AEH wrote.

The group added, “We urge HHS to revise its methodology to ensure providers treating disproportionate numbers of people of color and low-income populations — regardless of size — receive a higher payment amount that will cover the steep rise in expenses and lost revenue they face as a result of the delta variant.”

The need for flexibility in PRF reporting

In addition to expeditiously distributing the pending funds, HHS also should consider relaxing the deadline for using funds received by June 30, 2020, the AHA wrote. The spending deadline for those funds remains June 30, 2021, with a reporting deadline of Sept. 30. HHS did enact a 60-day grace period, meaning funds won’t be immediately recouped from providers that don’t meet the reporting deadline.

Given the continued financial challenges affecting the hospital industry, the AHA wrote, the spending deadline should be pushed back to June 30, 2022, or the end of the public health emergency, whichever comes later. Such an extension also would cover payments received July 1-Dec. 31, 2020. The spending deadline for that distribution period is Dec. 31, 2021, and the reporting deadline is March 31, 2022.

The AHA also called for additional extensions to be granted upon request for providers that encounter “extreme and uncontrollable circumstances” such as natural disasters or COVID-19 surges.

Concern over new guidance on capital expenditures

The AHA said providers will be placed at further disadvantage by an August 2021 update to the PRF FAQs, with the Health Resources and Services Administration (HRSA) stating, “For projects that are a bundle of services and purchases of tangible items that cannot be separated, such as capital projects, construction projects or alteration and renovation projects, the project costs cannot be reimbursed using Provider Relief Fund payments unless the project was fully completed by the end of Period of Availability associated with the Payment Received Period.”

The AHA called for the change to be reversed, noting that the task of completing a capital project is more difficult during the pandemic, especially for hospitals with limited resources. It also pointed out that the policy change came with only about a month left in the reporting period and marked a “complete reversal of the prior policy,” which had allowed PRF allocations to be used for capital projects if the cost was “incurred” as a COVID-19-related expense.

Accommodations for new hospitals and more

The AHA also requested that new hospitals be made eligible for future distributions, contrary to the requirement for hospital TINs to be registered with HRSA before 2021. The rule leaves hospitals ineligible for new funding if they were purchased out of bankruptcy in 2021, yet such hospitals also are unable to use funding that was distributed to their previous owner.

“However, these hospitals are effectively the same hospital as they were before, and they continue to incur COVID-19-related expenses and lost revenue in 2021,” the AHA wrote.

Another requested change pertains to targeted distributions, such as those for hospitals in “high-impact” COVID-19 areas. Current requirements call for those distributions to be reported by the entity that initially received them, even if they were shifted to other facilities within a system. The AHA says HHS should allow the entity that ended up with the distribution to report on the use of funds, or the agency should provide better guidance on how to appropriately reclassify COVID-19 expenses and lost revenue.


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