Accounting and Financial Reporting

HHS identifies limits on clawbacks of CARES Act overpayments

May 26, 2020 6:19 pm
  • HHS unlikely to recoup COVID-19 overpayments that are less than documented COVID-19 expenses and related lost revenues.
  • Providers that want to return their COVID-19 assistance grants should be able to do so at the provider attestation portal.
  • HHS insists providers can agree to the terms and conditions of only the COVID-19 programs from which they accept assistance.

Amid provider concerns that the federal government may pull back overpaid emergency assistance related to the COVID-19 pandemic, the Trump administration identified a key restriction on any such efforts.

In recent weeks, the U.S. Department of Health and Human Services (HHS) has been distributing $50 billion from the CARES Act to providers adversely affected by lost revenue and increased costs from the pandemic. However, after the first tranche of $30 billion was distributed, HHS changed the calculation for how much each provider would receive and then retroactively applied it to both the original $30 billion and a new $20 billion allocation.

For some providers that heavily rely on Medicare, the change raised concerns that their organization might have been overpaid under the first formula.

In a response to questions on potential clawbacks of the federal assistance, an HHS spokesperson said May 5, “Generally, HHS does not intend to recoup funds as long as a provider’s lost revenue and increased expenses exceed the amount of Provider Relief funding [the] provider has received.”

The “terms and conditions” of those payment tranches require recipients to demonstrate that lost revenues and increased expenses attributable to COVID-19, excluding expenses and losses that have been paid from other sources or that other sources are obligated to pay, “do not exceed total payments from the [CARES Act] Relief Fund.” 

The limitation on clawbacks identified by the spokesperson may be more favorable to providers than a more open-ended, earlier assertion by an HHS official that the department was prepared to claw back “any further overpayment amounts through CMS and our partnership with UHG [UnitedHealth Group].”

Longer-term, the department has promised future audits on the CARES Act funding.

“HHS reserves the right to audit Relief Fund recipients in the future to ensure that this requirement is met and collect any Relief Fund amounts that were made in error or exceed lost revenue or increased expenses due to COVID-19,” the spokesperson said.

Additionally, HHS may move to recoup funds from any recipient that fails to comply with one of the sets of “terms and conditions” the department has laid out for the various funding tranches.

Officials also have repeatedly stressed that the HHS Office of the inspector General and the Department of Justice will use existing mechanisms to recoup funds and address fraudulent activity.

Provider concerns about aggressive HHS clawbacks of assistance stemmed, in part, from the range of information HHS had required them to submit. For instance, HHS required recipients to submit their “gross receipts or sales” or “program service revenue” as designated on their federal income-tax return.

Considerations for returning funds

Some providers also have expressed concern that they have only 30 days from receipt to decide whether to accept the funds. Some have returned the funds for unspecified reasons, a senior HHS official said at a recent media briefing.

However, some hospital advisers have said it remains unclear how providers can return the funds, which are being sent electronically to all qualifying providers — regardless of whether they want the assistance.

In response, the HHS spokesperson said providers that want to reject CARES Act funding should go to the payment portal. Payment rejection should be provided as an option within the “attestation process,” through which providers agree to the terms and conditions for different segments of COVID-19 assistance funding if they choose to accept the money.

“The CARES Act Provider Relief Fund payment attestation portal will guide providers through the attestation process to accept or reject the funds,” the spokesperson said.

If providers do nothing after receiving the money, they will be deemed to have agreed to the terms and conditions, an HHS official said.

Terms and conditions for different funding pools

Providers have noted that the attestation portal does not allow them to agree only with the terms and conditions for programs in which they want to participate. Six separate pools of CARES Act money have distinct sets of terms and conditions:

Despite the experience some providers reportedly have had on the portal, the HHS spokesperson insisted, “Providers can decide which payments they would like to accept, and thus which terms and conditions they agree to.”



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