HHS offers providers some clarification on CARES Act funding
- Hospitals should define patient revenue based on their specific tax information when providing information to HHS.
- Instead of using “lost revenue” data to claw back hospital overpayments, HHS will use the required information to provide future rounds of assistance payments.
- It remains unclear whether required data on “lost revenue” includes only patient revenue or other operating revenue and investment income.
In response to confusion among hospital finance leaders about details of a leading federal assistance package, the U.S. Department of Health and Human Services (HHS) provided clarification on some details but not on others.
Hospital finance leaders, advisers and hospital advocacy groups say they have received insufficient responses to clarifications they requested from HHS in recent weeks about details surrounding $50 billion in provider funding from the Coronavirus Aid, Relief and Economic Security (CARES) Act. That package is the primary mechanism the federal government has used to disburse financial assistance to hospitals and others in the healthcare sector that have been hit by the coronavirus pandemic.
Clarifications provided about patient revenue and other questions
Contacted for comment, an HHS spokesperson clarified what “patient revenue” hospitals were supposed to report to HHS to receive provider assistance. Hospital executives have questioned whether the term refers to net patient service revenue or gross charges.
The spokesperson said the response depends on what type of tax classification the hospital operates under, such as a partnership or an S Corporation. If the hospital is a C corporation, for example, it should use tax form 1120-S, Box 1a, to determine gross receipts or sales. Tax-exempt hospitals should use tax form 990, Part I-9 to determine program services revenue.
Asked whether the lost-revenue data HHS has required hospitals to provide in return for CARES Act payments will be used to determine whether a provider has been overpaid, the spokesperson said the information will be used to “have a better understanding of COVID impact on each provider.”
And the required information, the spokesperson said, “is being used to support the distribution of additional payments under the General Distribution to providers to augment their initial allocation so that $50 billion for the General Distribution is allocated proportional to providers’ share of 2018 net patient revenue.”
Hospitals also are trying to clarify payment rates for COVID-19 testing and treatment. HHS has said the CARES Act Provider Relief Fund will pay for COVID-19 testing or treatment services at “Medicare rates” based on current-year Medicare fee-schedule rates, except where otherwise noted. Those rates include geographic adjustments but do not include the 20% increase in Medicare payments that the CARES Act approved for inpatient COVID-19 treatment.
The spokesperson clarified that facility payments based on the Inpatient Prospective Payment System (IPPS) will not include the 20% increase to the DRG weight as authorized for COVID-19 diagnoses U07.1 and B97.29. And facility rates not paid on the IPPS schedule (critical access hospitals, rural health clinics, children’s hospitals and PPS-exempt cancer hospitals) will not be increased.
The spokesperson did not clarify whether the Medicare rates will be hospital-specific, such as by accounting for Medicare add-on payments for indirect medical education or disproportionate-share hospitals.
Questions about lost revenue remain unclear
Less clear was what providers receiving CARES Act funding should report as lost revenue. Some executives have wondered whether providers should report only lost patient revenue or include other operating revenue and investment income.
The HHS spokesperson’s response was limited to citing an earlier HHS FAQ, which states that lost revenue can be estimated by comparing year-over-year revenue or by comparing budgeted revenue to actual revenue.
“For April 2020, an estimate of the total monthly loss based on data from the first few weeks in April or by extrapolation from March data is acceptable,” the document states.
An additional $75 billion was allocated to the Provider Relief Fund by the Paycheck Protection Program and Health Care Enhancement (PPPHCE) Act, which was passed after the CARES Act. But the spokesperson declined to provide any time frame for distribution of those funds.
Other areas the spokesperson declined to clarify included:
- Whether HHS will add the PPPHCE funds to the existing CARES Act disbursement tranches — e.g., general distribution, high-impact areas and rural providers — or use different criteria to distribute the $75 billion
- When funds will be distributed for CARES Act “additional allocations” to providers that receive payments from Medicaid but not Medicare
Also unclear was whether the CARES Act Provider Relief Fund will pay for COVID-19 testing or treatment services for patients who are undocumented, assuming all other requirements are met.
“Healthcare providers who have conducted COVID-19 testing of any uninsured individual or provided treatment to any uninsured individual with a COVID-19 diagnosis for dates of service or admittance on or after Feb. 4, 2020 may be eligible for claims reimbursement through the program as long as the services provided meet the coverage and billing requirements established as part of the program,” the spokesperson said.