The Coronavirus Aid, Relief and Economic Security (CARES) Act established and appropriated $175 billion the Provider Relief Fund. The Provider Relief Fund supports American families, workers, and the heroic healthcare providers on the front lines in the battle against the COVID-19 outbreak. Its mission is to issue relief funding to alleviate financial hardship caused by the pandemic. To date, the Department of Health and Human Services (HHS) has distributed funds to the following populations:

• Phase 1 General Distribution – $50 billion distributed to eligible providers who bill Medicare fee-for-service. This payment was an automatic payment that did not require an application. The automatic payments come to providers via Optum Bank with “HHSPAYMENT” as the payment description.
• Phase 2 General Distribution – $18 billion made available for eligible providers in state Medicaid/CHIP programs, Medicaid managed care plans, dentists and certain Medicare providers, including those who missed Phase 1 General Distribution payments.
• Phase 3 General Distribution – $20 billion in new funding made available for providers for previously ineligible providers. Additionally, providers that already had received a payment from Phase 1 and Phase 2 are invited to apply for a possible add-on payment, which will be determined after all initial payments are made.  Applications for this distribution are due November 6^th.
• COVID-19 High-Impact Distribution – $22 billion distributed to hospitals in high-impact areas
• Rural Distribution – Over $11 billion distributed to rural health care providers and hospitals.
• Allocation for Skilled Nursing Facilities – Over $7 billion distributed to skilled nursing facilities and nursing homes.
• Allocation for Tribal Hospitals, Clinics, and Urban Health Centers – $500 million distributed to providers falling under these categories.
• Allocation for Safety Net Hospitals – Over $14 billion distributed to various acute care facilities and children’s hospitals.

Payment Determination & Attestation to Terms & Conditions

Payout determinations start with at least 2% of reported gross revenue from patient care. The final amount each provider receives will be determined after the data is submitted for each phase, including information about the number of Medicaid patients providers served.  For the Phase 3 General Distribution, the payments are designed to balance an equitable payment of 2% of annual revenue from patient care for all applicants, plus an add-on payment to account for revenue losses and expenses attributable to COVID-19.  Please note that HHS continues to provide clarification and guidance on how providers should calculate lost revenues.

Recipients who receive Provider Relief Fund payments must accept or reject funds within 90 days through the Provider Relief Fund Application and Attestation Portal. To accept payment, the recipient must agree to the terms and conditions of the payment. To reject payment, the recipient must return funds to HHS within 15 calendar days of the attestation.  The Provider Relief Fund requires these funds to be spent on eligible expenses (examples noted below) incurred no earlier than January 1, 2020 through June 30, 2021 or returned. Organizations must keep documentation to support that these funds were used for their response to the COVID-19 pandemic in case of an audit.

Reporting

If you receive one or more payments exceeding $10,000 in the aggregate, the reporting requirements include:

• All recipients must report within 45 days of the end of calendar year 2020 on their expenditures through the period ending December 31, 2020. The portal for providers will open on January 15, 2021.
• Recipients who have expended funds in full prior to December 31, 2020 may submit a single final report at any time during the window that begins October 1, 2020, but no later than February 15, 2021.
• Recipients with funds unexpended after December 31, 2020, must submit a second and final report no later than July 31, 2021.

How must the funds be spent?

Types of Eligible Expenses:

Provider Relief Funds may be used to cover lost revenues, as represented by a change in net patient care operating income from 2019 to 2020 (revenue less expenses) or expenses attributable to the Coronavirus that are not reimbursed or obligated to be reimbursed from other sources. Examples of eligible expenses include, but are not limited to:

• Supplies and equipment used to provide health care services for possible or actual COVID-19 patients
• Staffing and Workforce training
• Reporting COVID-19 test results to federal, state, or local governments
• Building or constructing temporary structures to expand capacity for COVID-19 patient care or to provide healthcare services to non-COVID-19 patients in a separate area from where COVID-19 patients are being treated
• Acquiring additional resources, including facilities, equipment, supplies, health care practices, staffing and technology to expand or preserve care delivery
• Developing and staffing emergency operation centers

HHS is reimbursing providers who have conducted COVID-19 testing or provided treatment for uninsured individuals with a COVID-19 diagnosis on or after February 4, 2020.  Providers can electronically request claims reimbursement through  the COVID-19 Claims Reimbursement Portal for Testing and Treatment of the uninsured here – https://coviduninsuredclaim.linkhealth.com/

Mercadien’s COVID-19 Task Force can work with you to help you understand the compliance elements related to the Provider Relief Fund, assist with grant management and prepare your organization for an audit, along with other COVID Consulting services to help your organization navigate through these uncertain times.  If you have any questions relating to the Provider Relief Fund or any of the aforementioned services, please feel free to reach out to me at 609-689-2333 or via email at msmierciak@mercadien.com.

DISCLAIMER: This advisory resource is for general information purposes only. It does not constitute business or tax advice and may not be used and relied upon as a substitute for business or tax advice regarding a specific issue or problem. Advice should be obtained from a qualified accountant, tax practitioner or attorney licensed to practice in the jurisdiction where that advice is sought.