The United States Department of Health and Human Services (HHS) recently posted the reporting requirements and guidance for providers who received funds from the CARES Act Provider Relief Fund.  Pursuant to the applicable terms and conditions, providers that received payments exceeding $10,000 in the aggregate are required to report on the following schedule:

  • January 15, 2021: reporting portal opens.
  • February 15, 2021: first reporting deadline for all providers.
  • July 31, 2021: final reporting deadline for providers that did not spend all funds prior to December 31, 2020.

Some of the key takeaways from HHS’s guidance include:

1. Calculation of Lost Revenue

HHS materially changed the calculation of “lost revenue.” Lost revenue is now defined as a year-over-year change in net patient care operating income, which is equal to patient care revenue for the year minus patient care-related expenses for the same year.  This new definition is significantly different than the previous one, which defined “lost revenue” as any revenue that a health care provider loses as a result of the coronavirus.  Expenses were not previously included in the calculation.  Providers receiving funds and relying on the prior guidance regarding lost revenue must consider the effect of the modified definition on the use and reporting of distributions.  Furthermore, the ability to use Provider Relief Fund distributions for lost revenue is limited to a provider’s 2019 net gain from health care-related sources.  Providers that do not spend all of their distributions by the end of 2020 will have an additional six months to use the funds for allowable expenses or lost revenue.

2. Eligible Expense Reporting

Under the new guidance, applicable expense reporting requirements are based on the amount of the distribution the provider received.  Providers receiving between $10,000 and $499,999 in aggregated payments will report health care-related expenses in two aggregate categories: (1) General and Administrative expenses; and (2) other health care-related expenses.  Providers receiving $500,000 or more in total payments must provide additional detailed information, including a breakdown of expenses in subcategories such as mortgage/rent, insurance, personnel, fringe benefits, new equipment or software lease payments, utilities/operations, and other general and administrative expenses.  In the other health care-related expenses category, providers must detail expenses in specific sub-categories, including supplies, equipment, information technology, facilities, and other health care-related expenses.

3. Recipient Audits

Providers receiving $750,000 or more in aggregated distributions in 2020 (including Provider Relief Fund payments and other federal financial assistance) are subject to Single Audit requirements pursuant to 45 CFR 75.501.

Further clarification on the guidance will likely be forthcoming and, as we have seen numerous times throughout the past six months, HHS may make additional changes to the guidance in the future.  We will continue to monitor updates on the guidance.

October 1, 2020