On September 18, the Department of Health and Human Services (HHS) released a six-page document detailing some of the reporting requirements for the Provider Relief Funding paid out over the last six months. As we have previously communicated, all providers will be required to report 2020 COVID-19 related expenses and lost revenues by February 15, 2021. If all funds were not expended by December 31, 2020, providers will have another opportunity to report expenses and lost revenues incurred from January 1, 2021 through June 30, 2021 by July 31, 2021. This guidance does not apply to the Nursing Home Infection Control payments.
The new guidance provides more detail on reporting of expenses and lost revenues attributable to COVID-19 and appears to be, in some cases, significantly different from previous guidance from HHS. Expenses not reimbursed by other sources (e.g., PPP loans or state COVID Relief Funds) will be claimed first. If the funds received are not fully exhausted by COVID related expenses, lost revenue can then be used, but only up to the amount of a provider’s 2019 “net gain” from healthcare-related sources.
Highlights from the guidance include:
- Expenses will fall into two categories: G&A expenses and other healthcare related expenses. Page 3 of the document provides more detail regarding what should be classified in each category. It appears HHS may have broadened the definitions of allowable expenses, but we are awaiting further guidance.
- Lost revenues will be allowed based on a calculation of the change in year-over-year net patient care operating income, which will be calculated using comparisons of 2019 actual revenues and expenses (by quarter) to 2020 actual revenues and expenses (by quarter).
- The guidance indicates providers will only be able to claim lost revenue if 2020 net operating income is lower than 2019 net operating income. Providers incurring a negative net operating income in 2019 will be able to claim lost revenues up to a net zero gain/loss in 2020.
- Providers will be required to report certain non-financial data as well, including personnel, patient and facility metrics. Examples of the metrics are included on page 5 of the HHS document.
- The guidance reaffirms the Single Audit requirement for entities expending $750,000 or more in Provider Relief Funds in 2020.
HHS has omitted all language regarding the use of any reasonable method including comparisons to budget, which was included in previous guidance for the General Distribution submissions. At present, the FAQs still have this language. We expect clarification on this and other issues to be forthcoming.
As a reminder, each payment from the HHS provider relief fund has a separate set of terms and conditions. Providers will need to be sure to track the use of each payment separately.
The reporting requirements are complex and will require providers to report 2019 and 2020 data, in many cases on a quarterly basis. The HHS reporting tool is currently scheduled to be available in early 2021. We are developing a template to assist in gathering the information needed for reporting. Please contact us if you are interested or need any assistance.
The HHS guidance on the provider relief funds has been ever changing and often conflicting. The FAQs continue to be updated frequently. HW&Co. is here to assist you in any way we can. Please visit the HW&Co. Current Events Center on our website for additional resources or contact your HW Healthcare Advisor if you need assistance.
