COVID-19: Provider Relief Fund General Distribution – Phase 3

Foley & Lardner LLPOn October 1, 2020, the Department of Health and Human Services (HHS) announced a new $20 billion Phase 3 of the Provider Relief Fund (PRF) General Distribution. Much like the Phase 2 funding, Phase 3 funding will be made available following the submission of an application by providers. Providers can begin applying for funds on Monday, October 5, 2020 and have until November 6, 2020 to complete their applications, though HHS is encouraging providers to apply early.

Phase 3 expands the eligibility for the PRF General Fund to behavioral health providers, including those who have not previously received funding. In addition, providers who previously received PRF General Distribution funds, and providers who began practicing between January and March 2020 can apply for additional funding. Applicants that have not yet received PRF payments of 2% of patient revenue will receive a payment that, when combined with prior payments (if any), equals 2%  of patient care revenue. With the remaining balance, HRSA will calculate an equitable add-on payment, in excess of the 2%. In doing so, HRSA will consider:

  • A provider’s change in operating revenues from patient care
  • A provider’s change in operating expenses from patient care, including expenses incurred related to coronavirus
  • Payments already received through prior Provider Relief Fund distributions.

The exact formula for determining the add-on payments is not yet known, and HRSA has cautioned the payments will not be made until it can review applications from all providers.. With respect to entities that were waiting for their TINS to be validated for the receipt of Phase 2 funding, applications not submitted by October 4, 2020 will be voided and the applicants will need to begin a new application under Phase 3.

This announcement comes on the heels of last week’s release of the long-awaited guidance establishing reporting requirements for health care providers that received PRF payments.  That reporting guidance continues to create confusion, as it modified prior guidance on how to calculate both health care expenses and lost revenues attributable to COVID-19. As calendar year 2020 moves into the fourth quarter, many providers continue to weigh whether or not they are able to retain PRF payments received. Additional guidance is expected.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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