Phase 3 of the CARES Act Provider Relief Fund General Distribution

Winthrop & Weinstine, P.A.

On October 1, 2020, the United States Department of Health and Human Services (HHS) announced Phase 3 of the CARES Act Provider Relief Fund General Distribution, which makes $20 billion available to an expanded group of eligible providers, including behavioral health providers. In addition, providers who previously received distributions from prior phases of the Provider Relief Fund are also eligible to apply for this phase. Eligible providers also include those who began practicing between January and March 2020. Providers who have not yet received Provider Relief Fund distributions equal to approximately 2% of patient revenue will receive a payment that, combined with prior distributions (if any), totals 2% of patient care revenue.

Funds remaining in the Phase 3 distribution will be used for an equitable add-on payment in excess of 2% of patient revenue. The formula for calculating this add-on payment has not been released but will take into consideration:

  1. A provider’s change in operating revenue from patient care,
  2. A provider’s change in operating expenses from patient care, including expenses incurred related to COVID-19, and
  3. Payments already received from prior Provider Relief Fund distributions.

The application portal and FAQs for Phase 3 were rolled out on October 5, and providers currently have until November 6, 2020, to apply. As with previous deadlines, HHS may extend that deadline but for now has encouraged providers to apply early.

This announcement follows the recent release of the long-awaited guidance regarding reporting requirements for providers that received prior Provider Relief Fund distributions.

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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