The Department of Health and Human Services (“HHS”) continues to modify guidance related to reporting requirements of the provider relief funds (“Relief Funds”) that were part of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The initial Post-Payment Notice of Reporting Requirements were released on July 20, 2020 and then later modified on September 19, 2020. We analyzed those changes in a previous article. In its latest guidance from October 22, 2020, HHS modified the Post-Payment Notice of Reporting Requirements for Relief Funds which should benefit providers.
As a condition for receipt of Relief Funds, recipients must agree to use the Relief Funds to reimburse them first for health care related expenses and then to reimburse them for lost revenues attributable to coronavirus. As part of the guidance that HHS released on September 19, 2020, HHS narrowed its interpretation of “lost revenue” to year-over-year changes in net patient care operating income. Providers interpreted this as a change to HHS’s prior guidance. In its guidance issued on October 22, 2020, HHS again modified its definition of lost revenue, which should increase the amount providers may claim as lost revenue. The October 22, 2020 guidance includes the following changes:
- Lost Revenue – HHS now defines lost revenue as “patient care lost revenues” net of the healthcare related expenses attributable to coronavirus that provider reimbursed using Relief Funds. The limitation of net operating income (including patient care related expenses) was removed entirely.
- Cap of Lost Revenue – Similarly, HHS changed the limit on amount that can be claimed as lost revenue as the difference between a provider’s 2019 and 2020 actual net patient revenue. Therefore, HHS is no longer limiting lost revenue to net gain 2019.
- Actual Revenue – HHS also modified the term revenue when calculating lost revenue to include the term “actual” revenue. We interpret this to mean revenue that was actually collected by a provider as opposed to the amounts billed.
- Methods of Accounting – HHS clarified that recipients of Relief Funds may use their normal method of accounting when reporting the use of Relief Funds to HHS. Previously, it was unclear whether providers should use an accrual or cash basis method of accounting.
- Reporting Entities for General Distributions – Consistent with recent FAQs, HHS clarified that reporting entities for General Distribution Relief Funds may be either (1) the entity (at the TIN level) that received one or more Relief Funds or (2) an entity that: i) is the parent of one or more subsidiary that received General Distribution payments, ii) has associated providers that were providing diagnoses, testing, or care for possible or actual cases of COVID-19 on or after January 31, 2020, and iii) can otherwise attest to the Terms and Conditions of the Relief Funds.
- Reporting Entities for Targeted Distributions – For Targeted Distribution payments, only the entity (at the TIN level) receiving the Targeted Distributions is responsible for reporting their use of Targeted Distribution payments, and parent organizations may not report on such entity’s behalf.
These changes should be welcomed by providers, but there are still a number of uncertainties around reporting the use of Relief Funds. For example, it is unclear why HHS still requires providers to report healthcare related expenses and G&A expenses as part of lost revenue calculation considering the changes to the definition of lost revenue. Perhaps, HHS is attempting to gather as much information as possible related to the expenses incurred to fight coronavirus.
HHS has indicated that the Relief Fund Reporting Portal will open on January 15, 2021, with the first reporting deadline on February 15, 2021. Providers who did not fully expend Relief Funds prior to December 31, 2020, will have until July 31, 2021 to submit their final report.