The Health Resources and Services Administration (HRSA) quietly released a Post-Payment Notice of Reporting Requirements (Notice) over the weekend, which provides some initial details regarding the reporting requirements applicable to CARES Act Provider Relief Fund (PRF) recipients that accepted one or more payments exceeding $10,000 in the aggregate. The PRF, which reimburses eligible healthcare providers for healthcare-related expenses or lost revenues attributable to COVID-19, requires recipients to agree to comply with reporting requirements as a condition on the receipt of funding.
The Notice, dated September 19, clarifies and supplements HRSA’s prior notice (issued on July 20 and later updated on August 14), which explained the timing of reporting requirements but did not specify what information recipients would need to submit. This new Notice provides long-awaited details of the required reporting elements and additional information regarding which expenses and lost revenues may be reimbursable through the PRF; however, it is already prompting mixed reactions and new questions as healthcare finance teams begin to digest some shifts related to the calculations of lost revenues and prioritizations of applying the funds.
These reporting requirements do not apply to the Nursing Home Infection Control distribution, the Rural Health Clinic Testing distribution, or the HRSA Uninsured Program. HRSA signals these distributions will be, or may be, subject to separate reporting requirements in the future. All others that have received more than $10,000 in PRF payments in the aggregate are required to report the following information:
Interestingly, in stating the above, HRSA seemingly introduces two new concepts. Namely, HRSA introduces an apparent hierarchy into how the funds should be applied – first to COVID-19 attributable expenses and second to lost revenues. HRSA confirmed this hierarchy in a summary of the reporting requirements released on September 23 (Reporting Summary). Also, and potentially more significant, HRSA seems to be signaling that the use of PRF to cover lost revenues may only be available up to 2019 net gain (i.e., profits) from patient care. This concept already is causing consternation for organizations that took early cost-cutting measures.
Information regarding expenses and lost revenues and the additional information detailed below must be provided by the entity (as identified by Tax Identification Number (TIN)) receiving the PRF payment(s) or by a parent organization on behalf of its subsidiaries TINs receiving PRF payments. (Reporting Entity). Unlike the Phase 2 application process, despite including a “federal tax classification” data element, the Notice does not seem to limit the Reporting Entity to the tax filer, leaving some uncertainty as to whether parent organizations should aggregate and report data on a tax filing basis or whether they can report on an organizational-wide basis.
Notably, a parent organization may also direct the use of a subsidiary’s General Distribution Payments. However, subsidiary TINs receiving Targeted Distribution Payments are required to independently report on their use of funds; further, a parent organization that reports on a subsidiary’s General Distribution payment cannot also report on (or transfer) the subsidiary’s Targeted Distribution Payment.
All Reporting Entities must provide demographic information, information regarding expenses and lost revenue attributable to COVID-19, and certain non-financial data via a PRF Reporting System (Reporting System).
Reporting Entities must provide the following demographic information: Reporting Entity, TIN, National Provider Identifier (though this field is optional), fiscal year-end date, and federal tax classification (i.e., the designated business type associated with the Reporting Entity’s TIN).
Reporting Entities must report any expenses attributable to the coronavirus, including expenses incurred in treating confirmed or suspected coronavirus cases, preparing for possible or actual COVID-19 cases, and maintaining healthcare delivery capacity.
Reporting Entities that received between $10,000 and $499,999 in aggregated PRF payments are required to report healthcare-related expenses attributable to coronavirus, net of other reimbursed sources, in two categories (1) general and administrative (G&A) expenses and (2) other healthcare-related expenses. Recipients that received $500,000 or more in PRF payments must report more detailed information regarding G&A expenses and other healthcare-related expenses, as follows:
Reporting Entities must also report 2019 and 2020 revenue information used to calculate lost revenues attributable to coronavirus. Lost revenues attributable to coronavirus will be represented as a negative change in year-over-year net operating income from patient care-related sources. Once revenue information is provided, cost/expense impacts will be calculated based on a calendar year comparison of 2019 to 2020 healthcare expenses to determine net operating income. Reporting Entities must separately report total revenue/net charges from patient care-related sources, revenue from their patient care payer mix, other assistance received in 2020, including assistance received from the PPP, FEMA, local or state governments, business insurance, and other COVID-19-related assistance, as well as total calendar year expenses for 2019 and 2020.
Uncertainties exist within the definitions of some of these terms. For example, do temporary increases in reimbursement for patient services during the public health emergency qualify as COVID-19-related assistance that must be reported?
Finally, Reporting Entities will be required to report certain non-financial data by quarter. Such data include personnel metrics, including personnel by labor category, re-hires, new hires, and personnel separations; patient metrics, including patient visits and admission and total number of resident patients; and facility metrics, including total available staffed beds for medical/surgical, critical care, and other beds. In addition, Reporting Entities that acquired- or divested-related subsidiaries are required to report the changes in ownership and provide related data.
Lastly, Reporting Entities must indicate whether they are subject to Single Audit requirements in 2020, and if so, whether PRF payments were selected to be within the scope of the Single Audit. As we previously reported, the Single Audit requirement applies to recipients that expend $750,000 or more in aggregated federal financial assistance in 2020.
The Reporting System, which was previously set to become available on October 1, 2020, is now expected to open January 15, 2021. The Reporting Summary indicates that the timing requirements announced in HRSA’s prior notice otherwise still stand. Namely, recipients are required to submit reports on their expenditures through December 31, 2020, by February 15, 2021.
In addition, HRSA announced in the Notice that recipients who do not expend PRF payments in full by the end of 2020 will have through June 2021 to use the funding and that recipients who use funds after December 31, 2020, will be required to submit a second and final report no later than July 31, 2021.
HRSA plans to offer question and answer sessions in advance of the reporting deadline and to issue Frequently Asked Questions to aid in the reporting process. Providers should also continue to stay up to date on new guidance as the agency continues to refine its instructions.
We are continuing to monitor for additional guidance regarding the reporting requirements.