Providers that underwent a change of ownership (CHOW) in 2019 or 2020 should take note of recent FAQ updates from the Department of Health & Human Services (HHS). On October 28, 2020, the agency signaled its continued focus on how provider relief funds should be handled by individuals or entities involved in recent changes of ownership. In the updates, HHS:
1. Updated existing FAQs to confirm that the guidance applies to changes of ownership in 2019 and 2020 (see A-C below); and
2. Clarified who is responsible for reporting use-of-funds where a change of ownership occurred after receipt of a Provider Relief Fund payment (see D below).
The updates reconfirm HHS’ position that a seller in an asset transaction may not transfer provider relief funding to the buyer. However, with respect to general distributions, where (1) an entity is acquired and merged with another entity or (2) a CHOW involves the purchase of stock or membership interest of a provider entity, then the entity resulting from the merger or the entity acquired, respectively, may use the funding. If providers are uncertain whether they may be eligible for additional funding, they should apply for Phase 3 by November 6, 2020.
Can an organization that sold its only practice or facility under a change in ownership in 2019 or 2020 and is no longer providing services accept payment and transfer it to the new owner?
No. A provider that sold its only practice or facility must reject the Provider Relief Fund payment because it cannot attest that it was providing diagnoses, testing, or care for individuals with possible or actual cases of COVID-19 on or after January 31, 2020, as required by the Terms and Conditions. Seller organizations should not transfer a payment received from HHS to another entity. If the current TIN owner has not yet received any payment from the Provider Relief Fund, it may still receive funds in other distributions.
Can a provider that purchased a TIN in 2019 or 2020 accept a Provider Relief Fund payment from a previous owner and complete the attestation for the Terms and Conditions?
No. The new TIN owner cannot accept the payment from another entity nor attest to the Terms and Conditions on behalf of the previous owner in order to retain the Provider Relief Fund payment. However, the new TIN owner may still receive funds in other distributions.
No. The new TIN owner cannot accept the payment from another entity nor attest to the Terms and Conditions on behalf of the previous owner in order to retain the Provider Relief Fund payment. If the new TIN owner did not receive a direct payment under the Provider Relief Fund, it is not eligible to receive a payment under the General Distribution. However, the new TIN owner may still receive funds in other distributions.
Who is responsible for reporting use-of-funds in the event of a change of ownership after receipt of a Provider Relief Fund payment?
The following chart outlines Provider Relief Fund reporting actions in the event of a change of ownership of a subsidiary that received Provider Relief Fund dollars.