Baker Ober Health Law

On September 19, 2020, the Department of Health and Human Services (HHS) released detailed guidance outlining reporting requirements for health care providers that receive payments from the COVID-19 Provider Relief Fund (PRF). HHS has issued payments under the PRF using $175 billion appropriated by Congress to reimburse providers for health care-related expenses and revenue losses attributable to COVID-19. Baker Donelson's summary of PRF payment distributions to date is available here.

Timing and Applicability

Although HHS previously anticipated that the reporting system would be open in October, the Department now indicates that the reporting system will be available in early 2021. The reporting requirements will apply to PRF recipients that received one or more payments exceeding $10,000 in the aggregate. The reporting requirements do not apply to the Nursing Home Infection Control distribution, the Rural Health Clinic Testing distribution, or reimbursement from the Health Resources and Services Administration (HRSA) Uninsured Program.

Reporting Entities will submit an initial report outlining how funds were used in 2020. Entities with unused funds after December 31, 2020, must submit a second and final report no later than July 31, 2021 that includes patient care-related revenue amounts earned January 1– June 30, 2021. This timeline suggests that recipients must use PRF payments by June 30, 2021.

Key Issues Addressed in Guidance

Use of PRF Payments in Conjunction with Other Funding Sources

The terms and conditions that PRF recipients must agree to when accepting payments specify that recipients may use PRF payments "for health care related expenses or lost revenues that are attributable to coronavirus." The guidance indicates that recipients must report expenses not reimbursed from other sources and "PRF payment amounts not fully expended on healthcare related expenses attributable to coronavirus are then applied to lost revenues." This appears to suggest that there is a hierarchy in how PRF may be used: recipients must first use payments to cover expenses not reimbursed from other sources, and then a recipient may use remaining funds to cover revenue losses.

However, there does not appear to be any prohibition on applying for and receiving funds from other sources to cover expenses before the reporting to HHS is completed. The guidance notes that expenses must be reported to HHS "net of other reimbursed sources (e.g., payments received from insurance and/or patients, and amounts received from federal, state or local governments, etc.)" and must be "actual expenses incurred over and above what has been reimbursed by other sources." The guidance does not address a scenario in which a provider has applied for funding from another source to cover expenses but has not yet received payment upon reporting to HHS.

Definition of Revenue Losses Attributable to COVID-19

The guidance articulates a definition of revenue losses that may be narrower than how providers expected to report revenue losses. Prior FAQs suggested that providers may be able to estimate lost revenues by comparing budgeted revenue to actual revenue or comparing current revenues to prior revenues. However, the guidance appears to focus on changes in operating income, rather than changes in revenue.

The guidance defines a revenue loss as "a negative change in year-over-year net patient care operating income (i.e., patient care revenue less patient care related expenses for the Reporting Entity that received funding), net of the healthcare related expenses attributable to coronavirus...." The guidance says: "Recipients may apply PRF payments toward lost revenue, up to the amount of their 2019 net gain from healthcare related sources. Recipients that reported negative net operating income from patient care in 2019 may apply PRF amounts to lost revenues up to a net zero gain/loss in 2020."

Definition of Health Care-Related Expenses Attributable to COVID-19

HHS indicates that recipients may include in their reporting both expenses incurred in treating confirmed or suspected cases of COVID-19 as well as expenses for preparing for possible or actual COVID-19 cases and maintaining delivery capacity. HHS will allow recipients to report certain general and administrative expenses, such as mortgage/rent, personnel costs, fringe benefits, lease payments, and utilities. HHS will also allow recipients to report health care-related expenses, including supplies, equipment, information technology costs, and facility-related costs. HHS specifies that providers may report costs related to IT or interoperability systems "to expand or preserve care delivery during the reporting period," such as "electronic health record licensing fees, telehealth infrastructure, increased bandwidth, and teleworking to support remote workforce." 

HHS will require entities that received $500,000 or more in PRF payments in the aggregate to report their expenses attributable to COVID-19 broken down into sub-categories.

Reporting by Parent Organizations on Behalf of Subsidiaries

HHS clarifies how parent organizations may be able to submit reports on behalf of subsidiaries. The guidance indicates that parent organizations can "report on and direct the use of" General Distribution payments on behalf of subsidiary entities "regardless of whether the subsidiary or Reporting Entity formally attested to accepting the payment within the provider portal." Parent organizations may not report on use of targeted payments issued to subsidiaries; only the entity that received a targeted payment may report on the use of the targeted payment.

Summary of Data Elements to be Reported

Demographic Information

  • Reporting Entity
  • Tax Identification Number (TIN)
  • National Provider Identifier (NPI) [optional]
  • Fiscal year-end date
  • Federal tax classification

Expenses Attributable to Coronavirus Not Reimbursed by Other Sources (2020 Only)

Reporting Entities that received between $10,000 and $499,999 in aggregated PRF payments must report expenses in two aggregated categories: (1) G&A expenses and (2) other health care-related expenses.

Recipients that received $500,000 or more in PRF payments must report expenses in the same categories but also according to the following sub-categories of expenses:

General and Administrative Expenses Attributable to Coronavirus

  • Mortgage/rent
  • Insurance
  • Personnel
  • Fringe benefits
  • Lease payments
  • Utilities/operations
  • Other general and administrative expenses

Health Care-Related Expenses Attributable to Coronavirus

  • Supplies
  • Equipment
  • Information technology (IT)
  • Facilities
  • Other health care-related expenses

Lost Revenues Attributable to Coronavirus

Lost revenues are defined as a negative change in year-over-year net operating income from patient care-related sources. HHS will determine net operating income to calculate a reporting entity's lost revenues attributable to coronavirus by conducting a calendar year comparison of 2019 to 2020 health care expenses based on information reported by the entity.

Information to be reported:

  • Total revenue/net charges from patient care-related sources for 2019 and 2020 (entered by quarter)
  • Revenue by payer mix for 2019 and 2020
  • Other assistance received in 2020, as of the reporting period end date, from:
    • Treasury, Small Business Administration (SBA) and the CARES Act/Paycheck Protection Program (PPP)
    • FEMA CARES Act
    • CARES Act testing
    • Local, state, and tribal government assistance
    • Business insurance
    • Other assistance
  • Total calendar year expenses for 2019 and 2020, by quarter, broken down by general and administrative expenses and health care-related expenses

Non-Financial Data (Per Quarter)

  • Facility, staffing and patient care metrics
  • Change in ownership information
  • Single audit status