On May 29, and June 2, the Department of Health and Human Services (HHS) updated its “Provider Relief Fund FAQs” on disbursements made to providers from the $175 billion Provider Relief Fund initially established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, for expenses and lost revenues attributable to the coronavirus pandemic. HHS’s updated guidance includes helpful details on the types of coronavirus-related costs and lost revenues for which providers may use Provider Relief Fund disbursements. But the updates also reemphasizes that “HHS will have significant anti-fraud monitoring of the funds distributed, and the Office of Inspector General will provide oversight … to ensure that Federal dollars are used appropriately.” HHS will soon be examining the first batch of quarterly reports on use of funds, due by July 10, from providers that received over $150,000 of CARES Act funding. And HHS isn’t the only one watching, as the media and Congress have already questioned the methodology behind the $77 billion in disbursements HHS has made thus far.
Given this environment of heightened scrutiny, hospitals and providers should strive to rigorously monitor and account for their proper receipt and use of the Provider Relief Fund payments. While pandemic-related losses and expenses likely dwarf total payments so far (e.g., total losses through July are estimated to top $200 billion), some areas of caution include identifying where potentially overlapping funding sources might be available and HHS’s ban on balance billing for coronavirus-related care. As with any other important task, an ounce of prevention in using and documenting Provider Relief Fund payments will be worth a pound when trying to cure any agency or committee investigation.
HHS’s Updated FAQs
HHS’s updated FAQs cover a variety of topics, the most important of which seem to be the following on the proper use of disbursements from the Provider Relief Fund, the potential for additional targeted distributions, and the potential for oversight and recoupment:
Eligible expenses and lost revenues: HHS’s new FAQs endeavor to flesh out what “expenses or lost revenues are considered eligible for reimbursement.”
As to eligible expenses, the FAQs now say:
The term “health care related expenses attributable to coronavirus” is a broad term that may cover a range of items and services purchased to prevent, prepare for, and respond to coronavirus, including:
- supplies used to provide healthcare services for possible or actual COVID-19 patients;
- equipment used to provide healthcare services for possible or actual COVID-19 patients;
- workforce training;
- developing and staffing emergency operation centers;
- reporting COVID-19 test results to federal, state, or local governments;
- building or constructing temporary structures to expand capacity for COVID-19 patient care or to provide healthcare services to non-COVID-19 patients in a separate area from where COVID-19 patients are being treated; and
- acquiring additional resources, including facilities, equipment, supplies, healthcare practices, staffing, and technology to expand or preserve care delivery.
Providers may have incurred eligible health care related expenses attributable to coronavirus prior to the date on which they received their payment. Providers can use their Provider Relief Fund payment for such expenses incurred on any date, so long as those expenses were attributable to coronavirus and were used to prevent, prepare for, and respond to coronavirus. HHS expects that it would be highly unusual for providers to have incurred eligible expenses prior to January 1, 2020.
(emphasis added). Note that the list of eligible expenses is not exhaustive—providers may use funding for other expenses if they can document that the expense was intended to “prevent, prepare for, and respond to coronavirus.”
As to lost revenues, the FAQs now explain that funds used to replace revenue lost due to the coronavirus may naturally be used to pay for any costs the lost revenue otherwise would have covered:
The term “lost revenues that are attributable to coronavirus” means any revenue that you as a healthcare provider lost due to coronavirus. This may include revenue losses associated with fewer outpatient visits, canceled elective procedures or services, or increased uncompensated care. Providers can use Provider Relief Fund payments to cover any cost that the lost revenue otherwise would have covered, so long as that cost prevents, prepares for, or responds to coronavirus. Thus, these costs do not need to be specific to providing care for possible or actual coronavirus patients, but the lost revenue that the Provider Relief Fund payment covers must have been lost due to coronavirus. HHS encourages the use of funds to cover lost revenue so that providers can respond to the coronavirus public health emergency by maintaining healthcare delivery capacity, such as using Provider Relief Fund payments to cover:
- Employee or contractor payroll
- Employee health insurance
- Rent or mortgage payments
- Equipment lease payments
- Electronic health record licensing fees
Executive salary payment limits: Provider Relief Funds may not be used to pay salary in excess of “Executive Level II” of the Federal Executive Pay Scale. The FAQs clarify that this prohibition limits the payment of any salary above $197,300, excluding fringe benefits and indirect costs.
HHS’s process for allocating the $50 billion General Distribution payments: The FAQs explain that HHS intended to give each provider with 2019 Medicare fee-for-service an overall payment from the $50 billion General Distribution that was proportional to its “share of 2018 net patient revenue.” Many providers received additional payment in the second tranche after providing data to CMS on net patient revenue. Total payments “are determined based on the lesser of 2% of a provider’s 2018 (or most recent complete tax year) net patient revenue or the sum of incurred losses for March and April.”
Receiving Provider Relief Fund payments does not preclude other CARES Act funding: HHS added an FAQ to clarify that providers who receive payments under the Provider Relief Fund are not banned from seeking or accepting payment from other funding sources, such as the Paycheck Protection Program or the FEMA Disaster Relief Fund. Of course, the Provider Relief Fund payments may not be used to reimburse expenses or losses that have been reimbursed by other sources.
Providers that have ceased operations due to coronavirus are still eligible: The FAQs also say that providers that have ceased operations due to COVID-19 are still eligible to receive funds, so long as they provided COVID-19 testing or care on or after January 31, 2020.
The first round of High Impact Area Targeted Distributions are complete, but more may come as new hotspots develop: HHS’s FAQs now explain that the agency selected April 10 as the cut-off for data to determine COVID-19 High Impact Area distributions to “allow HHS to calculate and make payments in a fair, transparent, and timely manner based on submitted COVID-19 admissions data.” Hospitals with 100 or more COVID-19 discharges were eligible for payment. HHS also stated it may make additional “High Impact Area” distributions as new hotspots arise.
HHS will have significant anti-fraud monitoring and recoup funds improperly received or used: The FAQs explain that “HHS has not yet detailed how recoupment or repayment [of misused funds] will work.” However, HHS stressed the terms and conditions for the funds will be subject to heightened scrutiny and oversight:
- Providers must certify that they are “eligible to receive the funds (e.g., provides or provided after January 31, 2020, diagnoses, testing, or care for individuals with possible or actual cases of COVID-19) and that the funds were used in accordance with allowable purposes (e.g., to prevent, prepare for, and respond to coronavirus).”
- The FAQs note “HHS broadly views every patient as a possible case of COVID-19.”
- “Recipients must submit all required reports,” which include the quarterly reporting obligations, starting in July, for all providers that receive more than $150,000.
- “Non-compliance with any Term or Condition is grounds for the Secretary to direct recoupment of some or all of the payments made.”
- “HHS will have significant anti-fraud monitoring of the funds distributed, and the Office of Inspector General will provide oversight as required in the CARES Act to ensure that Federal dollars are used appropriately.”
Additionally, though not stated in the FAQs, any wrongful retention or misuse of the Provider Relief Fund disbursements could lead to allegations of fraud, criminal charges or False Claims Act liability.