Between April and December 2020, many eligible healthcare providers received or applied for payments from the $175 billion Coronavirus Aid, Relief, and Economic Security (CARES) Act Provider Relief Fund (PRF) through the U.S. Department of Health and Human Services (HHS). On Dec. 27, 2020, the Consolidated Appropriations Act, 2021 (the Appropriations Act) was signed into law, allocating an additional $3 billion for the CARES Act PRF and providing further guidance on the widely anticipated reporting process.
In a previous CARES Act-related “Legal Update” column (see “Covering All Bases” in the November 2020 issue), the discussion focused on CARES Act PRF payment categories, best practices for maintenance and handling of funds prior to the reporting period, and the potential for provider audits based on HHS guidance. Healthcare providers who received and retained CARES Act PRF payments through the attestation process during 2020 must now turn their attention to ensuring adequate documentation, timely reporting, and continued preparation for potential audits or document requests for three years from the date of final PRF expenditure.
This article contains a high-level overview of the CARES Act PRF reporting requirements and other important considerations for healthcare providers who will be CARES Act PRF reporting entities. Providers should note that the current reporting requirements don’t apply to Health Resources and Services Administration Uninsured Program reimbursement; separate reporting requirements may be announced in the future for that program by HHS. In addition, for providers who didn’t fully expend CARES Act PRF payments prior to Dec. 31, 2020, the final reporting deadline is set for July 31, 2021.
On Jan. 15, 2021, the PRF Reporting System opened for provider registration, and the first reporting deadline, previously set by HHS for Feb. 15, was announced as delayed. HHS also released an update to the General and Targeted Distribution Post-Payment Notice of Reporting Requirements from prior November guidance, with instructions on several options to calculate lost revenue and required reporting information under four main categories:
- Entity demographic information
- Expenses attributable to COVID-19
- Lost revenues attributable to COVID-19
- Non-financial information
Generally, recipients of CARES Act PRF payments exceeding $10,000 must report certain information, including their intent, their use of the funds, and other specific data. The primary data element categories for reporting entities are summarized below:
1. Entity Demographic Information. Providers are expected to submit standard business information such as the Taxpayer Identification Number (TIN) or an Employer Identification Number of the reporting entity, a National Provider Identifier (optional), the month that’s considered the provider’s fiscal year end date, and the provider’s federal tax classification status (sole proprietor, LLC, partnership, C Corporation, S Corporation, trust, or tax-exempt).
Reporting may also involve relevant changes in ownership, including whether a related entity TIN was transferred or changed as a result of a business transaction in 2020.
2. Expenses Attributable to the Coronavirus (Not Reimbursed by Other Sources). Expenses attributable to the coronavirus pandemic include general and administrative (G&A) expenses and healthcare-related expenses that another source has not reimbursed and is not obligated to reimburse. Healthcare-related expenses are limited to costs incurred to prevent, prepare for, and/or respond to COVID-19. The actual G&A expenses are attributable to COVID-19 costs that were incurred over and above what has been reimbursed by other sources. Reporting entities who received $500,000 or more in CARES Act PRF payments must provide further detail on their G&A expense breakdown, including:
- Fringe benefits
- Other G&A overhead expenses
In addition, reporting entities must provide further detailed information for healthcare expenses to identify supplies, equipment, information technology, facility costs, and other healthcare expenses.
3. Lost Revenues Attributable to the Coronavirus. Reporting entities may apply CARES Act PRF payments toward lost revenue from 2020 patient care. This calculation includes the revenue or net charges from patient care and revenue from patient care payer mix, prior to net costs and expenses, and will separately account for the amount of other assistance received from federal, state, and other sources.
The recently passed Appropriations Act added flexibility for certain provider budgets established and approved before March 27, 2020, allowing applicable providers several options to calculate lost revenues. One of these options uses a budgeted-to-actual revenue comparison rather than an actual year-over-year calculation as required by prior HHS guidance.
CARES Act PRF reporting takes into consideration other assistance that eligible providers received during 2020, including, but not limited to, funds from the Paycheck Protection Program; CARES Act Testing relief; local, state, or other government assistance; and business insurance.
Reporting entities will need to provide additional revenue information, depending on which of the lost revenue calculation options they use.
CARES Act PRF reporting takes into consideration other assistance that eligible providers received during 2020, including, but not limited to, funds from the Paycheck Protection Program; CARES Act Testing relief; local, state, or other government assistance; and business insurance, among other things.
Providers should be aware that any monies received through a state program may include similar reporting and documentation requirements and may indicate a priority order of spending that cannot supersede the HHS CARES Act PRF terms and conditions. These other federal and state monies also may not overlap with HHS CARES Act PRF distributions to cover the same expenses or lost revenue.
It’s worth noting, for reporting entities that held CARES Act PRF payments in an interest-bearing account, that the value of interest earned on those PRF payments must also be reported. The reportable use of PRF distributions includes the interest earned on those distributions.
4. Non-Financial Information. Non-financial information for reporting includes a PRF recipient’s number of personnel (i.e., full time, part time, contract, other), total rehires, total new hires and total personnel by labor category, total number of patients and types of visits (i.e., in person or telehealth visits, admissions, residents), and information regarding the facility (i.e., total available staffed beds).
Auditing and Enforcement
The CARES Act PRF terms and conditions generally indicate that provider–recipients of payment distributions must promptly submit records and documentation of expenditures upon the request of HHS and fully cooperate with audits by HHS, the Office of the Inspector General (OIG), or the Pandemic Response Accountability Committee.
The HHS has warned that significant anti-fraud monitoring of the CARES Act PRF funds will occur, and that the OIG will provide oversight to ensure that the funds were used appropriately to comply with the applicable terms and conditions. The HHS has indicated that non-federal reporting entities who received and expended annual federal awards exceeding $750,000 in the aggregate during their fiscal year are subject to single audit requirements.
Generally, recipients of CARES Act Provider Relief Fund payments exceeding $10,000 must report certain information, including their intent, their use of the funds, and other specific data.
The record retention and potential audit lookback period is at least three years for providers who retained and expended CARES Act PRF payment distributions. Therefore, providers should take care to document expenditures accurately and in detail. Deliberate omission, misrepresentation, or falsification of any information contained in payment applications or future reports may result in criminal, civil, or administrative penalties, including, but not limited to, revocation of Medicare billing privileges, exclusion from federal healthcare programs, and related fines.
Additional PRF Considerations
The Coronavirus Public Health Emergency status was renewed by HHS, effective Jan. 21, 2021, for another 90 days. Remaining CARES Act PRF payments may be expended by healthcare providers through July 31, 2021, which is also the final reporting deadline for providers who did not expend their funds in full by the end of December 2020.
Providers may have additional opportunities to apply for CARES Act PRF payments depending on how many of them returned their PRF distributions through the end of December 2020 and based on the recent allocated funds from the Appropriations Act and any future stimulus legislation allocations.
Providers who have yet to report their CARES Act PRF distributions, who are seeking additional funding, or who are considering retaining PRF monies should consult a healthcare attorney to review each particular distribution category’s terms and conditions, documentation, and reporting requirements, and should continue to monitor PRF deadlines, which may be subject to change.
It is highly recommended that providers consult with certified accountants to review and assist in the preparation of all reporting information, especially the lost revenue and expenses calculations.
Finally, providers should continue to monitor the HHS CARES Act Provider Relief Fund website, as it is updated from time to time.
Steven M. Harris, Esq., is a nationally recognized healthcare attorney with McDonald Hopkins LLC. Contact him at firstname.lastname@example.org.
Reprinted with permission from the American College of Rheumatology.