One clear message in the recently updated Provider Relief Fund (PRF) FAQs is that the U.S. Department of Health and Human Services (HHS) has the authority to audit PRF recipients and if appropriate, recoup PRF payments that were “made in error, or exceed lost revenue or expenses due to COVID-19, or do not otherwise meet applicable legal and program requirements.” The FAQs also note the Office of the Inspector General’s role (OIG) is to root out fraud, abuse and waste related to these funds.

While the FAQs have always said that there would be some sort of reconciliation process at the end, the updated FAQs set a different tone with a focus on accountability for use of funds and stress an enforcement of the requirements. Although HHS has not set a reporting deadline yet, providers should be preparing, to the degree possible, for this inevitability when the reporting portal will open to submit reports. This includes ensuring that they have documentation for their coronavirus expenses and plan for calculating lost revenue. Given the complexity of the reporting that is expected, providers may want to seek assistance through an accounting firm familiar with the PRF program and requirements. In addition, providers should remember that PRF dollars are essentially the payer of last resort and a coronavirus expense can only be reimbursed or covered once. For example, providers who received Paycheck Protection Program (PPP) dollars to cover certain staff costs cannot also include those same costs as uses for the PRF. If all the additional staff costs were not covered by the PPP loan, then the excess costs could be applied to PRF.

LeadingAge continues to advocate to HHS for additional clarification and support related to the PRF reporting requirements. The Health Resources and Services Administration (HRSA) who administers the PRF funds has said it plans to offer question and answer sessions via webinar prior to the reporting deadline and provide further clarity about the reporting process via the FAQs. At this time, HHS has not provided any further information on when the first report will be due or this additional information available. However, the January 15, 2021 reporting requirements document still notes that a “second and final report” will be due no later than July 31, 2021. As that date is only 4 months away, LeadingAge speculates that this could end up being the deadline for reporting on all PRF dollars received to date.

The current FAQs reiterate that all PRF funds must be expended no later than June 30, 2021 and that providers must submit documentation to substantiate that the funds were used for expenses and lost revenues attributable to coronavirus and were not reimbursed by other sources. Providers who do not expend all of the funds by the June 30, 2021 deadline will be expected to return unused PRF to HHS and that process will be outlined in future guidance.

The June 30th deadline begs the question, when will HHS release a Phase 4 PRF Application to disburse the remaining $24 billion? And when those funds are released, will HHS establish a new spending deadline? LeadingAge has been advocating for the spending deadline to be extended to June 30, 2022. Of note, Congress instructed HHS to distribute 85% of the remaining funds based upon provider losses and expenses incurred in the last half of 2020 and first quarter of 2021 with that information obtained through an application process. We also still await details on how the $8.5 billion in PRF for rural providers will be distributed.

The recently updated FAQs also clarify:

• Phase 3 PRF dollars received by a provider can be used for any eligible losses or expenses throughout calendar year 2020 and through June 30, 2021. Providers do not need to apply their use exclusively to expenses and losses incurred in the first half of 2020 even though that is what the distribution was based upon.
• Parent organizations can transfer General Distribution PRF payments to its subsidiaries, including those that report income under a separate EIN as long as the terms and conditions for use of the funds are met.
• Situations where PRF are received but some or all of a provider’s organization was sold, terminated, transferred or otherwise disposed of can retain PRF payments as long as the provider can attest to the terms and conditions related to the funds. A provider cannot opt to return a portion of the PRF received. HHS has repeatedly noted that providers wishing to return funds must return all or none of the PRF.
• Providers who are part of a cost-based reimbursement system are limited in their use of PRF dollars. The FAQs state if the full cost of providing services is reimbursed then none of these expenses should be reported under PRF. If, however, the cost-based system has a ceiling, or some costs are not reimbursed (such as through commercial payers) then the non-reimbursed amounts are eligible to be reimbursed via PRF. New language was added stating, “Provider Relief Fund payments cannot be used to cover costs that are reimbursed from other sources or that other sources are obligated to reimburse. Therefore, if Medicare or Medicaid makes a payment to a provider based on the provider’s Medicare or Medicaid cost, such payment generally is considered to fully reimburse the provider for the costs associated with providing care to Medicare or Medicaid patients and no money from the PRF would be available for those identified Medicare and Medicaid costs.”

Based on the last bullet point, SNFs would be able to utilize PRF dollars for any costs that were above their daily Medicaid rate.  The same would apply to assisted living facilities.  As long as those costs were for COVID related expenses or losses.

Questions?

Contact:

David Carter | Director, Health Care Finance & Policy

c: 360.888.5702