On June 11, 2021, the Department of Health and Human Services (HHS) announced the Provider Relief Fund (PRF) portal will open for reporting on July 1, 2021. Any provider that received and retained payments exceeding $10,000 in aggregate on or before June 30, 2020, must use those funds by June 30, 2021, and complete the reporting process by September 30, 2021.
HHS promises to hold webinars, update and issue additional Frequently Asked Questions, and publish a detailed reporting portal user guide. However, HHS has not provided a date by which such guidance will be available.
The clock keeps ticking on the first deadline: use of funds by June 30, 2021. Despite pleas from members of Congress, trade associations, and provider organizations, HHS refused to extend this deadline for funds received before July 1, 2020.
One of the most common questions we’re asked is whether assuming an obligation to make payment at a future time constitutes “use of funds.” For example, we’ve heard from several organizations that want to use PRF dollars to make facility modifications to provide more appropriate care for potentially contagious individuals. Due to labor shortages and supply chain interruptions, however, it is not possible to complete the work by June 30, 2021.
To date, HHS has not squarely addressed this issue. Its guidance has used the terms “expense,” “expenditure,” and “use” interchangeably although each has a different meaning for accounting purposes. This has left some providers hesitant to commit PRF dollars to projects that will not be fully completed by June 30, concerned that HHS will demand recoupment of any amount paid after that date even if the provider had a contractual obligation to make such payment.
Our team has had several spirited discussions on this subject, doing our best to play devil’s advocate. Based on HHS’ guidance that providers “must follow their basis of accounting (e.g., cash, accrual, modified accrual) to determine expenses,” we have concluded that a provider using an accrual method of accounting can include any amount it recognizes as an expense—even if payment is not due until after June 30—as an appropriate use of PRF dollars (provided, of course, the use of funds is attributable to coronavirus). For those providers operating on a cash basis, we are not as confident in our response, but we still believe HHS should conclude such use of funds is appropriate in these circumstances. In both cases, the provider should thoroughly document the reasons for the delay.
HHS’ Provider Relief Fund FAQs address the use of funds and reporting requirements for providers having experienced changes in ownership both before and after having received PRF payments. Those providers that have been involved in such transactions should study this guidance carefully to determine parties’ respective duties. Although the FAQs include multiple scenarios, one matter not addressed is the use of funds by and reporting for a tax identification number (TIN) that has ceased doing business. Hopefully, HHS will address this specific issue in subsequent reporting guidance.
The Provider Relief Fund portal has been open since January 15, 2021, but only for registration. We know many providers that have been waiting to complete the registration process, hoping for additional guidance from HHS regarding reporting entities. Given one will not be able to access the reporting screens without having first registered, now is the time to complete that process, incorporating the guidance on parent/subsidiary reporting options based on your reporting strategy.
Importantly, a parent entity reporting on behalf of its subsidiaries must submit a complete list of the subsidiary TINs delimited by commas. As explained in the June 11 Post-Payment Notice of Reporting Requirements, HHS will permit a parent entity to include its subsidiaries’ General Distribution payments in its reporting, but a parent entity may not include its subsidiaries’ Targeted Distribution payments. Instead, the original recipient of a Targeted Distribution must report on the use of funds under its own TIN, regardless of whether the original recipient subsequently transferred the payment.
HHS has updated the user guide and detailed FAQs regarding the registration process as of June 11. HHS warns the process will take at least 20 minutes and must be completed in one session (i.e., one cannot save partial information). The system will timeout after 15 minutes of inactivity, forcing the user to re-start the process from the beginning. The user guide includes screenshots detailing all information required to complete the registration process.
PYA’s COVID-19 Task Force includes subject matter experts in regulatory compliance, accounting, audit, cost reporting, tax, operations, and strategy. We help health systems, hospitals, critical access hospitals, post-acute providers, and physician practices of all specialties navigate COVID-19 relief funding. Our team’s numerous presentations and publications have delivered direction and insight for providers struggling with complex, confusing, and sometimes contradictory federal guidance.
As your organization prepares to register and report, PYA can help with:
- Developing a defensible lost revenue calculation
- Re-allocating targeted distributions
- Interpreting and applying guidance regarding coronavirus-related expenses
- Properly accounting for other coronavirus relief
- Developing appropriate documentation in the event of future audit
- Addressing coronavirus-related cost reporting issues
- Understanding and preparing to meet Single Audit requirements
If you would like guidance related to the appropriate use of Provider Relief Funds, or for assistance with any matter related to COVID-19 relief, visit PYA’s COVID-19 Hub, or contact one of our PYA executives below at (800) 270-9629.