The Federal Appropriations Act (the act) was signed into law on December 27, 2020. The act authorizes the US Department of Health and Human Services (HHS) to distribute an additional $3 billion in Provider Relief Fund (PRF) payments, while increasing flexibility around how providers can use these funds.
HHS also released updated reporting requirements (the update) reflecting changes from the act, other revisions and portal registration information, and navigation guidance.
Below, we cover key changes to PRF reporting guidance and use of funds.
The act and the update impact PRF in the following notable ways:
- Introduce additional PRF funds. HHS is authorized to distribute up to $3 billion in additional PRF payments.
- Expand lost-revenue calculation. There’s now additional flexibility around lost revenue calculation, including allowing providers to apply the budget-to-actual comparison. Budgets must have been enacted and approved by March 27, 2020, to qualify.
- Authorize use of additional lost-revenue calculations. Additional calculations may be used if they’re reasonable and attribute lost revenues to COVID-19 (coronavirus). Alternate methodologies may come with increased audit risk.
- Potentially limit the scope of health care-related expenses. HHS has narrowed the footnote definition of general and administrative expenses attributable coronavirus, including removing the reference to maintaining health care delivery capacity.
- Increase PRF transfer flexibility. The changes grant providers new flexibility in how they may distribute received PRF funds across affiliated entities, including allowing transfer of Targeted Distributions among affiliates.
- Update reporting timeline. HHS opened a reporting portal as planned on January 15, 2021; however, the February 15, 2021, first-reporting due date was pushed out.
Changes to PRF Reporting Guidelines
HHS’ guidance for using PRF payments and reporting on the usage of funds has been changing since the fund’s inception. While the updated guidance didn’t resolve all outstanding questions, it did provide alignment to language in the recently enacted act and included some other subtle changes.
Calculating Lost Revenue
Under the new legislation, Congress allows providers to calculate lost revenues using the Frequently Asked Question (FAQ) guidance HHS issued in June 2020. The act provides flexibility in a provider’s calculation of lost revenue, allowing comparison of budgeted-to-actual revenue in 2020.
HHS guidance from as recently as November 2020 required providers to utilize a calendar year-over-year calculation of change in actual patient care-related revenue. The act does require, however, that budgeted revenues used in the lost revenue calculation be derived from a budget established and approved prior to March 27, 2020.
Any Reasonable Method
Updated reporting requirements from HHS released on January 15, 2021, explicitly include the budget-to-actual calculation described above, but also provide for an “any reasonable method” option.
Under this option, the provider can propose and use any other reasonable methodology to calculate lost revenue. The calculation must be supported because providers will be required to submit:
- A description of the methodology
- Explanation of its reasonableness
- Support for attribution to coronavirus
This alternate methodology comes with a warning of increased audit risk as well as a 30-day resubmission requirement if the alternate methodology is rejected by HHS.
Determining Health Care-Related Expenses
HHS’s updated reporting guidance issued in January 2021 also subtly updated the footnote definition of general and administrative expenses attributable to coronavirus.
Previous reporting guidelines defined these expenses broadly, including expenses for “…maintaining healthcare delivery capacity which includes operating and maintaining facilities, etc.” That clause has been removed from the footnote definition in the reporting guidelines issued on January 15, 2021.
It’s unclear how the change in this definition may impact the inclusion of certain expenses as attributable to coronavirus, but it appears to indicate a push for clear linkage of expenses to activities that directly provide patient care and prevent, prepare, or respond to coronavirus.
Transferring PRF Payments
The act relaxes some prohibitions around a recipient organization’s ability to transfer PRF payments among its corporate parents and subsidiaries.
Specifically, the act clarifies that any payments from the PRF may be allocated—through transfers or otherwise—among affiliated eligible health care providers, including payments designated by HHS as Targeted Distribution payments.
Previously, guidance from HHS limited transferrable payments to PRF General Distributions. The reporting guidance also advises that transfers of Targeted Distributions increase the likelihood of a Health Resources and Services Administration (HRSA) audit.
As part of the January 15, 2021, post-payment reporting process update, HHS opened its Provider Relief Fund Reporting Portal. However, the initial February 15, 2021, reporting due date has been pushed out indefinitely.
Providers may register through the portal if they received one or more payments exceeding $10,000 in aggregate value. Registrants should make note of the following points before registering:
- At present, there isn’t a deadline for completing registration in the portal
- HHS released a Reporting Portal Frequently Asked Questions document and Registration User Guide
- According to HHS’s PRF webpage, recipients who register through the portal will receive email notification from HRSA about when they should complete the next step of submitting required information on the use of funds.
We’re Here to Help
A number of questions remain about how providers will report their expenses and lost revenues, the fate of HHS FAQs after June 2020, and the timing of reporting. To stay up-to-date, providers should continue to frequently monitor HHS guidance for clarifications and timing updates.
If you have questions about the Federal Appropriations Act and potential impacts on your PRF payments or calculations, contact your Moss Adams professional.
For regulatory updates, strategies to help cope with subsequent risk, and possible steps to bolster your workforce and organization, please see the following resources: