HHS Amended CARES Act Reporting Requirements . . . Again

On Oct. 22, 2020, the U.S. Department of Health and Human Services (HHS) amended the provider reporting requirements to increase flexibility by rolling back restrictions it imposed on what would be considered “lost revenue” under the Coronavirus Aid, Relief, and Economic Security (CARES) Act Provider Relief Fund (PRF) Post-Payment Notice of Reporting Requirements. The guidance HHS issued on Sept. 19, 2020 earned considerable pushback from providers, including the American Hospital Association, for its restrictive definition of “lost revenue.” After considering these concerns, HHS published amended guidance adjusting its initial reporting instructions to increase flexibility regarding “lost revenue” calculations to permit considerations of revenue included in HHS’ original guidance issued in June 2020.

The CARES Act and subsequent legislation reimbursed eligible healthcare providers for healthcare-related expenses and lost revenues attributable to COVID-19. In a June 2020 FAQ, HHS defined lost

revenue as “any revenue that … a health care provider lost due to coronavirus.” It stated that hospitals could “use any reasonable method of estimating the revenue during March and April 2020 compared to the same period had COVID-19 not appeared.” However, the Post Payment Reporting Guidelines redefined lost revenue as “represented as a negative change in year-over-year net patient care operating income,” noting that after covering the cost of COVID-19-related expenses, provider would generally only be able to apply PRF payments toward lost revenue “up to the amount of their 2019 net gain from health care related sources.” This revision appeared to focus solely on changes in operating income, instead of changes in revenue as HHS’ initial guidance suggested. Accordingly, this definition would have caused a significant administrative burden, likely requiring many hospitals to return PRF payments. Providers would be forced to re-evaluate accounting, auditing, and planning protocols implemented under the prior definition of COVID-19 related “lost revenues.”

Recently, on Oct. 22, 2020, HHS revised its Sept. 19, 2020 Post-Payment Notice of Reporting Requirements. This new guidance effectively adopts the June 2020 reporting requirements, defining “lost revenues” broadly as “a negative change in year-over-year actual revenue from patient care related sources. Revenues and expenses include all lost patient care revenues and patient care cost/expense impacts.” HHS clarified that PRF recipients “may apply PRF payments toward lost revenue, up to the amount of the difference between their 2019 and 2020 actual patient care revenue.”

With its latest guidance, HHS eased the reporting burden on providers by simplifying COVID-19-related “lost revenues.” Providers should continue to evaluate their CARES Act related protocols and confer with experienced legal counsel to ensure compliance with evolving HHS guidance.