HHS Issues Reporting Requirement Guidance for General and Targeted Distributions

While providers have welcomed the vitally important general and targeted Provider Relief Fund (PRF) payments to cover COVID-19 related expenses and lost revenues, providers also have been waiting for the U.S. Department of Health and Human Services (HHS) to provide detailed guidance on the anticipated reporting requirements. For the past several months, HHS has supplemented its initial limited guidance with multiple FAQs. However, on Sept. 19, 2020, HHS finally published its General and Targeted Distributions Post-Payment Notice of Reporting Requirements applicable to any provider that received and retained aggregate PRF payments exceeding $10,000 (“Recipients”). HHS will supplement the reporting instructions through Question and Answer Sessions via webinar and through additional FAQs.

Important Dates:
The new guidance also established reporting deadlines. On Jan. 15, 2021, HHS’ reporting portal system will open and start accepting submissions. The reporting deadline is Feb. 15, 2021. Recipients that did not fully expend their PRF payments during 2020 have until June 30, 2021 to expend the funds and must file updated reporting information by July 31, 2021.

1. Expenses: HHS provided a method for Recipients to report their use of the PRF payments. First, Recipients must report their healthcare-related expenses attributable to COVID-19 that were not reimbursed or obligated to be reimbursed by another source (payments received from insurance, patients, and government assistance). As noted by HHS, these expenses “may be incurred in both direct patient care overhead activities related to treatment of confirmed or suspected cases of coronavirus, preparing for possible or actual coronavirus cases, maintaining healthcare delivery capacity which includes operating and maintaining facilities, etc.” Such expenses are categorized as either General and Administrative Expenses or Other Healthcare Related Expenses related to coronavirus consisting of the following:
   1. General and Administrative (G&A) Expenses are defined to consist of the following subcategories:
      • Mortgage/Rent payments for a facility;
      • Insurance premiums for property, malpractice, business insurance or other insurance
        related to operations;
      • Personnel or workforce-related actual expenses paid to prevent, prepare for, or respond
        to the coronavirus during the reporting period, (i.e. workforce training, staffing, temporary
        employee or contractor payroll, overhead employees or security personnel);
      • Fringe Benefits or extra benefits supplementing an employee’s salary (hazard pay,
        travel reimbursement, employee health insurance, etc.);
      • Lease Payments on new equipment or software;
      • Utilities/Operations including lighting, cooling/ventilation, cleaning or additional third-
        party vendor services not included in “Personnel;”
      • Other General and Administrative Expenses not captured in the list above that are
        generally considered part of overhead.
   2. Other Healthcare Related Expenses are defined to consist of the following subcategories:
      • Supplies: PPE, hand sanitizer, or supplies for patient screening;
      • Equipment: ventilators, HVAC upgrades, etc.;
      • Information Technology: expenses paid for IT or interoperability systems to expand or
        preserve care delivery during the reporting period (EHR license fees, telehealth,
        infrastructure, increased bandwidth, and teleworking to promote remote workforce;
      • Facilities: lease or purchase of permanent or temporary structures, modification of
        facilities to accommodate patient treatment practices revised due to coronavirus;
      • Other Healthcare Related Expenses: other expenses not covered above.To ease the burden on Recipients that retained between $10,000 and $499,999 in aggregate PRF payments, HHS is permitting such Recipients to report their expenses as aggregated totals under these two general categories. However, Recipients that retained aggregate PRF payments of $500,000 or more must report more detailed information on the total permitted expenses for each of the multiple subcategories listed above.
2. Lost Revenues: Second, Recipients are required to report “lost revenues” attributable to coronavirus. In the new notice, HHS defined “lost revenues” as “a negative change in year-over- year net patient care operating income….” Recipients may use PRF payments to offset lost revenue up to the amount of their 2019 net gain from healthcare related sources. Those that reported negative net operating income from patient care in 2019 may apply PRF payments to lost revenues up to a net zero gain/loss in 2020. Revenue must be reported by payer type and should include any other assistance received in 2020.Reporting: PRF Recipients are required to provide non-financial data each quarter, including: (a) Personnel Metrics, defined as total personnel by labor category (full or part time, contract, other), total re-hires, total new hires, and total personnel separations by labor category; (b) Patient Metrics, defined as, total number of patient visits (in-person and telehealth), total number of patients admitted, total number of resident patients; and, (c) Facility Metrics, defined as total available staffed beds for medical/surgical, critical care, and other beds. PRF Recipients are also required to report specific information pertaining to any acquisitions or divestitures and changes of ownership.Lastly, Recipients that retained $750,000 or more in PRF payments are also subject to additional financial audit requirements depending on the nature of the PRF recipient as a non- Federal entity (including non-profit organizations) or a private for-profit provider. These PRF Recipients are required to include any general or targeted PRF payments (and Uninsured Testing and Treatment reimbursement) when determining if the Recipient meets the $750,000 threshold. Private for-profit providers have two options for the type of audit performed: a financial related audit of the award(s) conducted in accordance with Government Auditing Standards or a Single Audit in conformance with 45 C.F.R. 75 Subpart F. The audit information must then be submitted directly to the Audit Resolution Division of HHS.

Conclusion:
After distributing at least $175 billion in Provider Relief Funds, Recipients should expect considerable scrutiny from HHS, the Office of Inspector General and the Department of Justice focused on tracking and evaluating the use of those payments. Recipients should continue to keep detailed records of its use of any PRF funds received and be prepared to provide that information to HHS directly and/or as part of an audit. Recipients should be familiar with this Notice as well as the supplemental FAQs and confer with experienced legal counsel to ensure the recipient complies with the evolving HHS requirements.