Practice Management Alert

Some providers may find that the relief isn’t quite enough.

The second wave of funding for the Coronavirus Aid, Relief, and Economic Security (CARES) Act Provider Relief Fund began with payment distributions of $20 billion on April 24. The Department of Health and Human Services (HHS) says it will continue releasing funds on a weekly basis until they are all disbursed.

While the news of more funding is welcome, even successful applicants shouldn’t count on the money to pay rent. Some payments disbursed to providers, including to independent practitioners, totaled only $5. Some providers, including hospitals, received millions. This second wave of Provider Relief Fund disbursement is aimed at helping hospitals, especially hospitals that serve non-Medicare populations, like children’s hospitals. Independent practices may not feel much relief at all.

Know These Nuts and Bolts

Another funding option is the replenished Small Business Administration (SBA)’s Paycheck Protection Program (PPP). Weigh the relief funding options carefully, as some have extensive terms and conditions that determine whether and how much you’ll need to pay back. See the story on page 43 for more information on each program.

Theoretically, both the PPP and Provider Relief Fund legislation says that payments can be forgiven, but important differences exist, points out Dave Macke with VonLehman & Co. in Fort Wright, Kentucky. For example, with PPP loans, companies have to spend the amount within eight weeks, and can spend it only on payroll, rent, utilities, and/or mortgage interest. In contrast, there’s no deadline for CARES Act Provider Relief Fund spending, and it can go for any COVID-19- related expenses or losses, he says.

While the Relief Fund is a bit less structured, it comes with a bevy of documentation requirements. The terms and conditions that the organization must accept and attest to include these two points:

“The Recipient certifies that the Payment will only be used to prevent, prepare for, and respond to coronavirus, and that the Payment shall reimburse the Recipient only for health-care-related expenses or lost revenues that are attributable to coronavirus.

“The Recipient certifies that it will not use the Payment to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse.”

Read all of the terms and conditions: www.hhs.gov/coronavirus/cares-act-provider-relief-fund/terms-conditions/index.html.

The requirements aren’t casual. “All recipients will be required to submit documents sufficient to ensure that these funds were used for healthcare-related expenses or lost revenue attributable to coronavirus,” HHS stresses on its Provider Relief Fund webpage. There will be significant anti-fraud and auditing work done by HHS, including scrutiny by the Office of the Inspector General (OIG).

With the second wave, the terms and conditions have grown more complex as well. “HHS has added another page of requirements to its 10-page terms and conditions,” reports the Health Care Financial Management Association.

The additions require providers to submit general revenue data for calendar year 2018; give HHS consent to publicly disclose payments providers may receive; and acknowledge that payment disclosures may allow others to estimate providers’ “gross receipts or sales, program service revenue or other equivalent information.” Providers also must agree not to charge patients out-of-network costs.

However, proving your services were coronavirus-related shouldn’t be too tough. “HHS broadly views every patient as a possible case of COVID-19,” it says on its Relief Fund page under the “Who is eligible for initial $30 billion” section.

But proving that you have not used “the Payment to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse” may require more work, experts fear. “Expenses and losses cannot be charged twice,” points out consulting firm The Health Group in Morgantown, West Virginia.

Look to These Equations to Understand Payment Amounts

In the first wave of Provider Relief Fund, HHS distributed $30 billion based on a provider’s percentage of total Medicare fee-for-service reimbursement in 2019. To calculate that amount, HHS divided your 2019 fee-for-service (FFS) revenues by the total ($484 billion) and multiplied by the amount available ($30 billion).

In the second wave, HHS is distributing $20 billion more by taking all revenues into account, and by using revenues from 2018. It will divide your 2018 revenues from all sources by the total 2018 revenues ($2.5 trillion) and multiply that by the total amount available ($50 billion), according to a letter United Healthcare Group sent to providers. Then HHS will subtract what you’ve already received in the first wave from your second-wave payment.

You can check the math to get a better idea of what you would, should, or will receive. “To calculate your estimated total allocation, divide your ‘Gross Receipts or Sales’ or ‘Program Service Revenue’ by 2.5 trillion and then multiply by 50 billion ((Gross Receipts or Sales)/ 2,500,000,000,000) * 50,000,000,000),’” HHS explains on the CARES Act Provider Relief Fund General Distribution Portal. “To estimate the amount likely to be received via this portal application, subtract the amount of payments already received from your total estimated total allocation above.”

Take This Precaution

Depositing any Provider Relief Fund payments into a separate bank account will help you keep track of the funds, The Health Group advises. “When received, the healthcare provider should establish a liability account entitled ‘Unearned Provider Relief Funds,’” the firm recommends. “This liability account will be relieved as COVID-19 related expenses are incurred or as COVID-19 related lost revenues are computed and reported. Likewise, revenue will be recognized as qualifying expenses and lost revenues are recognized.”

Even though HHS is emphasizing that providers don’t have to repay Provider Relief Funds, “such funds can only be used for COVID-19 related expenses or COVID-19 related lost revenues,” The Health Group stresses in its electronic newsletter.