On Friday, April 10, 2020, Medicare-participating providers began receiving distributions from the United States Department of Health and Human Services (HHS) of the first $30 billion from the $100 billion CARES Act Provider Relief Fund. A provider (including but not limited to hospitals, SNFs, physician practices and others) that received any Medicare Part A and/or Part B payments in 2019 has now received or will shortly receive an automatic payment from HHS equal to 6.2% of the total Medicare fee-for-service revenue the provider collected in 2019. The payments are being made via electronic fund transfers or by paper check issued in the near future.
While these distributions are just that – direct grants and not loans or advances of future Medicare payments – they come with significant “strings” attached. Providers are advised to educate themselves on these strings and, perhaps more importantly, prepare for the inevitable audits that are likely to occur. Significant audit activity is anticipated as HHS seeks to confirm that each recipient-provider is, in fact, eligible for the payment and, further, was and remains in compliance with the various terms and conditions that apply to the acceptance of these funds.
A few of the more important terms and conditions attached to the payments are detailed below:
- Within 30 days of receiving the payment, providers must (i) confirm their agreement with HHS’s calculation of the distribution, (ii) certify that they are eligible to receive the distribution, and (iii) accept the distribution terms and conditions via a provider online portal that went live on April 15, 2020. Any provider that fails to certify via the portal as required within that 30-day time frame will be deemed to have certified its eligibility and agreement to the various terms and conditions. Likewise, in the event a provider desires to reject the payment (and thus not be bound by the eligibility certification or the terms and conditions), that must also be managed via the portal.
- Only providers that have diagnosed, tested and/or treated a COVID-19 patient or a possible COVID-19 patient are eligible to receive the funds. This requirement initially caused concern for certain providers that may not be directly treating actual or possible COVID-19 patients. However, HHS has clarified that it considers every patient to be a possible COVID-19 patient, thus significantly decreasing this concern so long as the provider is continuing to provide health care services to patients.
- The funds must be used solely and exclusively to reimburse the provider for healthcare-related costs and/or lost revenues arising from the provider’s efforts to prevent, prepare for and/or respond to coronavirus. Additionally, those expenses and losses must not be eligible for reimbursement by any other source. Providers are well advised to maintain detailed, accurate and contemporaneous records of all coronavirus-related expenses and lost revenue claimed to be eligible for reimbursement, as well as any payments received from other sources and the expenses or losses those payments are meant to address. For example, if a provider has business interruption insurance that will reimburse coronavirus-related lost revenue, that same lost revenue cannot be counted for purposes of the HHS distribution. Providers must also keep track of any Payroll Protection Program, FEMA, or other coronavirus support payments received and be prepared to prove, upon audit, that no double-dipping occurred. At some point, providers will be required to return any excess funds to HHS if the distribution from HHS is not completely offset by these otherwise unreimbursed costs and lost revenue. At the moment, there is no indication of how such repayment will be made or whether interest will be applied, but that possibility is something for which providers should plan, particularly if they have concerns about documenting adequate excess costs and losses compared to payments received. Further guidance is expected as the program matures.
- Any provider that receives funds in excess of $150,000 from this program, either alone or when added to additional payments a provider may receive from other coronavirus relief programs (such as other programs pursuant to the CARES Act, the Coronavirus Preparedness and Response Supplemental Appropriations Act, the Families First Coronavirus Response Act, etc.), is required to make quarterly reports to HHS regarding (i) the total amount of funds the provider received, (ii) the amount of funds received that were expended or obligated for each coronavirus-related project or activity, (iii) a detailed list of all projects or activities for which large expenditures were made, including the name and description of the project or activity and the estimated number of jobs created or retained by the project or activity, where applicable, and (v) detailed information on any sub-contracts awarded by the provider or a provider’s subcontractors, including data elements required by the Federal Funding Accountability and Transparency Act of 2006. Accordingly, providers should establish detailed reporting and accounting structures as soon as possible so they can easily create not only these quarterly reports when required, but also the contemporaneous documentation that will be critical in any future audits.
- Some other operational requirements and limitations include:
- For all care an out-of-network provider renders to a possible or actual COVID-19 patient, the provider may not collect out-of-pocket expenses from the patient (such as co-payments) in excess of what the patient would have been required to pay if the provider had been in-network.
- The provider may not attribute salaries in excess of $197,300 for any single individual as a reimbursable coronavirus-related expense.
- Expenses related to lobbying, abortion, gun-control, legalization of controlled substances and needle exchange programs are not eligible for consideration as coronavirus-related expenses.
This is not an exhaustive description of the terms and conditions applicable to these distributions. Additional information, including the complete terms and conditions, and access to the portal for certifying acceptance or rejection of the funds, can be found here: https://www.hhs.gov/provider-relief/index.html
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