Over the past week, HHS has issued additional FAQ guidance regarding the Provider Relief Fund (“PRF”) established pursuant to the CARES Act. Here are the highlights:
HHS finally provides details regarding appropriate use of PRF payments
Most of our clients who decided to retain PRF distributions have already attested that they will only use PRF monies to be reimbursed for two broad categories: (1) healthcare-related expenses attributable to coronavirus and (2) lost revenues attributable to coronavirus. In the latest round of FAQs, HHS has finally provided details about the appropriate use of PRF monies within those two categories.
The term “health care related expenses . . . attributable to coronavirus” is a broad term covering a range of items and services purchased to prevent, prepare for, and respond to coronavirus (e.g., supplies, equipment, training, reporting test results, and building temporary structures). Nothing unexpected there, although HHS did say that you can use PRF Payments for these coronavirus-related expenses even if incurred before you received your payment.
The HHS discussion of “lost revenues that are attributable to coronavirus” is a bit more interesting. According to HHS, “lost revenues” means any revenue that you as a healthcare provider lost due to coronavirus, such as revenue losses associated with fewer outpatient visits, canceled elective procedures or services, or increased uncompensated care. So, you would not count loss revenues due to a group member retiring or business interruption from an insurable event. Instead, ensure that your documentation shows that the revenue replaced by the PRF monies was, in fact, lost due to coronavirus.
HHS then says that you may use your PRF monies attributable to lost revenues to cover any cost that the lost revenue otherwise would have covered, so long as those costs are to prevent, prepare for, and respond to coronavirus. While those costs need not be specific to providing care for possible or actual coronavirus patients, HHS “encourages” use of the funds in a manner which maintains your healthcare delivery capacity and provides specific examples of uses it deems appropriate:
- Employee or contractor payroll
- Employee health insurance
- Rent or mortgage payments
- Equipment lease payments
- Electronic health record licensing fees.
The first four categories probably sound familiar to our clients who also obtained a PPP Loan (and note that HHS said that your receipt of a PPP Loan does not disqualify you from retaining PRF monies). What is the point of this specific list? In the HHS view, these are costs which “prevent, prepare for, or respond to coronavirus.” There may certainly be others, but practically speaking, we recommend that you spend your PRF monies on these costs (that have not otherwise been paid with PPP Loan monies) and NOT on things like skybox suites at Neyland Stadium.
We were glad to see confirmation that the $197,300 Executive Level compensation cap does NOT include fringe benefits and indirect costs and only applies to the rate of pay charged to PRF payments and other HHS awards. You may pay an individual’s salary amount in excess of the salary cap with non-federal funds.
All providers receiving Provider Relief Fund payments will be required to comply with the reporting requirements, but of course guidance about the type of documentation HHS expects recipients to submit will be in future guidance posted at https://www.hhs.gov/provider-relief/index.html.
Procedure for rejecting funds and retracting your attestation
HHS removed language from previous FAQs advising providers to reject their PRF distributions “if a provider anticipates that COVID related lost revenues or increased expenses will be materially less than the value of the Provider Relief Fund payment received.” However, there is enough guidance in other FAQs that leads us to believe that retaining a payment that is greater than your lost revenue and coronavirus-related expenses will be grounds for recoupment. We still do not know if and how those recoupments will be handled, nor do we have any guidance with respect to returning a portion of the PRF monies in the future should your lost revenues/expenses be less than your PRF distributions.
HHS does offer a way to return all of a PRF distribution. If you affirmatively attested to a PRF distribution already received and now wish to reject those funds and retract your attestation, you may do so by calling the provider support line at (866) 569-3522; for TTY dial 711. Note: HHS is regularly posting a public list of providers and their payments once they attest to receiving the payment and agree to the Terms and Conditions, so even if you later return the PRF monies, you will likely remain on the public list.
The COVID-19 pandemic and response is an evolving situation. All levels of government are engaged in the process of preparing new legislation, regulations and orders both to stem the spread of the virus and to provide relief to employers and employees. We will continue to monitor the situation and provide updates as applicable, especially as such updates affect healthcare providers and their practices.
For more updates on this topic and other legal updates related to the COVID-19 pandemic, please visit our COVID-19 Legal Resource Page by clicking here.
