UPDATE: CARES Act Provider Relief Fund – No Strings Attached?

Apr 15, 2020 | COVID-19 Legal Update

[Editor’s Note: This article provides an update and further clarification of our previous article, dated April 10, 2020.]

On April 10, we recommended that our clients take a “wait and see” approach to retention of the Provider Relief Funds that the Department of Health and Human Services (“HHS”) deposited into their accounts.  Yesterday, in response to requests for clarifications, HHS released additional guidance regarding the Relief Fund Payment here and updates to its “Terms and Conditions” to which providers retaining the Relief Fund payments must agree here.  As a result, some of the questions we raised on April 10 have been answered.  We have discussed those clarifications below:

If you retain the deposited funds, you are required to certify that:

You provided diagnoses, testing, or care for individuals with possible or actual cases of COVID-19 after January 31, 2020. HHS issued an important clarification that removed the “currently providing” language to make clear that shuttered providers are still eligible to receive the payment, even if they are not currently treating patients.  In addition, HHS made it clear that you do not have to be a “front line” provider to retain the funds by stating that:  “If you ceased operation as a result of the COVID-19 pandemic, you are still eligible to receive funds so long as you provided diagnoses, testing, or care for individuals with possible or actual cases of COVID-19.  Care does not have to be specific to treating COVID-19.  HHS broadly views every patient as a possible case of COVID-19″ (emphasis added).


Still, if you are a provider minimally impacted by coronavirus (i.e., you received more funds than needed to offset expenses or lost revenues attributable to the pandemic), you may need to consider returning the deposited funds.  We also note that the Terms and Conditions incorporate federal grant requirements that the monies received may not be used to “pay the salary of an individual at a rate in excess of Executive Level II.”  Note: The current Executive Level II pay-scale rate is $197,300, so providers may not use the Relief Fund monies to pay physicians more than that amount.
  • You will only use the payment to prevent, prepare for, and respond to coronavirus, and to reimburse you for health care related expenses or lost revenues that are attributable to coronavirus.   Again, HHS interprets “attributable to coronavirus” broadly by indicating that:  “The quick dispersal of funds will provide relief to both providers in areas heavily impacted by the COVID-19 pandemic and those providers who are struggling to keep their doors open due to healthy patients delaying care and cancelled elective services”  (emphasis added).
  • You 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 (for example, Paycheck Protection Program loan funds).   It seems likely that“other sources” will include the forgiven portion of SBA loan monies under the Paycheck Protection Program.
  • You will submit reports to the HHS Secretary needed to ensure compliance with conditions that are imposed on this Payment, and in such form as specified by the Secretary.   These forms have yet to be released by HHS, but HHS will require documentation sufficient to establish “the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.”  Note: You must track, in detail how you use all monies received, whether under the CARES Act, the Coronavirus Preparedness and Response Supplemental Appropriations Act, the Families First Coronavirus Response Act, or any other Act primarily making appropriations for the coronavirus response and related activities, if you receive at least $150,000 from all such sources.
  • For all care for a possible or actual case of COVID-19, you will not seek to collect from the patient out-of-pocket expenses in an amount greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network recipient.   Note: This requirement has not changed; we include it here as reminder that you may not balance bill out-of-network patients.

Finally, while a provider must sign an attestation confirming receipt of the funds and agreeing to the terms and conditions of payment, HHS further clarified that not “returning” the payment within 30 days of receipt will be viewed as acceptance of the Terms and Conditions (which begs the question:  why have the attestation requirement in the first place?).  The 30-day period began on April 10 for many providers, but the attestation portal is not yet active.  We will keep you updated on the attestation requirement, but be mindful that this clock is ticking.If you do not wish to comply with the Terms and Conditions (e.g., providers who are minimally impacted by coronavirus but have received payments in excess of their expenses or lost revenues), you must contact HHS within 30 days of receipt and “remit the full payment to HHS, as instructed.”   We still have no clarification as to whether HHS would allow you to return only the portion of the payment that you do not need. Stay tuned.

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.