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Provider Relief Fund Distribution Payments May Be Subject To Audit Requirements

In the CARES Act that became law with President Trump’s signature on March 27, $100 billion has been set aside for “health care related expenses or lost revenues that are attributable” to the COVID-19 pandemic. Commonly referred to as the “Provider Relief Fund,” the stated purpose of this $100 billion fund (which has been supplemented with an additional $75 billion pursuant to the Paycheck Protection Program and Health Care Enhancement Act) is to address the economic harm suffered by healthcare providers that have incurred (or will incur) additional expenses and have lost (or will lose) significant revenue as a result of the pandemic. Payments made from the Provider Relief Fund have been made from either the “General Distribution” or various “Targeted Distributions”.  Health care providers that have received (or will receive) payments from either the General Distribution or any of the Targeted Distributions may be subject to certain audit requirements.

Audit Requirements

Since the creation of the Provider Relief Fund, HHS has continued to make a number of announcements and updates to its Provider Relief Fund guidance, most of which are detailed in the agency’s Frequently Asked Questions (FAQ) document. One of the most significant recent program changes came with a July 22, 2020, update to the FAQ document, that was further modified on July 30, 2020, announcing that commercial (for profit) organizations (including for profit health care providers) must satisfy certain audit requirements if, within any fiscal year, they receive $750,000 or more in total federal awards, including any General Distribution payments or Targeted Distribution payments made from the Provider Relief Fund. This recent update also made clear that non-Federal nonprofit organizations (including nonprofit health care providers) must satisfy certain audit requirements if, within any fiscal year, they expend $750,000 or more in total federal awards, including any General Distribution payments or Targeted Distribution payments made from the Provider Relief Fund. HHS has further clarified that any payments made from the Provider Relief Fund to reimburse health care providers for testing and treatment of uninsured actual or potential COVID-19 patients must also be included in determining whether the applicable audit thresholds have been met.

Commercial (For Profit) Health Care Providers

Commercial (for profit) organizations (including for profit health care providers) that meet the $750,000 audit threshold (i.e., receipt of at least $750,000 in federal awards in any fiscal year) must have one of the following types of audit conducted in connection with such federal awards:

  • A financial related audit conducted in accordance with Generally Accepted Government Auditing Standards (as further described in 45 C.F.R. § 75.216(d)); or
  • A single or program-specific audit conducted in accordance with 45 C.F.R. 75, Subpart F (as further described in 45 C.F.R. § 75.501).

Commercial organizations must submit the resulting audit report directly to the U.S. Department of Health and Human Services, Audit Resolution Division at AuditResolution@hhs.gov. The deadline for submission of the audit report is the earlier of 30 calendar days after receipt of the auditor’s report or 9 months after the organization’s fiscal year end. 45 C.F.R. § 75.512.

Non-Federal Nonprofit Health Care Providers

Non-Federal nonprofit organizations (including nonprofit health care providers) that meet the $750,000 audit threshold (i.e., expenditure of at least $750,000 in federal awards in any fiscal year) must have a single or program-specific audit conducted (in accordance with 45 C.F.R. 75, Subpart F and as further described in 45 C.F.R. § 75.501) in connection with such federal awards. Non-Federal nonprofit organizations must electronically submit the resulting audit report to the Federal Audit Clearinghouse.  The deadline for submission of the audit report is the earlier of 30 calendar days after receipt of the auditor’s report or 9 months after the organization’s fiscal year end. 45 C.F.R. § 75.512.

Request for Extensions

Finally, organizations may be able to obtain an extension of the due date for any necessary audit described herein. Commercial (for-profit) organizations with questions about their ability to obtain an extension should email HRSA’s Division of Financial Integrity at SARFollowup@hrsa.gov. Non-Federal nonprofit entities interested in obtaining an extension should review the Office of Management and Budget’s June 18, 2020  Memorandum (M-20-26) titled “Extension of Administrative Relief for Recipients and Applicants of Federal Financial Assistance Directly Impacted by the Novel Coronavirus (COVID-19) due to Loss of Operations”.