This article was updated on October 27, 2020. To read the update, click here.
In the CARES Act that became law with President Trump’s signature on March 27, $100 billion was 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. Provider Relief Fund payments have been made from either the “General Distribution” or various “Targeted Distributions”. Terms and Conditions attached to such payments require recipient healthcare providers to, among other things, submit reports to the U.S. Department of Health and Human Services (HHS) in such form and including such content as specified by the HHS Secretary “to ensure compliance with conditions imposed on [such] payment[s]”.
Following issuance of a notice of upcoming post-payment reporting requirements (as amended thereafter), on September 19, 2020, the HHS Secretary issued a notice detailing certain reporting requirements for healthcare providers that have received one or more Provider Relief Fund payments exceeding $10,000 in the aggregate (whether from the General Distribution, the Targeted Distribution, or both). In conformance with the stated purpose of the Provider Relief Fund, such healthcare providers are broadly required to report:
- healthcare related expenses attributable to the coronavirus, including G&A (General and Administrative) expenses and “healthcare related operating expenses”; and
- lost revenues attributable to the coronavirus, but only to the extent the applicable Provider Relief Fund payments have not been fully expended on the healthcare related expenses attributable to the coronavirus described in item 1.
FAQ guidance issued earlier this year by HHS stated that providers could “use any reasonable method of estimating the revenue during March and April of 2020 compared to the same period had COVID-19 not appeared.” The new guidance is much less forgiving, changing the meaning of lost revenue to: “a negative change in year-over-year net patient care operating income.”
The new guidance requires providers to report the following specific data elements between January 15, 2021 and February 15, 2021 (when the initial reporting portal opens and closes, respectively):
- Demographic Information, specifically, the name of the Reporting Entity (at the TIN reporting level; may include not only the healthcare provider that received Provider Relief Fund payments but also any of its subsidiaries, with separate TINs, that received General, but not Targeted, Distributions) as well as the Reporting Entity’s TIN, NPI (optional), Fiscal Year-End Date, and Federal Tax Classification.
- Healthcare Related Expenses Attributable to the Coronavirus (Not Reimbursed by Other Sources) (in 2020), specifically:
Reporting Entities that have received between $10,000 and $499,000 in aggregate Provider Relief Fund payments must report their healthcare related expenses attributable to the coronavirus (net of other reimbursed sources) broken down into (a) G&A expenses and (b) other healthcare related expenses; and
Reporting Entities that have received $500,000 or more in aggregate Provider Relief Fund payments must report their healthcare related expenses attributable to the coronavirus (net of other reimbursed sources) again broken down into (a) G&A expenses and (b) other healthcare related expenses, but also further broken down into:
The following G&A expenses: mortgage/rent, insurance, personnel, fringe benefits, lease payments, utilities/operations, and “[c]osts not captured [in the identified expenses] that are generally considered part of overhead structure”; and
The following healthcare related expenses: supplies, equipment, information technology, facilities and “[a]ny other actual expenses, not otherwise captured, that were paid to prevent, prepare for, or respond to the coronavirus”.
- Lost Revenues Attributable to the Coronavirus, specifically, all Reporting Entities that have received more than $10,000 in aggregate Provider Relief Fund payments must report:
Total Revenue/Net Charges from Patient Care Related Sources (net of uncollectible patient service revenue recognized as bad debts and prior to netting with expenses) broken down into:
Actual Revenue/Net Charges received from the following Patient Care Payers in 2019 and 2020: Medicare Part A+B; Medicare Part C; Medicaid; Commercial Insurance; Self-Pay (no insurance); and “actual gross revenues/net charges from other sources received for patient care services and not included in the list above for the [applicable] calendar year”; and
Other Assistance Received from the following sources in 2020 alone: Treasury, Small Business Administration (SBA) and the CARES Act/Paycheck Protection Program (PPP); FEMA CARES Act; CARES Act Testing; Local, State, and Tribal Government Assistance; Business Insurance; and the “total amount of other federal and/or coronavirus-related assistance received by the recipient and the other TINs included in its report as of the reporting period end date”.
Total Calendar Year Expenses, broken down by calendar year quarters into:
General and Administrative Expenses in 2019 and 2020, including monthly payments related to mortgage or rent for the facility where the Reporting Entity provides patient care services; other monthly finance charges for real property and/or property taxes; insurance premiums for property; employee health insurance; malpractice insurance; overhead salaries; healthcare and contractor salaries; fringe benefits; lease payments; lighting, cooling/ventilation, cleaning, vendor services purchased from third party vendors; consulting support; legal fees; audit and accounting services; food preparation and supplies; logistics and transport; and other costs not otherwise captured, such as debt financing, for the relevant calendar year; and
Healthcare Related Expenses in 2019 and 2020, including supplies, equipment, IT, facilities, employees, and other healthcare related costs/expenses for relevant calendar year.
Note: Provider Relief Fund payments may be applied toward lost revenue up to the amount of the recipient’s 2019 net gain from healthcare related sources. Recipients that reported negative net operating income from patient care in 2019 may apply such payments to lost revenues up to a net zero gain/loss in 2020. If recipients do not expend Provider Relief Fund payments in full by the end of calendar year 2020, they will have an additional six months in which to use remaining amounts toward expenses attributable to coronavirus but not reimbursed by other sources, or to apply toward lost revenues in an amount not to exceed the 2019 net gain. In this case, recipients with unused funds after December 31, 2020, must submit a second and final report no later than July 31, 2021 that includes patient care related revenue amounts earned January 1–June 30, 2021, and the reporting period January – June 2021 will then be compared to the same period in 2019.
- Additional non-financial data (per quarter), specifically, (a) facility, staffing and patient care information, (b) change in ownership information, and (c) single audit status.
This change has stirred considerable controversy within the provider community. Many providers accepted Provider Relief Funds on the belief that they would be able to use “any reasonable method” to calculate the amount of lost revenue they have suffered as a result of the pandemic. Certainly, healthcare providers should immediately begin (and ensure that they continue) gathering the information and documentation necessary to comply with these recently released reporting requirements. However, all would be well advised to be on the lookout for additional guidance.
 HHS defines “healthcare related expenses attributable to the coronavirus” to include expenses “incurred both in treating confirmed or suspected cases of coronavirus, preparing for possible or actual coronavirus cases, maintaining healthcare delivery capacity, etc.”.
 HHS defines lost revenues attributable to the coronavirus as a negative change in year-over-year net patient care operating income (patient care revenue less patient care related expenses of the Reporting Entity that received funding), net of the healthcare related expenses attributable to the coronavirus described in the preceding section. HHS further explains that “[o]nce revenue information is provided, cost/expense impacts will be calculated based upon a calendar year comparison of 2019 to 2020 healthcare expenses to determine net operating income.”