A Summary of CARES Act Provider Relief Efforts

• February 18, 2021

• Jennifer V. Nguyen , Salem & Green PC

As part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the federal government allocated $175 billion in payments to be distributed to health care providers through the Provider Relief Fund (PRF) for expenses related to health care or lost revenue due to COVID-19. These distributions are grants, not loans, and do not need to be repaid so long as recipient providers comply with the applicable terms and conditions.[1]

To date, the U.S. Department of Health and Human Services (HHS) has made the following distributions from the PRF:

• Phase 1 General Distribution—$50 billion distributed to nearly 335,000 providers who received Medicare Fee-For-Service (FFS) reimbursement. The initial $30 billion was distributed based on 2019 Medicare FFS payments and an additional $20 billion was allocated for providers based on the most recent tax year annual gross.
• Phase 2 General Distribution—$18 billion distributed to providers who participate in state Medicaid/Children’s Health Insurance Programs, Medicaid managed care plans, or provide dental care, as well as certain Medicare providers, including those who missed Phase 1 General Distribution payment equal to 2% of their total patient care revenue or had a change in ownership in 2019 or 2020.
• Targeted Distributions—Made to specific providers in need, including:
  • $22 billion to hospitals with a high number of confirmed COVID-19 positive inpatient admissions.
  • $11 billion to rural hospitals (including rural acute care general hospitals and critical access hospitals), rural health clinics, and community health centers located in rural areas.
  • $7.5 billion to skilled nursing facilities and nursing homes.
  • $500 million to trial hospitals, clinics, and urban health centers on the basis of operating expenses.
  • $13 billion to safety net hospitals that meet certain profitability thresholds.
  • $1.4 billion to freestanding children’s hospitals facing financial hardships caused by the pandemic.
• Uninsured Patients
  • A portion of the PRF also was distributed to providers who served uninsured COVID-19 patients on or after February 4, 2020.

Update on Phase 3 General Distribution and New Reporting Requirements

Recently, the Health Resources and Services Administration (HRSA) announced it completed review of PRF Phase 3 applications and expects to distribute $24.5 billion to more than 70,000 health care providers. According to HRSA, over 35,000 Phase 3 applicants will not receive any additional payment because they either experienced no change in revenues or net expenses attributable to COVID-19, or they have already received funds that equal or exceed reimbursement of 88% of reported losses.[2]

As a condition to receiving payment distributions from the PRF, all recipients who received one or more payments exceeding $10,000 in the aggregate must submit certain reporting information to the HRSA. On January 15, 2021, the HRSA opened the PRF Reporting Portal for provider registration. The PRF Reporting Portal may be accessed at https://prfreporting.hrsa.gov/s/. Recipients are unable to enter reporting information at this time but the HRSA expects to announce the window for submitting such reports in the near future.[3] Recipients with funds unexpended after December 21, 2020 will have six more months from January 1 to June 30, 2021 to use remaining funds and are required to submit a second and final report no later than July 31, 2021.[4]

Finally, recipients should be aware that HHS recently issued a new post-payment notice of reporting requirements that supersedes the prior November 2, 2020 notice.[5] Significant changes in the January 15, 2021 notice include: (1) greater flexibility in calculating lost revenue by providing three alternative methodologies to recipients; (2) allowing recipients to allocate funds from Targeted Distributions to the recipients’ subsidiaries; (3) requiring the reporting of interest if the recipient held payments in an interest-bearing account; and (4) requiring the reporting of additional information such as the recipient’s payor mix and business organization.[6] These reporting requirements do not apply to the Nursing Home Infection Control or Rural Health Clinic Testing distributions, nor do they apply to reimbursement from the HRSA COVID-19 Claims Reimbursement to Health Care Providers and Facilities for Testing, Treatment, and Vaccine Administration for the Uninsured Program and the HRSA COVID-19 Vaccine Administration Assistance Fund.[7]

ARTICLE TAGS

• Regulation, Accreditation, and Payment Practice Group
• Coronavirus Pandemic Hub
• Government Reimbursement