The deadline for use of Provider Relief Fund (PRF) proceeds has been extended by six months until June 30, 2021. The guidance from HHS on allowable uses and reporting requirements has been ambiguous, changing, and at times contradictory – this article summarizes the most important points according to current best understanding. HHS promises additional guidance in the future.
There are two broad categories where the funds may be used: incremental expenses incurred due to Coronavirus (includes administrative expenses as well as expenses directly related to caring for patients) and revenue losses due to Coronavirus. Expenses reimbursed from other sources*1 are excluded, and calculation of revenue losses must count funds from other program sources as revenue.
A report is due on February 15, 2021 on that portion of the funds expended in 2020. (A portal for that reporting will open on Jan 15th, 2021.) An additional report will be due on July 31, 2021 for any funds expended in the first six months of next year. Funds not expended for allowable uses by that latter deadline will need to be returned, although the details have not been specified. If you have received less than $10,000 in total PRF funds, you may not need to report. Entities receiving more than $500,000 will be required to submit a more detailed report.
PRF funds are first to be applied to expenses as described in Step1 below. If you have received more PRF funds than can acceptably be allocated to expenses, there is a second allocation (Step2) based on revenues lost due to Coronavirus. In all cases, reporting will follow the practice’s normal basis of accounting (cash or accrual – if you are unsure, ask your accountant).
Step1: G&A, and Healthcare Related Expenses Attributable to Coronavirus
- G&A (General and Administrative – an accounting term)*2
- Personnel (Salaries / Fringe Benefits)*3
- Mortgage / Rent
- Equipment Lease Payments
- Healthcare Related Expenses paid to prepare for, prevent, or respond to the Coronavirus
- Supplies (ex: PPE, Sanitizer, Patient screening supplies)
- Information Technology (increased IT bandwidth, enhanced EHR capability, IT support of remote workforce, etc.)
- Equipment: (Ventilators, updates to HVAC systems, etc.)
- Facilities: (Lease or purchase of permanent facilities or to upgrade existing facilities to accommodate changes in treatment practices to deal with coronavirus safety.)
- Other (expenses specifically made for accommodating to Coronavirus)*4
Step2: Practice “Patient Care Lost Revenues” due to Coronavirus
- 2020 Reporting Period
- Compare total 2020 revenues with total 2019 revenues. Include all assistance program funds received in 2020 as 2020 revenues
- Jan-June 2021 Reporting Period – if PRF funds are not fully allocated during 2020
- Compare revenues from the first (up to) 6 months of 2021 with the comparable period of 2019.
*1: Examples of other sources include: PPP, SBA, FEMA, Cares Act Testing, Business Interruption Insurance Local, State & Tribal Pandemic Relief Programs – all of this if received during the reporting period (by 12/31/2020 or by 6/30/2021). Portions of this assistance may be in the form of loans. Only that portion which is forgiven should be counted as revenue. (Count grants, not loans)
*2: “Providers should calculate incremental G&A expenses incurred that were attributable to coronavirus”. Examples include: hiring additional security personnel, increased hazard pay, increased cost of utilities to operate temporary facilities, extra training of staff, additional third party vendor costs (such as stepped up cleaning services) or similar items attributable to the coronavirus that were not normally incurred.
*3: Salaries here may only be counted up to a maximum of $197,300 for a single employee.
*4: These are expenses due to Coronavirus in excess of what would have been incurred otherwise. Suppose your pre-pandemic cost of an office visit was $80, but extra time spent by staff makes that $90 during the pandemic. If insurance reimbursements have not gone up, the additional $10 per office visit is an expense that may be counted against PRF.
The guidance from HHS comes in three forms: Terms and Conditions, a document called Post Payment Notice of Reporting Requirements (which has been issued four times, so far) and in their responses to Frequently Asked Questions (60 pages and counting). With some of the requirements still ambiguous, our best advice is to act based upon the latest understanding of the rules, and to keep a snapshot in time of those rules. Generally accepted accounting principles should govern the timing of expenses and revenues. It is extremely unlikely any practice will be penalized for following a reasonable understanding of the rules as available when applied.
Follow this link to the HHS webpage for FAQs on the Provider Relief Fund – Other links on this page, particularly in the left column under Coronavirus (COVID-19), lead to a wealth of additional information on the PRF. https://www.hhs.gov/coronavirus/cares-act-provider-relief-fund/faqs/index.html?language=en
Follow this link to the latest Post Payment Notice of Reporting Requirements: https://www.hhs.gov/sites/default/files/post-payment-notice-of-reporting-requirements-october-2020.pdf