And It’s Changed Again: Amended Provider Relief Fund Reporting Requirements, Phase 3 Eligibility Expanded
On October 22, the Department of Health & Human Services (HHS) released amended Provider Relief Fund (PRF) reporting requirements along with an expansion of eligible providers for the Phase 3 General Distribution. Here’s the run-down.
October 22 Provider Relief Fund Reporting Changes
There are relatively few changes in the six pages of reporting guidance, but the main one is big and revises the lost revenues calculation. If you remember our September 23 blog post, we highlighted how HHS was going to require lost revenues to be calculated as the net patient care operating margin. Many providers and organizations expressed strong concerns with this approach, and over a month later, HHS relented, reverting the calculation back to net patient care revenues.
Here is how HHS describes the change in the new, October 22 reporting requirements document:
“PRF payment amounts not fully expended on healthcare related expenses attributable to coronavirus are then applied to patient care lost revenues, net of the healthcare related expenses attributable to coronavirus calculated under step 1. Recipients may apply PRF payments toward lost revenue, up to the amount of the difference between their 2019 and 2020 actual patient care revenue.” (Bold added)
Later, under the lost revenues data element section, HHS says, “[lost revenues are] represented as a negative change in year-over-year actual revenue from patient care related sources” (Bold added).
HHS explains the change in a simultaneously released “policy memo,” indicating the September 19 lost revenue calculation was developed to try to meet “dual objectives” – that of getting PRF dollars out to those in most need while not allowing providers to be more profitable in 2020 than 2019. However, the memo goes on to explain that, “there is consensus among stakeholders and Members of Congress who have reached out to HHS that the PRF should allow a provider to apply PRF payments against all lost revenues without limitation. In consideration of this feedback, HHS has amended its reporting instructions to provide for the full applicability PRF distributions to lost revenues.”
Take-Away: While the October 22 guidance appears better on the whole, it still treats 2019 and 2020 as if financial issues/decisions are static over the years (ie: is silent on the issue of normalizing revenues for changes), removes the exception in the earlier guidance that allowed providers who were unprofitable in 2019 to break even in 2020, and continues to take a 20-20 hindsight view of provider finances. It is interesting to note that the new guidance still requires recipients to submit operating expenses and revenues by quarter along with other sources of assistance, though we do not have clarity on how that information will be used. Finally, we would remind our readers that the new guidance does not change the two-step process for justifying use of PRF funds – first to offset COVID expenses (Step 1) and then to offset lost revenues (Step 2).
Definition of Reporting Entity, Accounting Treatment
There are several other changes of material interest.
The first change relates to the definition of “Reporting Entity” in the demographics section (bolded language is new):
“Reporting Entity: Entity (at the Tax Identification Number (TIN) level) that received one or more PRF payments, or an entity that meets the following three criteria: 1) is the parent of one or more subsidiary billing TINs that received General Distribution payments, 2) has providers associated with it that were providing diagnoses, testing, or care for individuals with possible or actual cases of COVID-19 on or after January 31, 2020, and 3) is an entity that can otherwise attest to the Terms and Conditions. If the entity has subsidiary TINs that received General Distribution payments, regardless of whether the subsidiary or Reporting Entity formally attested to accepting the payment within the provider portal, the Reporting Entity may report on and direct the use of General Distribution payments. However, if a subsidiary TIN received a Targeted Distribution payment, 1 the subsidiary TIN must report use of funds for that payment, and the parent organization that reports on a subsidiary’s General Distribution payment cannot also report on (or transfer) the subsidiary’s Targeted Distribution payment.
Second, HHS indicates in reporting on PRF payments that recipients would “use their normal method of accounting (cash or accrual basis)….” This is the first time HHS addresses methods of accounting related to reporting on PRF, and is a welcome clarification.
Phase 3 Eligibility Expanded
On October 22, HHS also expanded the list of eligible providers for the Phase 3 General Distribution. This new list incorporates many provider types that, to date, have either not qualified for PRF or can qualify now since there is not a requirement to accept Medicare or Medicaid. See newly eligible list below.
As a reminder, the Phase 3 application process will review applicants to ensure each has received 2% of their patient care revenues in PRF General Distributions, and, if not, true those up. Then HHS will assess operating revenues and expenses from Q1/Q2 of 2019 compared to 2020 to determine a formula for an additional bump beyond the 2%. Details on the Phase 3 applications are on the PRF relief website.
CLA October 29 PRF Webinar
We know it’s difficult to keep track of everything, so you won’t want to miss our complimentary October 29 PRF follow-up webinar. On October 29, we will expand on CLA’s October 8 PRF webinar where we had over 1,400 registrations and hundreds of questions. As you can imagine, we could not answer most questions, and will answer as many as possible on October 29, keeping the new PRF reporting guidance in mind. We’ll also review the Phase 3 application, and take live questions time permitting. This is a complimentary webinar, but registration is required.
What You Can Do Now
- Review the revised lost revenue calculation to assess impact on your use of PRF dollars.
- Consider applying for Phase 3 General Distribution. Have you received 2% PRF based on your patient care revenues? Could you use an additional bump beyond 2%? Do you qualify for Phase 3 under any of the newly eligible provider types?
- Register for our complimentary PRF webinar on October 29, Demystifying Recent HHS Reporting: Your Questions Answers.
- Reach out to CLA if you need assistance. We are here to know you and help you.
Jennifer Boese is the Director of Health Care Policy at CLA. She is a highly successful public policy, legislative, advocacy and political affairs leader, including working in both the state and federal government as well as the private sector. She brings over 20 years of government relations and public policy knowledge with her to CLA. Well over half of her career has been spent dedicated to health care policy and the health care industry, affording her a deep understanding of the health care market and environment, health care organizations and health care stakeholders. Her role at CLA is to provide thought leadership, policy analysis and strategic insights to health care providers across the continuum related to the industry's ongoing transformation towards value. A key focus of that work is on market innovations and emerging payment models. Her goal is to help CLA clients navigate and thrive in an increasingly dynamic health care environment.
Comments are closed.