How to handle Provider Relief Funds

The abundance of funding distributed during the pandemic has certainly been a welcome relief to many health care providers. The Provider Relief Fund (PRF) offered qualified healthcare providers funding for health care-related expenses or lost revenue as a direct result of the pandemic. While this financial support offered in response to the COVID-19 pandemic has been a huge sigh of relief for providers across the nation, the continual funding updates, reporting requirements, deadlines to monitor and the “double dip” implications have been a cause for concern.

What is the “double dip” risk?

Through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the United States federal government has allocated $178 billion in payments to be distributed through PRF. However, providers must keep in mind the complexities of program terms and conditions as they continue to evolve. Most providers have been warned of the infamous “double dip” risk, or the use of funds from one source to be used on the same expenses to offset another funding stream. “Double dipping” is strictly prohibited and navigating the cost reimbursement funding on the use of the HHS Provider Relief Funds has proven challenging for many.

PRFs may be used on expenses attributable to COVID-19 that are not reimbursed by another source or obligated to be reimbursed by another source. Take Critical Access Hospitals, for example, Medicare reimburses Critical Access Hospitals for 101% of their costs based on the cost report. As such, any costs related to Medicare patients are considered reimbursed in full and no HHS Provider Relief Funds can be used on these costs, even if they are attributable to COVID-19. Providers should carve out the Medicare portion of their cost when determining allowable expenses for the PRF.

Navigating the ever-changing PRF rules

One beneficial rule change in the PRF allows the funds to offset the full purchase price of capital equipment, in place of only the annual depreciation expense. The capital purchases are required to be used to prevent, prepare for and respond to COVID-19 and could include items such as ventilators, CT scanners, ICU equipment inventory stockpiles, HVAC upgrades, infrastructure to support telehealth and remote working, and projects or equipment investments to allow for social distancing. This enabled providers to make purchases that were attributed to COVID-19, but that would also benefit the organization in the future.

Reporting consideration to avoid the “double dip”

As cost reporting season is right around the corner, it is an opportune time to review the areas of reimbursement that could pose a risk of duplication of funding. Recently, the HHS announced new reporting requirements and timelines for recipients of the PRF payments. These new changes expand the amount of time providers will have to report information, aim to reduce burdens on smaller providers, and extends key deadlines for expending PRF payments for recipients who received payments after June 30, 2020.

Now, all recipients of PRF payments must comply with the reporting requirements and will have a 90-day period to complete reporting, as compared to the previous 30-day limit. To alleviate questions and concerns around reporting, providers are encouraged to register in the PRF Reporting Portal in advance of the relevant reporting time period dates. Additionally, recipients are now also required to report for each Payment Received Period in which they received one or more payments exceeding, in the aggregate, $10,000.Lastly, reporting requirements are now applicable to recipients of the skilled nursing facility and nursing home infection control distribution in addition to general and other targeted Distributions.

Capital reimbursement rates

Outside of these new reporting revisions, there is another newer consideration for providers to keep in mind that can impact reporting – the cost-based reimbursement of capital rates. Capital assets reported on the various provider cost reports are used in determining the capital rates in subsequent years. Even though this reimbursement may not come for several years, these capital items are still obligated to be reimbursed by another source. It is therefore important to exclude the Medicaid portion of capital items when reporting expenses on the HHS portal and the schedule of federal expenditures if the funds are subject to single audit requirement. Medicaid in New York State reimburses skilled nursing facilities, Article 28 clinics, licensed home care service agencies and other provider types for the Medicaid portion of capital improvements.

Providers should also review cost reporting instructions for changes that may impact HHS reporting. For example, COVID-19 vaccines and vaccine administration costs are reimbursable for Federally Qualified Health Centers and Rural Health Clinic Centers through the cost report in the same way that influenza and pneumococcal vaccines are. Monoclonal antibody treatments are also reimbursable for Medicare beneficiaries. Make sure the expenses associated with newly reimbursable services are not used to offset Provider Relief Funds.

Triple Check Records

Since HHS considers the Provider Relief Fund the payer of last resort, providers should take the time to review cost reporting instructions for changes that may impact HHS reporting. This ensures the expenses associated with newly reimbursable services are not used to offset PRFs. They should file cost reports normally and exclude any cost-reimbursed amounts from the HHS reporting. Clear and concise records and documentation will alleviate concerns of “double dipping” funds.

Confident and accurate reporting is possible

With the ever-changing rules and updates to COVID-19 relief funds reporting and policies, it is easy for providers to get confused especially when it comes to the Provider Relief Fund. By working with financial experts, providers can better understand the various implications and considerations that go into filing and reporting so they can avoid the “double dip” and confidently and accurately report on PRF funds on behalf of organizations.

Margaret Lally is a Healthcare Consulting Manager at The Bonadio Group, she can be reached at mlally@bonadio.com. For more information, visit www.bonadio.com