CARES Act Provider Relief Fund Begins Distributing an Additional $20 Billion of Funding to Healthcare Providers Impacted by COVID-19
May 1, 2020 •Leah McLain, CPA, Consulting Executive
As of Friday, April 24, 2020, an initial $30 billion of this funding had been distributed to Medicare providers. The U.S. Department of Health and Human Services (HHS), in partnership with United Health Group (UHG), began distributing another $20 billion for a total general distribution to Medicare providers of $50 billion.
Overview of $50 Billion General Distributions
- The initial $30 billion was a rapid, automatic distribution based on each provider’s 2019 pro-rata share of Medicare fee-for-service (FFS) reimbursements. These payments arrived via direct deposit for providers whose information was on file and via paper check for all others. Medicare fee-for-service reimbursements for 2019 totaled $484 billion, so each provider would have received funding as follows:
|$30 billion||X||Provider's 2019 Medicare FFS Reimbursements|
- The remaining $20 billion of general distribution funding is being distributed such that the entire $50 billion general distribution will be allocated proportional to each provider’s share of 2018 net patient revenue. Total 2018 net patient revenue is estimated to be about $2.5 trillion. Each provider can expect to receive a combined total distribution from the initial $30 billion distribution and the second $20 billion distribution as follows:
|$50 billion||X||Provider's 2018 Net Patient Revenue|
Portals and Application Process
- Medicare providers who have received a general distribution must complete an attestation confirming receipt of funds and acceptance of terms and conditions within 30 days of receiving funding via the CARES Act Provider Relief Fund Payment Attestation Portal.
- All providers who have received a general distribution as of 5:00 pm EST Friday, April 24, 2020 must logon to the General Distribution Portal and submit the following information:
- Gross receipts or sales or program service revenue, per federal income tax return
- Estimated revenue losses for March-April 2020 due to COVID-19
- Most recently filed federal income tax return
- TINs of any subsidiaries who have received Provider Relief Fund money who do not file a separate tax return
Providers with sufficient revenue data on file will automatically receive an advance payment of the additional $20 billion general distribution. Information submitted via the General Distribution portal will be used for verification of disbursements issued and to make additional allocations for those providers without sufficient data on file.
- Additional allocations will be disbursed on a weekly, rolling basis, as information is validated, starting on April 24, 2020. Disbursements will be given equal consideration regardless of when applications for funding are submitted to the General Distribution Portal, with disbursements typically being processed within 10 days of application submission.
- Providers who have not received Provider Relief Funding as of 5:00pm EST Friday, April 24, 2020 are not eligible to use the General Distribution Portal. These providers may receive a targeted distribution later.
- Further details can be found in the General Distribution Portal FAQs.
Terms and Conditions
Providers receiving Provide Relief Fund money must agree to the terms and conditions. We highlighted the terms and conditions applicable to the initial $30 billion of general funding in our previous article. The terms and conditions applicable to the second $20 billion are identical but additionally contain the following:
- Providers receiving a payment from the $20 billion general distribution must submit 2018 general revenue data when applying to receive a payment or within 30 days of having received a payment (via the General Distribution Portal).
- Providers must consent to allow HHS to publicly disclose total payments received from the Public Health and Social Services Emergency Fund, which at this point would include total distributions received from the $50 billion general distribution.
Overview of Targeted Distributions
The remaining Provider Relief Fund moneys will be distributed based on targeted allocations, aimed at providing additional funding to providers particularly impacted by COVID-19 or who have not received payments under the initial $50 general distribution. So far, the HHS has outlined the below targeted distributions, but others may be announced. We are monitoring targeted distributions and will provide additional information when it becomes available.
- Treatment of the uninsured: providers treating uninsured COVID-19 patients on or after February 4, 2020 can submit claims for reimbursement at Medicare rates, as funding permits.
- COVID-19 high impact areas ($10 billion)
- Rural providers ($10 billion)
- Indian Health Service ($400 million)
- Additional allocations for skilled nursing facilities, dentists, and providers that solely take Medicaid. The HHS website does not contain any further information at this time addressing how these additional allocations will be disbursed.
Much like other CARES Act funding programs, there is some degree of uncertainty and ambiguity in interpreting the terms and conditions applicable to Provider Relief Funds. In particular:
- Centers for Medicare and Medicaid Services Administrator Seema Verma is quoted as saying the Provider Relief Fund money is “no strings attached. So the health care providers that are receiving these dollars can essentially spend that in any way that they see fit.” A cursory overview of the terms and conditions Provider Relief Fund recipients are required to accept, however, would seem to differ from these comments.
- Providers must have provided care to individuals with actual or possible cases of COVID-19 after January 31, 2020, and the HHS has indicated they broadly view every patient as a possible case of COVID-19. Does this mean medical providers providing non-COVID-19 care to patients without a confirmed case of COVID-19 meet this requirement? It seems so, but it’s not entirely clear.
- The General Distribution Portal FAQs address how a provider can quantify lost revenues due to COVID-19; however, the approach seems to be based on March and April 2020 revenues. Many providers won’t feel the full effects of COVID-19’s impact on revenues until much later due to a lag between when services are provided and when insurance and Medicare reimbursements are received. Depending on a provider’s basis of accounting, this may not be a fair representation, and this issue has not been clarified or addressed anywhere.
- Provider Relief Fund money must not be used to reimburse expenses or lost revenues reimbursed from “other sources.” However, we have no examples or clarification of what is considered an “other source.” Does loan forgiveness under the Paycheck Protection Program count as an “other source”?
- The terms and conditions indicate that reports may need to be submitted (mandatory for providers receiving more than $150k), but we don’t have more than a general explanation of what will need to be included on these reports.
- Providers need to be aware that the CARES Act authorizes the HHS Office of Inspector General to audit payments made under this program.
Providers choosing to accept the terms and conditions and keep the Provider Relief Fund money they receive should be fully aware of the terms and conditions and the uncertainties in their interpretation when considering using the funds. We are monitoring this situation and will provide updated information and commentary as further information becomes available.
HoganTaylor's Advisory Practice
If you have any questions about this content, or if you would like more information about HoganTaylor's Advisory practice, please contact the author of this article, Leah McLain, Consulting Manager, at firstname.lastname@example.org.
INFORMATIONAL PURPOSE ONLY. This content is for informational purposes only. This content does not constitute professional advice and should not be relied upon by you or any third party, including to operate or promote your business, secure financing or capital in any form, obtain any regulatory or governmental approvals, or otherwise be used in connection with procuring services or other benefits from any entity. Before making any decision or taking any action, you should consult with professional advisors.
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