Provider Relief Fund FAQs: Reporting COVID-Related Costs and Lost Revenue

At James Moore CPAs we understand the importance of having a healthy financial state. We offer local accounting service from highly-experienced CPAs, exceptional service at highly competitive rates, and time-tested expertise to help you manage your finances smartly and holistically.

Learn more about our bookkeeping services

Important Update: HHS has announced a single audit requirement for all non-federal entities receiving and spending $750,000 or more in Provider Relief Funds. Read further for important information on this new requirement. 

As hospitals and healthcare centers on the front lines of the coronavirus pandemic begin to tabulate the costs associated with combating the virus, they need to be mindful of the reporting requirements for payments received from the HHS Provider Relief Fund.

Stipulated as part of the CARES Act, the Provider Relief Fund is meant to offset the costs and lost revenue incurred by the virus. Legislators have appropriated $50 billion for dispersal as part of a General Distribution fund.

While we previously covered the basics of this fund, there’s much more to discuss regarding the reporting requirements. This includes a new announcement that the U.S. Department of Health and Human Services (HHS) will not require quarterly reporting as initially stipulated by the CARES Act. (We’ll discuss this and other aspects of reporting requirements later in this article.)

We also still don’t have a reporting portal or related guidance on the requirements for reporting these costs and lost revenue. Following are some of the most common questions on what qualifies for these funds and how to report on COVID-related costs and lost revenue.

What costs or lost revenues are eligible for reimbursement?

According to the U.S. Department of Health and Human Services (HHS), qualifying costs and lost revenues must be “health care related expenses attributable to coronavirus.” This definition is left intentionally broad by HHS to include products, services or payments meant to prevent, prepare for and respond to COVID-19. Examples include:

• Supplies used to provide healthcare services for COVID-19 patients (possible or actual)
• Equipment used to administer healthcare services for COVID-19 patients
• Personnel or workforce training regarding COVID-19-related standards and practices
• Expenses for developing and staffing emergency operation and testing centers
• The cost of reporting COVID-19 test results to federal, state or local governments
• Constructing temporary structures to expand capacity for COVID-19 patient care
• Housing or treating patients in separate areas from COVID-19 patients
• Facilities, equipment, supplies, practices, staffing and technology related to COVID-19

Providers can use general distribution payments to cover these expenses and more if the offsetting cost or lost revenue corresponds to coronavirus. Note that these costs do not need to be specific to providing care for possible or actual coronavirus patients. The Provider Relief Fund is meant to give relief for healthcare providers generally impacted by the pandemic.

What should Provider Relief Fund payouts for COVID costs and lost revenue cover?

Distributions should cover lost revenues associated with fewer outpatient visits, canceled elective procedures or services or increased uncompensated care. According to HHS guidance, “providers can use Provider Relief Fund payments to cover any cost that the lost revenue otherwise would have covered, so long as that cost prevents, prepares for, or responds to coronavirus.”

These costs can include:

• Employee or contractor payroll expenses
• Employee health insurance contributions
• Facilities’ rent or mortgage payments
• Equipment lease payments
• Electronic health record licensing fees

HHS encourages the use of funds on operational expenses that help providers maintain their capacity to deliver care. The funds could also be used to cover lost revenue, as well as amounts not covered (or only partially covered) by insurance. The simplest way to determine the extent of revenue losses is to compare current year revenue with the prior year or current year pre-COVID-19 budget revenue and calculate the difference between projected and actual revenue.

What are the reporting requirements?

To submit and be eligible for reimbursement through the Provider Relief Fund, healthcare providers must comply with reporting requirements described in the Terms and Conditions. Further, providers receiving more than $150,000 in cumulative funding from the CARES Act (all sources) must maintain clear documentation that demonstrates appropriate use of the funds. This includes the following:

• Documented compliance with the Terms and Conditions
• Total funds received through the CARES Act
• Amount of funds expended or appropriated to projects and activities
  • The name of those projects and activities
  • An estimate of jobs kept or created by those projects and activities (if applicable)
• Information about subcontracts or sub-grants awarded by the provider (if applicable)

All documentation must be kept for a period of at least three years to comply with auditing standards set by the HHS’ Office of Inspector General.

Previously, HHS and the Pandemic Response Accountability Committee required a report of this information within 10 days after the end of each calendar quarter (beginning June 30, 2020). However, this mandate has since been removed. Instead, HHS has created a website listing each provider that has accepted funding and the amount received.

On July 20, 2020, HHS released a timeline regarding additional processes to report funding:

• Aug. 17, 2020: Detailed instructions will be available by this date.
• Oct. 1, 2020: Reporting system will be available by this date.
• Feb 15, 2021: First report due for calendar year 2020 expenditures. *
• July 31, 2021: Recipients with funds expended after Dec. 31, 2020 must submit a second and final report no later than this date.

* = Note: The notice also states that this report is due “within 45 days of the end of the calendar year,” which is Feb. 14, 2021. We recommend that you watch for clarification on this date.

That said, providers receiving payments are still required to submit any reports requested by the Secretary to ensure compliance. So it’s important to watch for additional notices from HHS.

New Single Audit Requirement!

On July 22, 2020, HHS updated its guidelines yet again to announce that non-federal entities expending $750,000 or more in Provider Relief Fund money must undergo a single audit for the calendar year. These entities have two options (assuming PRF money is the only federal funding received):

• A single audit on the financial statements of the entity
• A program-specific single audit on just the revenue and expenditures related to the Provider Relief Fund payment

The audit report is to be submitted directly to HHS, Audit Resolution Division, at AuditResolution@hhs.gov.

Regardless of the option chosen, a single audit is typically due within nine months after the end of the audit period. For the calendar year ending 2020, this creates a due date of Sept. 30, 2021. However, there are extensions available due to COVID-19 depending on the circumstances.

Since commercial organizations generally don’t receive this type of federal funding, many healthcare facilities likely aren’t familiar with single audits and their requirements. It’s best to consult with your CPA if you find your practice or facility in this position.

What is the reporting period for COVID-related costs?

Because the origination date of the COVID-19 pandemic is relatively unknown, it’s likely providers have eligible claims prior to the date when they received their dispersal from the Provider Relief Fund. HHS has authorized the use of funds to cover retroactive expenses, so long as those expenses are attributable to coronavirus.

While there is no specific timeframe for reporting COVID-19-related expenses, HHS has cited that it would be “highly unusual for providers to have incurred eligible expenses prior to January 1, 2020.”

Additional Information

For more information about how to properly document and report COVID-19-related expenses in accordance with the Provider Relief Fund, you can review the FAQ section on HHS’ website.

In the meantime, James Moore’s healthcare CPAs will continue to provide updated guidance and clarification as it becomes available. HHS is continually updating reporting and reimbursement guidance, and we’re tracking it closely to keep you informed!

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.