Kailey Riskowski, CPA, Bland & Associates
On September 19, HHS released more information regarding the reporting requirements for any healthcare provider that received more than $10,000 in distributions from the Provider Relief Fund (PRF). HHS provided further explanation as to which expenses and lost revenue are eligible uses of the PRF distributions, as described here.
To summarize, the distributions will first be applied to healthcare-related expenses attributable to COVID-19 (step 1). If unused funds remain, a provider may then apply the funds towards lost revenue (step 2). Lost revenue is now defined as “a negative change in year-over-year net patient care operating income… net of the healthcare related expenses attributable to coronavirus”. This is significantly different from previous guidance issued, as the new calculation is based upon net operating income (patient care revenue – patient care expenses) less COVID-19-related healthcare expenses (step 1 above) as opposed to the difference in revenue between 2019 and 2020 (or 2020 actual revenue vs budgeted), as was previously published. Additionally, there is a now a limit as to how much lost revenue can be claimed (cannot exceed the provider’s 2019 net income from patient care; if the provider had a net operating loss from patient care in 2019, the amount of lost revenue claimed cannot exceed a net zero gain/loss for 2020 (essentially permitting a breakeven for 2020)).
Reporting will involve providers populating the required data in the PRF system. HHS originally said the reporting system would be available beginning October 1st. This is now scheduled for early 2021. Reports are due as follows –
- All recipients must report by February 15, 2021 on their expenditures incurred through the period ending December 31, 2020.
- Recipients with funds unexpended after December 31, 2020, must submit a second and final report no later than July 31, 2021.
It is important to note that the PRF distributions cannot be used on expenses that were already covered by other forms of relief (e.g. PPP loan). Providers should begin to reconcile their various sources of relief/covered expenses to determine if they have fully utilized their PRF distribution(s). Unused funds remaining at June 30, 2021 must be returned.
Additionally, any provider that has received/expended more than $750,000 in PRF distributions, is subject to single audit requirements.
Separate reporting requirements will be issued for the Nursing Home Infection Control distribution.
Stay tuned! It is anticipated that more guidance, including webinars and FAQs will be provided before the reporting deadline.
