The new HHS Provider Relief Fund Payment Portal (“Payment Portal”) went live late on Friday, April 24. Every eligible health care provider (“Provider”) that received payments from the first two tranches of the Public Health and Social Services Emergency Fund established by the CARES Act (“Relief Fund”) is required to submit and verify certain financial and other information through the Payment Portal.
Highlights
- The HHS Payment Portal Providers must use to report and verify certain financial and other information used to allocate Relief Fund payments is now open.
- Although HHS described these payments as not being distributed on a first-come, first-served basis, Providers will not receive additional payments until the required information is reported. The Relief Fund is also a finite amount of money, so Providers are encouraged to move forward without unnecessary delay while also ensuring the accuracy of all information submitted.
- The Relief Fund is now appropriated for $175 billion, and HHS is issuing new and evolving guidance, instructions and requirements every day. Providers should not submit or verify data without first consulting with both legal counsel and financial advisors.
- HHS guidance recommends that submissions be completed by an organization’s CFO or accounting professional.
Background on First Two Tranches of the Relief Fund
The initial $30 billion of the Relief Fund was distributed to Providers between April 10 and April 17, 2020 in proportion to Providers’ Medicare Fee for Services payments in 2019. Most payments were sent to Providers via direct deposit. There was no advance reporting or application process required for these initial payments.
Some Providers, including many hospitals, received a second round of payments beginning on April 24, 2020. These additional payments were from the $20 billion Second Tranche out of the Relief Fund. HHS refers to the combined First Tranche and Second Tranche totaling $50 billion as the “General Distribution” or “General Allocation” portion of the Relief Fund.
The First Tranche of the Relief Fund was distributed in proportion to an entity’s share of Medicare fee-for-service (Parts A and B) reimbursements in 2019. This formula was used because HHS had ready access to the data needed to distribute the funds, and it allowed HHS to get money distributed to entities as quickly as possible. Basing distributions on past Medicare reimbursements, however, disproportionately benefited some Providers while leaving others out entirely.
HHS describes the $50 billion General Distribution as instead being allocated based on providers’ share of “2018 net patient revenue,” not just Medicare revenue. In other words, these Second Tranche distributions are intended to augment Providers’ First Tranche distributions so that the whole $50 billion general distribution is apparently intended to be allocated proportional to Providers’ share of 2018 net patient revenue.
HHS guidance states that the national net patient revenue (denominator) was $2.5 trillion so that the $50 billion General Distribution Fund (numerator) is about 2% of the national total net patient revenue. As a result, Providers should expect that the combined First Tranche and Second Tranche should be about 2% of their 2018 net patient revenue. Assuming a Provider’s 2018 net patient revenue was $100 million, its total from the $50 billion would be $2,000,000 ($100 million x 2%). Apparently, HHS would then subtract the First Tranche distribution from that total to determine the Second Tranche distribution.
Some Providers that received a relatively minimal payment from the First Tranche may receive significantly more from the Second Tranche. This is particularly true for Providers with limited or minimal Medicare revenue compared to other revenue, such as children’s hospitals. HHS Secretary Alex Azar emphasized this scenario by providing an example of a large children’s hospital that received only $233,000 from the First Tranche but $32 million from the Second Tranche.
This also means, however, that some Providers that received payments from the First Tranche may receive significantly less than 2/3 ($20/30 billion) of their First Tranche distribution and may not receive any additional payments from the Second Tranche. HHS has referred to this as a reallocation but has been silent on whether any of the First Tranche could be subject to recoupment.
CARES Act Relief Fund Payment Portal
Since, according to HHS statements, the entire $50 billion General Allocation fund is meant to be distributed based on “2018 net patient revenue,” every Provider that received a payment from either the First Tranche or Second Tranche (or both) is required to submit certain revenue information via Payment Portal. This Payment Portal (available here) went live late Friday, April 24.
Some Providers that received a payment from the First Tranche have not received any additional payments from the Second Tranche. This may be because HHS did not have adequate cost report data on file in order to make an additional payment based on patient revenue. For example, many Providers, including physician practice groups, do not submit Medicare cost reports. These Providers need to submit revenue information to the General Distribution Payment Portal in order to receive additional payments from the General Allocation fund.
Providers who did receive an additional payment from the Second Tranche still need to submit revenue information via the Payment Portal so HHS can verify the data and adjust payments as necessary. Providers should not assume the patient revenue data HHS used to allocate the Second Tranche of payments is accurate. HHS was relying on revenue data included in cost reports filed with CMS, but Providers are now being asked to upload revenue data from tax returns to the Payment Portal, and these figures could be vastly different.
Additional guidance from HHS issued subsequent to the opening of the Payment Portal suggests HHS has chosen to determine net patient revenue based on tax returns (or audited financials for government entities) by using “gross receipts or sales” for taxable and pass through organizations and “program service revenue” for tax‑exempt organizations (Form 990).
These tax reporting concepts are quite different than typical health care industry definitions of the net patient revenue and may result in very different amounts, especially when taking into account the many varied corporate and government enrollment structures many health care organizations deploy: multi-corporate structures, single corporation with multiple Providers, non-Provider (as defined by the CARES Act) operations housed within a single legal entity (“EIN”), etc. Providers should not rush to submit or verify data without first assessing how their existing operational and corporate structure, government program enrollment structure and prior tax reporting practices all correlate with the available guidance from HHS and the CARES Act statute.
More information on the additional guidance issued by HHS (a Provider Relief Fund Application User Guide website and nine-page FAQ document) and a discussion about issues with using net patient revenue based on tax returns is available in the related Hall Render article available here.
Previous articles on the CARES Act Fund are available here:
- Latest Stimulus Bill Includes Over $100 Billion in Health Care Industry Relief;
- Updates on $100 Billion Health Care Relief Fund and Medicare APP;
- First Tranche of Payments from the $100B CARES Funding Relief Being Delivered; and
- CARES Act Relief Funding: Additional Tranches Announced.
If you have questions or would like additional information about this topic, please contact:
- David Snow at (303) 801-3536 or dsnow@wp.hallrender.com;
- Lori Wink at (414) 721-0456 or lwink@wp.hallrender.com;
- Joseph Krause at (414) 721-0906 or jkrause@wp.hallrender.com;
- Elizabeth Elias at (317) 977-1468 or eelias@wp.hallrender.com;
- Benjamin Fee at (720) 282-2030 or bfee@wp.hallrender.com; or
- Your regular Hall Render attorney.
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