The Public Health and Social Services Emergency Fund (“Relief Fund”) was originally appropriated $100 billion from the CARES Act to provide payment to hospitals and other health care entities for COVID‑19-related expenses and lost revenue. The Relief Fund later received an additional $75 billion appropriation through the Paycheck Protection Program and Health Care Enhancement Act, bringing the total of the relief package to $175 billion. The latest announcement (found here) for the Relief Fund is for an additional $20 billion General Allocation to eligible providers, which is being termed “Phase 3” of the General Allocation.
In addition, early in the morning October 1, President Trump signed a Continuing Resolution to continue FY 2021 appropriations to federal agencies through December 11, 2020 and extend several programs. These changes included significant changes to the Medicare Accelerated Payment Program (“APP”) to extend repayment periods for providers.
Highlights and Key Takeaways
- A new $20 billion General Allocation announced by HHS.
- Providers need to report information to HHS between October 5 and November 6 to qualify for additional payments.
- To date, about $145 billion of the Relief Fund has been announced and/or paid to providers through General Allocations and Targeted Distributions.
- Recently signed legislation extends the repayment period and lowers the interest rate charged on Medicare APP amounts received during the COVID-19 Public Health Emergency.
Phase 3 of the General Allocation
Phase 3 of the General Allocation will be made available to: (1) providers that previously qualified for General Allocation amounts based on 2% of patient revenue; (2) behavioral health providers (including new providers); and (3) new providers that began practicing between January 1 through March 31, 2020.
Eligible providers can begin applying for Phase 3 General Allocation funds beginning on October 5 through November 6, 2020. HHS is encouraging providers to submit as soon as possible to expedite the review and payment process. Phase 3 payment amounts will first be allocated to providers to ensure that applicants have received at least 2% of patient care revenue under the Relief Fund. If there are any remaining funds, HHS will distribute them “equitably” based on changes in operating revenue, changes in operating expenses (including those related to COVID) and other payments received under the Relief Fund. There will also be a new set of Terms and Conditions related to the Phase 3 General Allocation.
Providers are reminded that HHS recently announced new data reporting requirements for the Relief Fund, with the first report due by February 15, 2021. There has been some push back on the new requirements, given the change from lost revenue to operating margin and the requirement to use a 2019 to 2020 comparison, without the option to use budgeted or projected variances, as allowed by prior guidance. Providers should stay tuned for additional guidance and clarification by HHS. We note that Phase 3 may be a trial run for the final reporting requirements, as Phase 3 asks for some of the same information.
Medicare Accelerated Payment Program Recoupment Delay
On October 1, President Trump signed a Continuing Resolution (H.R. 8337) to keep the government funded through December 11. The Continuing Resolution contained several health care-related items, including the following changes to the Accelerated Payment Program:
- Provide 1 year after the receipt of APP funds before Medicare payments for items and services are used to recoup payments. Previously recoupment started at 120 days for providers and suppliers. (It was our understanding that CMS and the MACs had not started recouping APP amounts in anticipation of legislation changing the repayment period.)
- Provide that any such offsets be an amount equal to:
- 25% of the amount of such Medicare payment, during the first 11 months in which any such offsets are made; or
- 50% of the amount of such payment, during the succeeding 6 months.
- Allow 29 months from the date of the first payment before requiring that any outstanding balance be paid in full. Prior to these changes, the balance was due after 1 year for hospitals and CAHs and 210 days for other providers and suppliers.
- If APP amounts are not fully repaid at that point, the interest rate that would be charged to a provider is lowered to 4%.
The MACs were expecting this legislation, and we expect to see updates from CMS and the MACs shortly.
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.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.
