On October 22, 2020, the Department of Health and Human Services (“HHS”) published revised Provider Relief Fund Reporting Guidelines (“Revised Reporting Guidelines”) for providers (“Recipients”) who received more than $10,000 in relief fund payments from the Provider Relief Fund created by the CARES Act (“Relief Fund”) (the press release announcing the Revised Reporting Guidelines is available here).
The Revised Reporting Guidelines came in response to concerns and objections raised by the health care industry and members of Congress. It is important to note that these changes are NOT for the Phase 3 General Distribution application open through November 6, but are related to the FINAL Reporting process starting in 2021.
The following are some key observations from the Revised Reporting Guidelines (available here):
- The most significant change is that HHS is abandoning its controversial “operating income” approach for calculating “lost revenue” included in the original Reporting Guidelines published in mid-September and returning to a more typical description of “lost revenue.” The Revised Reporting Guidelines describe lost revenue as “the difference between 2019 and 2020 actual patient care revenue.”
- The Revised Reporting Guidelines do not, however, fully return to pre-September guidance that stated that Recipients could use “any reasonable method of estimating lost revenue,” including comparing budgeted revenue to actual revenue. Limiting the calculation to a comparison between 2019 and 2020 actual patient care revenue could continue to be problematic for many Recipients.
- There are still some questions unanswered, including whether the final determination of whether an entity can retain Relief Fund repayments is based on a quarter-by-quarter comparison or a full year-over-year comparison. The Revised Reporting Guidelines still ask for quarter-by-quarter reporting of revenue but without any discussion of how that impacts the final retention analysis.
- Recipients must also still report total, G&A and health care-related expenses, all broken out by quarter, despite moving away from an operating margin approach for calculating lost revenue. That portion of the Revised Reporting Guidelines is unchanged from the September version.
- The Revised Reporting Guidelines continue to describe a two-step process in which organizations first look to COVID-19 related expenses for purposes of qualifying Relief Fund payments and second to lost revenue.
- The Revised Reporting Guidelines appear to accommodate at least some “system-wide” reporting for at least the General Distributions. It is not clear yet how this will work but appears to be a step in the direction of allowing General Distributions to be allocated among different entities in a system as has been described in prior FAQs. Notably, this does NOT apply to the reporting for Targeted Distributions. A subsidiary TIN that received a Targeted Distribution must report on those funds, even if a parent reports on the General Distributions.
Hall Render will provide additional updates as more information becomes available.
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.
