HHS Issues Provider Relief Fund Reporting Requirements
HHS issued its long-awaited Provider Relief Fund (PRF) Reporting Requirements late in September. It specified the data that providers who received more than $10,000 in PRF payments will be required to submit as part of a post-payment reporting process. Providers should call their attention specifically to how HHS plans to calculate and limit the use of payments for lost revenues.
As part of the required reports, providers must report certain data for 2019 and 2020.
Healthcare related expenses attributable to Coronavirus: Providers will be expected to report expenses in two categories: general and administrative expenses, and healthcare related operating expenses. Providers are advised that only those expenses not reimbursed by other sources can be reported here. Providers who received between $10,000 and $499,999 in aggregate PRF payments can report their expenses in aggregate by category. However, providers receiving $500,000 or more in PRF payments will report their expenses in detail within each of the categories.
Lost revenues: This calculation becomes relevant if all PRF dollars received were not consumed by the COVID-19 healthcare related expenses. Lost revenues are defined as, “year-over-year net patient care operating income (i.e., patient care revenue less patient care related expenses for the Reporting Entity).” This approach is more limited than previous HHS guidance which permitted "any reasonable method of estimating lost revenue." Previously, providers could compare budgeted to actual, or use a year-over-year comparison. In addition, HHS appears to cap the application PRF payments toward lost revenues up to either:
- The amount of a provider’s 2019 net gain from healthcare related sources, or
- Up to a net zero gain/loss in 2020, if the provider reported negative net operating income in 2019.
- Calendar year expenses and revenues for each of the years;
- Other types of assistance received, such as Paycheck Protection Program funds, FEMA CARES Act dollars, state and local government assistance and other funds.
- Personnel Metrics such as total personnel by labor category, hire/re-hires, separations
- Patient Metrics including total number of admits, visits and residents.
- Facility Metrics like total available staffed beds.
Key dates to keep in mind:
- January 1, 2021: Opening the reporting system will not take place until early 2021.
- February 15, 2021: Deadline by which to submit a first report due for PRF expenditures through December 31, 2020
- July 31, 2021: Deadline by which to submit a second and final report for January 1 – June 30, 2021 revenues and expenditures.
The reporting guidance confirms that PRF payments can be used through June 2021. It is not clear if these timelines may shift should Congress appropriate additional dollars for the Provider Relief Fund. Note the public health emergency (PHE) has been extended another 90 days beyond October 23, 2020.
In addition to the reporting requirements, providers receiving more than $750,000 in federal awards, which include Provider Relief Funds, are subject to single audit requirements. More information here: https://www.hhs.gov/sites/default/files/post-payment-notice-of-reporting-requirements.pdf
Keep in mind: The IRS has confirmed that Provider Relief Fund payments cannot be excluded from taxation under a disaster relief exemption. Therefore, the payments do constitute gross taxable income, unless otherwise carved out under an existing exclusion, such as if the provider is a 501(c) nonprofit. Given that many healthcare providers may ultimately return unused payments from the Provider Relief Fund, taxpayers should be conscious of the tax consequences of payments received in one tax-year and returned in another year. Additionally, the guidance only applies for federal tax purposes so taxpayers should also consider the state and local tax treatment of the payments.