On June 11, 2021, the Department of Health and Human Services (HHS) issued an updated Post-Payment Notice of Reporting Requirements (June 11 Notice), providing extensive new guidance regarding reporting on the Provider Relief Fund (PRF).

As a reminder, the PRF was established by Congress back in March 2020 as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Its purpose is to provide cash to health care providers to support the expenses and lost revenues they incurred due to coronavirus. This new guidance not only establishes deadlines for the use of PRF payments and reporting on such payments, but has also introduced additional uncertainty regarding the use of PRF payments, including how to calculate lost revenues attributable to coronavirus, leaving providers with new questions.

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With respect to the timeline for reporting, HHS has responded to industry pressure to extend the period to use funds (“availability period”) by creating deadlines for use that varies with the period in which the PRF payments were received. The table below sets forth these deadlines and periods in which the funds are available.

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Additionally, HHS has clarified that providers should use their “normal basis for accounting” (e.g., cash basis, accrual basis) for the purposes of reporting.

Outstanding Issues

As providers begin to prepare for reporting, there are several key issues raised by this new guidance that they should bear in mind:

• Increased Healthcare-related Expenses: While it has been clear since the establishment of the PRF that expenses covered by other relief programs, such as the Paycheck Protection Program, were ineligible, a new FAQ posted on June 11, 2021 (June 11 Notice) seems to suggest that HHS is also looking for providers to use normal operating revenue to offset increased health-care-related expenses. Specifically, the new FAQ indicates that providers should determine the amount of their eligible expenses by identifying “their expenses attributable to coronavirus, and then offset[ing] any amounts received through other sources, such as direct patient billing, commercial insurance, Medicare/Medicaid/CHIP …” in addition to relief programs. It is possible that HHS is only looking for providers to apply incremental operating revenue in cases where payors increased reimbursement to account for additional coronavirus expenses. At this point, however, HHS has not provided clear guidance on how providers should approach determining the portion of expenses that should be offset by operating revenue.

• Lost Revenue Period: When the PRF Reporting Portal opened on July 1, it became clear the HHS had again tweaked its approach to lost revenue. HHS will still allow providers to choose from one of the three methodologies it set forth in January 2021: comparison of actual-to-actual revenues; comparison of actual-to-budgeted revenues; or “any reasonable method of estimating lost revenue.” For providers who pursue the first methodology, providers will report revenues, by payor class, by quarter, for the full calendar years 2019 and 2020 and for the first and second quarters of 2021. Lost revenue will be calculated by comparing quarters in 2020 and 2021 to the same quarters in 2019. If there are any quarters in which revenues increased versus 2019, lost revenue for that quarter will be $0; the increase will not offset the losses in other quarters. Generally, this change should be beneficial for most providers.

For providers who pursue the second methodology, actual to budget comparison, they will provide the actual and budgeted revenues, by payor class, by quarter for calendar year 2020 as well as the first two quarters of 2021. The issue some providers may encounter is that budgeted figures for 2021 must also have been “established and approved” prior to March 27, 2020. It would be unusual for a provider to have budgeted for the first half of 2021 during the first quarter of 2020, however, HHS has not addressed this particular issue, which is likely to become more critical as availability periods now stretch through the end of 2022. Additionally, many providers may not have broken their budgets down by quarter and/or by payor class, another issue HHS has not addressed.

• Tracking PRF Payment Uses: HHS has confirmed in the June 11 Notice that payments may be used for “eligible expenses incurred prior to receipt of [PRF] payments.” HHS has clarified in subsequent webinars that this provision extends to lost revenues as well. Providers who received payments in multiple periods will need to carefully track their uses to ensure they do not use the same expenses in multiple periods (i.e., “double counting”).

We recommend that providers confirm the dates they received PRF payments and the amounts received and log in to the reporting portal to ensure they are properly set up to begin reporting. Additionally, providers should revisit their eligible expense estimations throughout the availability period as well as their lost revenue by quarter during the availability period.

Citrin Cooperman is a nationally recognized, full-service CPA firm, currently ranked in the U.S. top 25. The firm offers assurance, tax, and business advisory services to help clients remain competitive in today’s market.

Kate Broderick is a manager in the firm’s healthcare practice in the Boston metro office with approximately five years of experience providing advisory service to health care organizations. Kate can be reached at kbroderick@citrincooperman.com.

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