Among the multitude of relief options under the CARES Act, the U.S. Department of Health & Human Services (HHS) allocated provider relief funds (PRF) to healthcare providers. Phase I in late April saw healthcare providers receive $50 billion in general PRF distributions, largely based on historical Medicare volume or net revenues. Phase II followed in early May with general PRF distributions of $15 billion for Medicaid, Children’s Health Insurance Program (CHIP), and dental providers. And continuing after that, HHS issued some $52 billion in targeted PRF distributions among: (1) hospitals treating large numbers of COVID-19 patients; (2) rural providers; (3) skilled nursing facilities; (4) safety net hospitals; and (5) tribal healthcare providers. All in all, HHS issued $175 billion in PRF to support healthcare providers.
While these PRF likely provided a much needed lifeline (no pun intended) to providers, they are not “free” money. Many providers received the PRF distribution by direct deposit. However, providers must agree to certain “Terms and Conditions” (T&C) to keep and use the PRF, and if they receive and use more than $750,000 in federal funds, including PRF, within a fiscal year, they must submit an audit of use of the funds. Guidance regarding the T&C and any audit remains in flux, with detailed audit instructions coming no later than August 17, 2020 (likely not until that day).
Failure to utilize the funds appropriately and in accordance with the T&C can result in exposure to government audits and False Claims Act (FCA) investigations, including possible qui tam litigation. Accordingly, the importance of the compliance obligations related to PRF payments cannot be overstated.
A little more detail—
Within 90 days of receiving each PRF payment, a recipient healthcare provider must: (1) sign an attestation to confirm receipt of the PRF and agree to the T&C for use of the PRF; or (2) reject the PRF and remit full payment back to HHS. Failure either to return the PRF amount in full or to attest within 90 days to the Payment Attestation Portal results in “deemed acceptance” of the PRF and agreement to the T&C.
So what are the T&C? There are several; providers must:
- Certify they provided “diagnoses, testing, or care for individuals with possible or actual cases of COVID-19”;
- Only use PRF to “prevent, prepare for, or respond to coronavirus,” including use of PRF only for healthcare-related expenses or lost revenues attributable to coronavirus;
- Not use PRF “to reimburse for losses or expenses that have been reimbursed from other sources or that other sources are obligated to reimburse”;
- Not use PRF for any purpose for which CARES Act funds cannot be used, such as:
- Paying individual salaries in excess of $197,300
- Funding lobbying, abortion, embryonic research, needle exchange, and similar activities;
- Doing business with any entity that requires employees to sign confidentiality agreements that prohibit reporting of fraud, waste, or abuse;
- Doing business with a corporation that has unpaid federal tax liability or where the corporation’s principals been convicted of a felony federal crime in the preceding 24 months (TIP—May require new representations and warranties in vendor contracts);
- Not balance bill patients for out-of-pocket expenses other than what the patient would pay if care were provided by an in-network provider;
- Submit reports as HHS deems necessary to monitor compliance; and
- Cooperate with any government review or investigation.
HHS has provided guidance on what satisfies the T&C, but the guidance is only minimally instructive. HHS guidance does not cover every application or use of the PRF and gives providers discretion in determining how to use the PRF (within the confines of the T&C). This means that providers should implement sound practices to support and document use of the PRF, including:
- Monitor HHS FAQ related to PRF updates;
- Develop policies and procedures to address T&C requirements;
- Analyze whether new processes are needed and whether additional contract provisions are needed for vendor and other service agreements;
- Develop and implement an effective audit trail to track the PRF;
- Use a PRF team as a collective reasonableness test, including listening to team members when they question whether a certain use of PRF is appropriate and documenting any response to the question or concern (TIP—A disgruntled or disregarded employee is often the source for a whistleblower action, so providers should listen and respond when issues are raised); and
- Maintain supporting information and documentation in a separate folder or location to show “what you’re doing” and “why you’re doing it.”
In other words, the primary healthcare compliance mantra holds true—Document, Document, Document!
Again, detailed instructions for the audit process are to be issued by August 17th. Once those instructions are issued, other key dates include:
- October 1, 2020—HHS reporting system will be available
- February 15, 2021—Deadline to report for COVID-related expenses/losses as of December 31, 2020
- July 31, 2021—Final deadline to report COVID-related expenses/losses that extend into 2021.
For more information about the PRF, you can visit HHS at its site for the CARES Act Provider Relief Fund.