HHS Clarifies Debated Provider Relief Fund Reporting Requirements

HHS is addressing Provider Relief Fund reporting requirements that have left recipients questioning how they can spend the financial aid from the federal government.

The federal department clarified in several Frequently Asked Questions (FAQs) published on the HHS website last week that expenses for capital equipment and inventory “may be fully expensed only in cases where the purchase was directly related to prevent, prepare for and respond to the coronavirus.”

For providers, that means they can use aid from the Provider Relief Fund to cover the expenses of ventilators and other intensive care unit equipment they needed to respond to the public health emergency.

The aid can also be used to cover the costs of masks, face shields, and other personal protective equipment, including disinfectant supplies.

Additionally, expenses for capital facilities can only be fully expensed if the purchase was directly related to preventing, preparing for, and responding to the COVID-19 pandemic, HHS clarified in an accompanying FAQ. For example, upgrading a heating, ventilation, and air conditioning (HVAC) system to support negative pressure units, retrofitting a COVID-19 unit, enhancing or reconfiguring ICU capabilities, leasing or purchasing a temporary structure to screen and/or treat patients, or leasing a permanent facility to increase hospital or nursing home capacity.

Providers using accrual or cash basis reporting should report the depreciation amount based on the capital equipment useful life, purchase price, and depreciation methodology otherwise applied, another new FAQ stated.

Additionally, providers may report an expense for items purchased with a useful life of 12 months or less in accordance with existing accounting policies, HHS explained.

HHS also made clear in another FAQ that providers should exclude any payments received or payments made to third parties for patient care provided outside of 2019 and 2020 when reporting net patient revenue per Provider Relief Fund reporting requirements.

The Provider Relief Fund reporting requirements in question have been problematic for clinicians, who have especially been confused by HHS’ guidelines on reporting lost revenue from the pandemic.

When HHS first published Provider Relief Fund reporting requirements, the department stated that providers could “use any reasonable method of estimating the revenue during March and April 2020 compared to the same period had COVID-19 not appeared. For example, if [hospitals had prepared a budget] without taking into account the impact of COVID-19, the estimated lost revenue could be the difference between … budgeted revenue and actual revenue.”

HHS later updated its requirements, including a new, stricter definition of “lost revenues attributable to COVID-19.”

Provider groups criticized HHS’ move, causing the department to walk back parts of its new definition. However, the American Hospital Association (AHA) has been looking for further clarification on issues such as third-party payments and capital purchases related to COVID-19.

The latest FAQs elucidate the issues AHA has brought up, but the hospital group is still calling on HHS to fully reinstate its original Provider Relief Fund reporting requirements from June.

“We urge you to address the concerns discussed above, fully reinstate the June reporting requirements and allow hospital systems to move targeted distributions within the system to follow COVID-19 patients,” the Association said earlier this month. “Hospital systems throughout the nation are relying on PRF distributions as Congress intended so that they can better withstand the staggering losses caused by this unprecedented public health crisis and continue to serve the patients and communities who depend on them. Retaining these funds as entitled under HHS’ June guidance will help them continue to serve their patients and communities.”

Providers who received over $10,000 from the Provider Relief Fund must report the use of the funds as of December 31, 2020, by February 15, 2021. The reporting window will open on January 15, 2021.

Providers who have not fully expended the funds by January 1, 2021, will have six more months to use the remaining money. HHS will require data and documentation on the use of the funds no later than July 31, 2021.