In the span of less than 90 days, the United States government made unprecedented changes to existing regulations and authorized the injection of nearly $300 billion of funding into the healthcare space – and they aren’t finished yet. These bold actions were taken to (hopefully) ensure that healthcare providers are able to remain open and service COVID-19 and other patients throughout the pandemic and beyond.
Below is a summary of a few key items of note for all healthcare providers.
Among other provisions, the CARES Act utilized waivers to considerably relax certain rules for various healthcare providers, on a temporary basis, to ensure that capacity can be stretched and patient loads maximized. The relaxation of certain requirements is beginning to be “rolled back”, in some respects as of early July 2020.
Initially, $100 billion in funding was appropriated to providers. Of that total, approximately $30 billion was released the week of April 6, 2020, in the “General Distribution”, based simply on the provider’s pro-rata portion of Medicare fee-for-service reimbursement to the national total. The final tranche of “General Distribution” funds was released based on CMS data and providers’ individual requests, shifting from the original calculation to net revenues in comparison to total national net revenues for eligible healthcare providers. Further targeted allocations were made to hospitals in “hot spots” for COVID-19 activity, rural facilities, skilled nursing facilities, tribal entities, Medicaid and CHIP providers, dentists, and others.
An additional $75 billion was authorized via later legislation (often referred to as “Phase 3.5”), which will likely be distributed almost entirely to hospitals on a targeted basis. As of the date of this posting, a large portion of these funds has not been released.
UPDATE – as of July 20, 2020, approximately $120 billion of the $175 billion of authorized funds have been disbursed, or are in the process of being released.
These funds are not loans and do not have to be repaid, assuming the funds are “spent” according to the terms and conditions found in the attestation and do not exceed lost revenues and direct and indirect expenses related to COVID-19. However, the funds do come with certain obligations. Chief among them is the requirement for a provider to attest, within ninety days of receipt of the funding, to several items regarding the usage of the monies and to maintain auditable records for future purposes.
Complete details are available here, which includes the attestation form.
Accelerated Medicare Payments
As of the date of this posting, more than $100 billion of Medicare accelerated payments have been processed and released by the Medicare Administrative Contractors (“MAC”). Nearly any provider that has recently billed Medicare was eligible for advanced payments, which are exactly as they sound –prepayments for services to be performed in the future. The available amount differs based on the type of the provider, as does the repayment term. However, in all cases, accelerated payments are interest-free for a period of time.
UPDATE – due to unprecedented and unanticipated demand, the Medicare Accelerated Payment program is now closed.
As of the date of this posting, competing bills are being debated in Congress. While details are scarce and the likelihood of passage uncertain, it is considered likely by most observers that there will be additional funding authorized and directed to healthcare providers (most likely hospitals) in the foreseeable future. The most likely figure will be an additional funding allocation of approximately $100 billion.
Ongoing Reporting Requirements
Providers who received stimulus exceeding a threshold of $150,000 were required to report these expenditures 10 days after each calendar quarter, beginning after June 30, 2020, per the Terms & Conditions. As of the date of this posting, the reporting portal is not yet open, and additional details are scarce.
UPDATE – in late June 2020, an update to the frequently asked questions (“FAQ”) section of the HHS provider relief website indicated that calendar quarterly reporting will not be required at this time. Rather, HHS will be requesting details of the usage of the distributed funds directly from selected providers, and future guidance will be made available in the coming weeks.
The Office of Management and Budget (“OMB”) is yet to provide guidance regarding the qualification/requirement of CARES Act and Phase 3.5 funds for inclusion and consideration for audits under the Uniform Guidance (often referred to as “Single Audits”). However, in minutes from their deliberations, it appears that the OMB is currently leaning strongly towards requiring such audits, for recipients that meet the threshold of expenditures (currently $750,000, but subject to change).
Additionally, existing federal law (45 CFR Section 74.26) subjects recipients of HHS funding (including for-profit and commercial entities) to “Single Audit” or compliance audits. As such, it would require additional legislation to remove or relax this requirement.
This lack of guidance is especially troubling for June 30, 2020, fiscal year-end healthcare providers, as well as for-profit entities that likely have never been required to obtain such as audit in the past. CRI will update this post as further information is obtained, and we strongly encourage you to speak to your auditors and advisors about these matters to plan accordingly.
On June 30, 2020, CRI held a Quick Hits webcast on various accounting, reporting, and other matters related to the CARES Act and Phase 3.5. This webinar explored items that are of importance to all healthcare providers, and we encourage you to view the webinar recording.
We plan to hold an additional Quick Hits webcast update in August.
These matters are evolving quickly, and we encourage you to reach out to your CRI Healthcare professional to help guide you through the resources and funding that is available to you. Thanks for all that you are doing, and we hope that you and your teams stay safe and well.