CARES Act
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CARES Act Provider Relief Fund FAQ

CPAs & Business Consultants

Written By: Ashley Rabie, CPA, and Mary Kreider, CPA, CPPM


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The Provider Relief Fund provided for in the Coronavirus Aid, Relief, and Economic Security (CARES) Act supports American families, workers, and the heroic healthcare providers in the battle against the COVID-19 outbreak. The Department of Health and Human Services (HHS) is distributing $175 billion to hospitals and healthcare providers on the front lines of the coronavirus response.

The following are answers to frequently asked questions about the Provider Relief Fund, including how payments are calculated, the difference between general and targeted distributions, what the money can be used for, how to return a payment, and more.

1. What is the money for and what do providers need to do to keep it?

The funding is required to be used for necessary expenses to prevent, prepare for, and respond to COVID-19, as well as to recoup losses that are a direct result of COVID-19. Necessary expenses include:

  • supplies or equipment used to provide healthcare services for possible or actual COVID-19 patients;
  • workforce training;
  • developing and staffing emergency operation centers;
  • reporting COVID-19 test results to federal, state, or local governments;
  • building or constructing temporary structures to expand capacity for COVID-19 patient care or to provide healthcare services to non-COVID-19 patients in a separate area from where COVID-19 patients are being treated; and
  • acquiring additional resources, including facilities, equipment, supplies, healthcare practices, staffing, and technology to expand or preserve care delivery.

If the terms and conditions are met, then the funds will not be required to be paid back. Each recipient must keep adequate records to document their expenses and losses. The records that HHS will require have not yet been disclosed, but HHS will require recipients to submit future reports relating to the recipient’s use of its Provider Relief Fund money. HHS will notify recipients of the content and due dates of such reports in the coming weeks. The following are terms and conditions for the first and second distributions and current reporting requirements.

Terms and Conditions – Initial $30 Billion

Terms and Conditions – Additional $20 Billion

Current Information on Reporting Requirements

2. If I am unable to spend the funding on qualified expenses or assign to losses, received multiple payments, or no longer would like the funding, how do I return the payment?

HHS has not yet detailed how recoupment or repayment will work. However, the terms and conditions associated with payment require that the recipient be able to certify, among other requirements, that it was eligible to receive the funds (provided after January 31, 2020, diagnoses, testing, or care for individuals with possible or actual cases of COVID-19) and that the funds were used per allowable purposes (to prevent, prepare for, and respond to the coronavirus). Additionally, recipients must submit all required reports as determined by the Secretary. Non-compliance with any term or condition is grounds for the Secretary to direct the recoupment of some or all the payments made.

HHS will have significant anti-fraud monitoring of the funds distributed, and the Office of Inspector General will provide oversight as required in the CARES Act to ensure that federal dollars are used appropriately.

Providers may return a payment by going into the attestation portal within 90 days of receiving payment and indicating they are rejecting the funds. The CARES Act Provider Relief Fund Payment Attestation Portal will guide providers through the attestation process to reject the funds.

To return the money, the provider needs to contact their financial institution and ask the institution to refuse the received Automated Clearinghouse (ACH) credit by initiating an ACH return using the ACH return code of “R23 – Credit Entry Refused by Receiver.” If a provider received the money via ACH, they must return the money via ACH. If a provider was paid via paper check, after rejecting the payment in the Payment Attestation Portal, the provider should destroy the check if not deposited or mail a paper check to UnitedHealth Group with notification of their request to return the funds.

If received via check, and the recipient has not yet deposited, destroyed, shredded, or securely disposed of it, or the provider has already deposited the check, then they should mail a refund check for the full amount payable to “UnitedHealth Group” to the address below. Please list the check number from the original Provider Relief Fund check in the memo.

UnitedHealth Group
Attention: CARES Act Provider Relief Fund
PO Box 31376
Salt Lake City, UT 84131-0376

If your bank does not allow you to return the payment electronically, contact UnitedHealth Group’s Provider Support Line at (866) 569-3522 (for TTY, dial 711). 

3. Can I receive a new payment after originally rejecting a Targeted Distribution?

No, HHS will not issue a new Targeted Distribution payment to a provider that received and then subsequently rejected and returned the original payment. The provider may be considered for future distributions if it meets the eligibility criteria for that distribution.

If a provider would like to reject one payment, the provider may still accept future distribution payments. The provider must use the Payment Attestation Portal to accept or reject payments.

If you affirmatively attested to a Provider Relief Fund payment already received and later wish to reject those funds and retract your attestation, you may do so by calling the provider support line at (866) 569-3522; for TTY dial 711. Note: HHS is posting a public list of providers and their payments once they attest to receiving the payment and agree to the Terms and Conditions.

4. What can the money be used for?

Funding can be used to prevent, prepare for, and respond to COVID-19. HHS expects that it would be “highly unusual” that these expenses would have been incurred before January 1, 2020.

Funding can also be used to recoup losses that are associated with fewer outpatient visits, canceled elective procedures or services, or increased uncompensated care. Providers can use Provider Relief Fund payments to cover any cost that the lost revenue otherwise would have covered, so long as that cost prevents, prepares for, or responds to coronavirus. Thus, these costs do not need to be specific to providing care for possible or actual coronavirus patients, but the lost revenue that the Provider Relief Fund payment covers must have been lost due to coronavirus. HHS encourages the use of funds to cover lost revenue so that providers can respond to the coronavirus public health emergency by maintaining healthcare delivery capacity, such as using Provider Relief Fund payments to cover:

  • Employee/contractor payroll (employee payroll limited to $197,300/person [executives])
  • Employee health insurance
  • Rent/mortgage payments
  • Equipment lease payments
  • Electronic health record licensing fees

5. What is the difference between the General Distributions and the Targeted Distributions?

The $50 billion General Distribution is allocated proportionally to providers’ share of 2018 net patient revenue. The allocation methodology is designed to provide relief to providers who bill Medicare fee-for-service, with at least 2% of that provider’s net patient revenue regardless of the provider’s payer mix. Payments are determined based on the lesser of 2% of a provider’s 2018 (or most recent complete tax year) net patient revenue or the sum of incurred losses for March and April. Payments began on April 10. 

HHS is allocating Targeted Distribution funding to providers in areas particularly impacted by the COVID-19 outbreak, rural providers, providers of services with lower shares of Medicare reimbursement or who predominantly serve the Medicaid population, and providers requesting reimbursement for the treatment of uninsured Americans. The fast and transparent dispersal of funds gives relief to those providers who are struggling to keep their doors open. Providers had to apply for these Targeted Distribution funds by June 3. Payments began on April 24 and the HHS is still reviewing applications, so some of the money is still coming.

6. How are eligibility and the payment amount determined? What is the maximum amount distributed?

For General Distributions

First, the provider must have billed Medicare on a fee-for-service basis in 2019. Second, the provider must have provided diagnoses, testing, or care for individuals with possible or actual cases of COVID-19.

The distributions are based on the lesser of 2% of a provider’s 2018 (or most recent complete tax year) gross receipts or the sum of incurred losses for March and April. If the initial distribution that was received between April 10 and April 17 was determined to be at least 2% of the annual gross receipts, then the provider may not receive additional General Distribution payments.

To calculate the 2%, providers should use this equation:
(Individual Provider Revenues/$2.5 Trillion) X $50 Billion = Expected Combined General Distribution

Providers should work with a tax professional for accurate submission. This includes any payments under the first $30 billion General Distribution as well as under the $20 billion General Distribution allocations. Providers may not receive a second distribution payment if the provider received a first distribution payment of equal to or more than 2% of gross receipts.

For Targeted Distributions

Rural Targeted Distributions:

The base payment will account for Rural Health Clinics (RHCs) with no reported Medicare claims, such as pediatric RHCs, and Community Health Clinics lacking expense data, by ensuring that all clinical, non-hospital sites receive a minimum level of support no less than $100,000, with additional payment based on operating expenses.

Rural acute care hospitals and Critical Access Hospitals will receive a minimum level of support of no less than $1,000,000, with additional payment based on operating expenses.

COVID-19 High Impact Area Targeted Distributions:

Must have had at least 100 COVID-19 inpatient admissions for initial distributions. Hospitals that received this funding accounted for more than 70% of the national COVID-19 admissions reported by April 10, 2020.

Skilled Nursing Facilities Targeted Distributions:

$50,000 per facility and an additional $2,500 per bed. Eligible facilities have between 6 and 1,389 beds.

Must be certified under Medicare and/or Medicaid.

Indian Health Service Targeted Distributions:

Was determined by:

a. Indian Health Service (HIS) Hospitals and Tribal Hospitals
Per hospital allocation = $2.815 million base + (Total Operating Expenses * 3%)

b. IHS and Tribal Clinics/Programs
Per IHS clinic allocation = Base amount of $187,000 + 5% of (estimated service population * average cost per user)

c. IHS Urban Programs
Per IHS Urban Indian health allocation = Base amount of $181,250 + 6% of (estimated service population * average cost per user)

HHS is partnering with UnitedHealth Group to deliver the funds.

Medicaid Targeted Distributions:

Providers who received funding from the General Distribution will not receive funding. Payment from a Targeted Distribution does not affect eligibility. Must have filed in 2017, 2018, 2019 or is not required to file.

Safety Net Hospitals Targeted Distributions:

Distributions are a minimum of $5 million and a maximum of $50 million per hospital. These distributions are allocated to hospitals that serve a disproportionate number of Medicaid patients or provide large amounts of uncompensated care. Qualifying hospitals include:

  • Medicare Disproportionate Patient %
  • Age (DPP) of 20.2% or higher
  • Average Uncompensated Care per bed of $25,000 or more. For example, a hospital with 100 beds would need to provide $2,500,000 in Uncompensated Care in a year to meet this requirement
  • Profitability of 3% or less, as reported to CMS in its most recently filed Cost Report

7. Are the Provider Relief Funds taxable?

Currently, it is unclear if the funds are taxable or not. CMS will issue guidance about how Provider Relief Fund payments should be treated for purposes of uncompensated care and how it should be reported on cost reports.

Conclusion

Navigating the CARES Act Provider Relief Funds is complex. Yeo & Yeo will continue to monitor developments that affect your practice and keep you informed. For more information about how payments are calculated and how they apply to the various types of providers, visit the HHS website at https://www.hhs.gov/provider-relief/index.html, refer to the CARES Act Provider Relief Fund Frequently Asked Questions, or call your Yeo & Yeo professional.

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