This is the second of two posts discussing the June 11, 2021 updates to the PRF reporting requirements and FAQs.

As discussed in our earlier blog post, on June 11, 2021, the U.S. Department of Health and Human Services (“HHS”) released revised COVID-19 Provider Relief Fund (“PRF”) Reporting Requirements, superseding all prior versions of reporting requirements issued by HHS, along with associated revised PRF FAQs, Reporting Portal FAQs, and a Reporting Portal Registration User Guide that each make conforming changes. In addition to the new deadlines discussed in the prior post, the June 11 PRF updates offer providers more clarity into the the priority of eligible uses, required reporting elements, and instructions on how to return unused funds.

Responsibility for Reporting and Parent-Subsidiary Relationships

The updates clarify that responsibility for reporting rests with the entity that registers its Tax Identification Number (“TIN”) and reports on payments received by such TIN or subsidiary TINs (a “Reporting Entity”). While a parent entity may report on its subsidiaries’ General Distribution payments (Phases 1–3), regardless of whether the subsidiary’s TIN received such General Distribution payments directly from HHS or via a transfer from the parent, a parent entity cannot report on its subsidiaries’ use of Targeted Distribution payments at all. HHS notes that Targeted Distribution payments that are transferred from a parent to a subsidiary’s TIN face an increased likelihood of audit.

How to Report on Use of Funds

Reporting should be conducted based on the reporting entity’s normal basis of accounting (e.g., cash or accrual) and data should be reported in the following order:

  1. Interest Earned on PRF Payment(s). If applicable, Reporting Entities that held PRF payments in interest bearing accounts must report the dollar value of interest earned.
  2. Other Assistance Received. Reporting Entities that received assistance from other sources, as described in the “Data Elements” section of the updated Reporting Requirements, must report on such assistance received by quarter during the period of availability.
  3. Use of SNF / Nursing Home Infection Control Distribution Payments. If applicable, Reporting Entities that received such funds can submit consolidated reports of how such payments were used and any interest earned thereon.
  4. Use of General and Other Targeted Distribution Payments. Excluding SNF / Nursing Home Infection Control Distribution payments, Reporting Entities must report on expenses paid using General and Targeted Distribution PRF payments.
  5. Net Unreimbursed Expenses Attributable to COVID-19: Reporting Entities must report on unreimbursed expenses attributable to COVID-19 (net after application of other assistance and PRF payments) by quarter for applicable periods of availability, with such expenses segmented as General and Administrative and/or other Health Care-Related Expenses, as defined in the “Data Elements” section of the updated Reporting Requirements.
  6. Lost Revenues Reimbursement. Reporting Entities with leftover PRF payments (excluding SNF / Nursing Home Infection Control Distribution payments) may then apply such funds to patient care lost revenues, as applicable, up to the amount: (i) of the difference between actual patient care revenues, (ii) of the difference between budgeted (prior to March 27, 2020) and actual patient care revenues (corroborated by submissions of budgets approved prior to such date), or (iii) calculated by any reasonable method of estimating revenues (supported by a narrative explanation of the methodology, its reasonableness, and the nexus between lost revenues and COVID-19). Regarding options (i) and (ii), HHS notably revised the requirement that Reporting Entities submit revenues/net charges from patient care for calendar year 2020 to instead require submission of revenues/net charges from patient care (prior to netting with expenses) by payer mix (including out of pocket charges), and by quarter for each quarter during the period of availability.

HHS plans to make available supporting worksheets and a comprehensive user guide to aid in the reporting process. Details on specific terms of each required reporting above can be found in the “Data Elements” section of the updated Reporting Requirements, and Reporting Entities should closely review such provisions prior to submitting reports.

Additionally, the updates include certain changes to the FAQs that may impact reporting on and use of PRF payments. For example, the FAQs clarify the definition of “patient admission” to mean “the number of hospital admissions on a clinician’s order (i.e., direct admit) or formally admitted from the emergency department to the hospital (i.e., emergency admission)”, which definition provides more certainty than prior FAQs that described “admissions” as patients with “confirmatory diagnoses” or “COVID-19 positive admissions”.  It thus appears that HHS has moved away from earlier suggestions that only cases confirmed by  positive test results could be counted as COVID-19 cases (even when such tests were not generally available), as the new guidance now focuses on the hospital’s admitting diagnosis.

It should also be noted that commercial (for-profit) organizations that expend over $750,000 or more in annual award must still undertake either (1) a financial related audit of the award(s), conducted in accordance with Generally Accepted Government Auditing Standards, or (2) a Single Audit under 45 CFR 75.514.

Returning Unused Funds

The updated FAQs also finally provide long-awaited clarity to PRF recipients on how to return any unused PRF payments. If a recipient has unused funds retained from a given PRP, the recipient must return such unused funds through the reporting portal during the associated Reporting Period.

HHS’s Nod to the Future: More Money, More Transparency

The new detail provided by HHS is key to assuaging certain concerns that were, up to this point, unaddressed by the PRF guidance. Recipient providers should carefully review the updated reporting requirements as they prepare their submissions. As the so-called “Delta Variant” of COVID-19 spreads going forward, though, providers will have to weigh the prospect of more detailed reporting requirements, increased transparency, and possible (if not probably) future changes to the PRF program against the perceived degree of flexibility afforded to them by these updates and the need for additional (but still heavily restricted) funds to maintain operations.

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Proskauer’s cross-disciplinary, cross-jurisdictional Coronavirus Response Team is focused on supporting and addressing client concerns. We will continue to evaluate the American Rescue Plan Act, the CARES Act, the Consolidated Appropriations Act, 2021, related regulations and any subsequent legislation to provide our clients guidance in real time. Please visit our Coronavirus Resource Center for guidance on risk management measures, practical steps businesses can take, and resources to help manage ongoing operations.