Provider Relief Fund
HHS added new FAQs on 5/6/2020 available HERE.
- Deadline to attest extended: The deadline for providers to attest to the terms and conditions of the Provider Relief Fund has been extended from 30 days to 45 days after receipt of payment. Providers that received funds from the first round of the ‘general distribution’ on April 10th now have until May 24,th to attest. Per the press release announcing the extension, choosing not to return the payment within 45 days of receipt will be viewed as acceptance of the terms and conditions. However, as of press time the terms and conditions have not been updated yet to reflect the new information at this point.
- Public disclosure: As part of the terms and conditions, providers agree to allow HHS to publicly disclose the amount received from the fund. On May 6th, HHS released a list of recipients who have accepted the terms and conditions of payment so far and published the amount received from the general distribution. This information is available on the CDC website HERE.
- Returning the funds: The HHS website and FAQ document direct providers to the attestation portal for instructions on returning the funds. Per the portal and the HHS Provider Hotline (866-569-3522) providers must contact their bank to request returning the payments to HHS which were directly deposited. The bank will do a return ACH with a code of R23.
- Balance Billing: HHS addresses the questions surrounding the promise against ‘balance billing’ as a part of the terms and conditions. Since HHS had clarified that they broadly viewed all patients as potential COVID-19 cases, it was uncertain if the condition against balance billing also broadly applied to all patients. Per the FAQ document, HHS says this only applies to “a presumptive or actual case of COVID-19” and not all care for all patients. HHS further elaborates that:
“A presumptive case of COVID-19 is a case where a patient’s medical record documentation supports a diagnosis of COVID-19, even if the patient does not have a positive in vitro diagnostic test result in his or her medical record.”
- 2nd round of funds: Some of those that received payment from the first $30 billion are eligible to receive a second round of funding by submitting or verifying revenue data through a second HHS portal. The two tranches of payments (first and second) use different methodologies when determining payment amounts. The first payment uses Medicare Fee-for-Service data from 2019 and the second payment uses all payer revenue data from 2018. HHS is currently accepting applications for the second round of funding through the General Distribution Portal HERE. The HHS user guide for the application process is available HERE.
Currently, HHS says there is no deadline to submit revenue data and applicants will be given equal consideration for funding regardless of when they apply. The following is from a recent article by the law firm Faegre Drinker HERE
“In general, if a provider’s revenue from Medicare fee-for-service is less than 33% of its net patient revenue, there should be an additional payment made from the second $20 billion tranche of General Distribution funds. If Medicare fee-for-service revenue accounts for a greater percentage of the provider’s net patient revenue, HHS may recoup the difference, although HHS’s plans in this regard have not yet been announced.
HHS has not announced a deadline to apply for these funds. Though HHS will not assess distributions from the additional $20 billion in Provider Relief Funds on a first-come, first-served basis, in response to our telephone inquiry, an HHS representative advised us that distributions will be made until the available funds run out.”
- “Recouping funds” (Overpayments): Previously, HHS added language to the attestation portal cautioning providers to estimate their total amount to be allocated from the fund before completing the attestation to accept the payment(s). This language has subsequently been removed, but it still provides some guidance regarding how this might work in the future if they reinstitute this method. Essentially, it said if the amount received from the first round is greater than the estimated total amount allocated, HHS asks that recipients contact the hotline. The text on the portal previously read as follows:
“You should only attest if you believe the payment you received is consistent with your estimated allocation. To calculate your estimated total allocation, divide your “Gross Receipts or Sales” or “Program Service Revenue” by 2.5 trillion and then multiply by 50 billion. ((Gross Receipts or Sales) / 2,500,000,000,000) * 50,000,000,000” – This amount is approximately 2% of all revenue for 2018″
“To estimate the amount likely to be received via this portal application, subtract the amount of payments already received from your total estimated allocation above.”
“Please do not attest if the payments you have received already exceed your estimated total allocation. Please contact the CARES Provider Relief hotline at (866) 569-3522 if you believe that you have received an overpayment.”
In the new updated FAQ document, HHS provides the following explanation to the question of whether they intend to recoup “overpayments”:
“The Provider Relief Fund and the Terms and Conditions require that recipients be able to demonstrate that lost revenues and increased expenses attributable to COVID-19, excluding expenses and losses that have been reimbursed from other sources or that other sources are obligated to reimburse, do not exceed total payments from the Relief Fund. Generally, HHS does not intend to recoup funds as long as a provider’s lost revenue and increased expenses exceed the amount of Provider Relief funding a provider has received. HHS reserves the right to audit Relief Fund recipients in the future to ensure that this requirement is met and collect any Relief Fund amounts that were made in error or exceed lost revenue or increased expenses due to COVID-19. Failure to comply with other Terms and Conditions may also be grounds for recoupment.”
- $75 billion additional funds: HHS has not released information on how the $75 billion of additional funding received from the interim spending bill, signed on April 24th, will be disbursed so it is uncertain how long the ‘general distribution’ funding will last.
Paycheck Protection Program
- New guidance: Following the re-launch of the Paycheck Protection Program, the SBA released new guidance in an effort to avoid some of the major issues with the initial launch of the program. Namely, the SBA has new guidance which states a business must certify and can only apply for a PPP loan if the business feels it is without adequate access to liquidity that will support its ongoing operations.
- Returning the funds: Additionally, the SBA has set up a ‘safe harbor’ (available until May 14th) for businesses who need to return the loans based on the new guidance. The SBA continues to release information through their FAQ document on the program, available HERE.
- PPP Loan Forgiveness: Some of those who have already received PPP loans are now looking to navigate the ‘forgiveness’ aspect of the program, which will ultimately be up to the banks to decide on the practical application of the process. The program states that:
“Loan amounts will be forgiven as long as: 1) Loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8-week period after the loan is made; and 2) Employee and compensation levels are maintained. “
Increasingly we’re seeing and hearing comments similar to this, which was made on an industry web forum:
“Worst case scenario, you have to pay the money back over two years with 1% interest. Until I have written documentation of forgiveness, I’m treating it all as a loan. Honestly, I think the best strategy is to keep good records, relax, and wait for your bank to prepare to begin calculating forgiveness. My guess is we won’t know results until the 3rd quarter.”
Uncertainty: However, there is still uncertainty on the specifics of calculating the forgiveness amount, tracking of allowable expenses, and filing taxes. Many small businesses with PPP loans have indicated they are likely going to need to start spending the funds while waiting for more guidance in this area.
Recommendations: Until more information is officially released, groups can consider the following steps to support the known requirements for loan forgiveness:
- Separate the funds – keep PPP funds in a separate account until spent in full and/or repaid back to the SBA (for any non-forgiven amount)
- Remember, funds cannot be used for all types of business expenses, even if it is a normal, recurring expense such as office supplies. To be forgiven, funds can only be used for payroll costs, rents, utilities, and interest on loans.
- Maintain documentation – keep a spreadsheet summarizing each qualified expense, including dates and notes that substantiate the costs. Consider keeping another file that contains other supporting documentation like utility invoices or loan statements.
- Consolidating as much documentation as possible will increase the chances that you can quickly and accurately assess forgiveness with your lender once the time comes later in the year.
- Check for outside resources – many national payroll companies have developed PPP compliant reports that help track payroll and benefits. The American Institute of CPA’s released a helpful step-by-step guide on determining loan forgiveness, available HERE.
More information is expected to be available over the coming days on both the HHS Provider Relief Fund and the Paycheck Protection Program. As always, ADVOCATE will continue to keep you informed on the issues impacting medical groups as they develop.
Manager, Regulatory Affairs