Paycheck Protection Program Flexibility Act
On 6/3/20, the Senate passed the Paycheck Protection Flexibility Act which is expected to be signed by the President. The legislation aims to ease the program’s forgiveness rules by adjusting the following:
- Adjusts the amounts allowed for non-payroll expenses: The act lowers the amount required to be spent on payroll to 60% from 75%, and allowable non-payroll expenses increase to 40% from 25%.
- Extends the amount of time the loan can cover, from 8 weeks to 24 weeks.
- Extends the time to repay any unforgiven portions of the loan, from 2 years to 5 years.
- Extends the ‘safe harbor’ date to restore workforce levels, from June 30th to December 31st, 2020.
- Allows that businesses may now defer payment of payroll taxes, which was previously not allowed under the CAREs act.
There is likely to be updated guidance from the Treasury and Small Business Association on the Paycheck Protection Program once the act is signed into law.
HHS Provider Relief Fund
The Department of Health and Human Services (HHS) continues to build onto their FAQ document (found HERE) on the Provider Relief Fund, issuing new additions of FAQs on 5/29 , 6/2, and 6/3. The newest additions mainly cover information for providers receiving targeted allocations or who may have been asked to resubmit revenue data for the second tranche of general distribution funds. However, in several additions on the $50 billion general distribution, HHS clarifies items from the terms and conditions which have been indirectly addressed by earlier FAQs.
Some of the key additions include:
Healthcare Related Expenses and Lost Revenues Defined
As stated within the Terms and Conditions, recipients of the Provider Relief Fund are to be used “to prevent, prepare for, and respond to coronavirus and shall reimburse the recipient only for healthcare-related expenses or lost revenues that are attributable to coronavirus.” HHS clarifies what expenses and lost revenues are considered as eligible for reimbursement in a new FAQ from 6/2.
Healthcare-related expenses remains a broad definition of a range of items and services purchased to prevent, prepare for, and respond to coronavirus. HHS provides examples such as purchasing supplies and equipment, COVID-19 workforce training, creating expansion sites, and acquiring additional resources.
Providers can use their Provider Relief Fund payment for such expenses incurred on any date, so long as those expenses were attributable to coronavirus and were used to prevent, prepare for, and respond to coronavirus. HHS expects that it would be highly unusual for providers to have incurred eligible expenses prior to January 1, 2020.
HHS also defines ‘lost revenue attributable to the coronavirus’ as any revenue a healthcare provider lost due to coronavirus. HHS provides examples of lost revenue such as decreased outpatient visits, canceled elective procedures or services, or increased uncompensated care. Stated in the FAQ:
“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 goes on to encourage recipients to use the funds to maintain the healthcare delivery system and gives examples on using the funds for items such as employee payroll and health insurance, rent or mortgage payments, equipment lease payments, and electronic health record licensing fees.
Provider Relief Funds and Other CAREs Act Funding
HHS addresses providers that may have utilized other COVID-19 related stimulus programs created by the CAREs act, such as the Paycheck Protection Program, by stating the following:
“There is no direct ban under the CARES Act on accepting a payment from the Provider Relief Fund and other sources, so long as the payment from the Provider Relief Fund is used only for permissible purposes and the recipient complies with the Terms and Conditions. By attesting to the Terms and Conditions, the recipient certifies that it will not use the payment to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse. “
Executive Level Pay Defined
HHS addresses the condition of the program related to using the funds to pay salaries in excess of the Executive Level II rate:
“The Terms and Conditions state that none of the funds appropriated in this title shall be used to pay the salary of an individual, through a grant or other mechanism, at a rate in excess of Executive Level II. The salary limitation is based upon the Executive Level II of the Federal Executive Pay Scale. Effective January 5, 2020, the Executive Level II salary is $197,300. For the purposes of the salary limitation, the direct salary is exclusive of fringe benefits and indirect costs. The limitation only applies to the rate of pay charged to Provider Relief Fund payments and other HHS awards. An organization receiving Provider Relief Funds may pay an individual’s salary amount in excess of the salary cap with non-federal funds. “
Returning Funds After Attesting
In the event a recipient accepted the funds but decides that they no longer wish to keep the payment, HHS directs recipients to the Provider Relief Hotline:
“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.”
There is not a deadline, at this time, to return funds that have already been attested to. Otherwise, recipients have 90-days from the receipt of payment to accept or reject the funds through the HHS
Attestation Portal (found HERE). As a reminder, if a recipient does not return the funds or complete the attestation within the time limit, HHS will view this as intent to keep the funds and comply with the terms and conditions.
Recoupment and Reporting Requirements Still Unknown
HHS clarifies that they have yet to detail the specifics of recoupment, repayment, and reporting under the program. However, HHS does include that recipients will need to be able to demonstrate that they were eligible to receive the funds and used the funds for the appropriate purpose (ie – prevent, prepare, respond to coronavirus or lost revenues due to coronavirus). HHS indicates that they may recoup all or some of the funds and will have significant anti-fraud monitoring resources to ensure the funds were used appropriately. HHS acknowledges that reporting requirements are still forthcoming and will eventually be available on the HHS Provider Relief Fund website (found HERE).
The full FAQ document on the HHS Provider Relief Fund is available HERE.
Please note, it is recommended to consult with legal and/or financial counsel when considering participation in any coronavirus relief programs.
As always, ADVOCATE will continue to keep you informed on the issues impacting medical groups as they develop.
Manager, Regulatory Affairs