So, you were one of the lucky organizations to receive Provider Relief Funds (PRF) from the Department of Health and Human Services and have been wondering what the next step will be and when. The long-awaited reporting portal was finally opened in July 2021 and the first reporting deadline of September 30, 2021 is, now, quickly approaching. Your reporting period is based on when you received your PRF. In addition to the opening of the portal, new Frequently Asked Questions (FAQs) were posted that clear up some of the ongoing confusion and questions that have been circulating since the funds were first announced. Any healthcare provider that received at least $10,000 from the Provider Relief Fund during a payment received period, must use the funds and report according to the chart below
Here are some highlights from the frequently asked questions that may help some of you:
- Providers must return any unused funds to the government within 30 calendar days after the end of the applicable Period of Reporting
- For purchases of tangible items made using PRF payments, the purchase does not need to be in the provider’s possession to be considered eligible, but the costs must be incurred before the deadline to use funds. Providers must follow their basis of accounting to determine the period the expense was incurred
- FQHCs and FQHC look-alikes must use COVID supplemental grant awards before PRF
- If a provider has submitted an application to FEMA but has not yet received the FEMA funds, they should not report the requested FEMA amounts in the PRF reporting portal. If a provider receives FEMA funds retroactively covering a reporting period, they must not use them on expenses already covered by PRF
- Each quarter is a standalone lost revenue calculation. Only quarters where lost revenues are demonstrated will be totaled to determine the aggregate lost revenue amount
- PPP or any other amount reported in “Other Assistance Received” is NOT included in the lost revenue calculation
- Lost revenues can be carried forward if not fully utilized to offset PRF payments in a reporting period
- There will be no extensions for reporting and providers who do not report will be deemed not in compliance with the terms and conditions and funds may be subject to recoupment
- There will be no extensions for use of PRF funds
Because PRF are federal funds you also need to be aware of the impact on the reporting as part of Uniform Grant Guidance Auditing considerations i.e., the single audit. The new FAQ, and our review of a draft OMB compliance supplement for 2021 does provide some clarity for reporting on the Schedule of Expenditures of Federal Awards (SEFA). Period 1 payments, those received 4/10/20-6/30/20, reported in the HHS portal before 9/30/21, will be reported on the 12/31/21 SEFA for calendar year filers. For Period 2 and 3 payments, will be reported on the 12/31/22 SEFA and period 4 will be reported on the 12/31/23 SEFA for calendar year filers. This may be confusing since the expenditures reported on a future SEFA were likely incurred in a past year.
What are some of the common allowable expenses to be considered for PRF reporting?
All expenses must be “attributable to coronavirus”, used to prevent, prepare for, and/or respond to coronavirus, and not reimbursed by another source. Items must be attributable to coronavirus and “not normally incurred”.
- Healthcare related expenses:
- Supplies – expenses paid for the purchase of supplies used to prevent, prepare for, and/or respond to coronavirus. Examples include PPE, hand sanitizer, supplies for patient screening.
- Equipment - expenses paid for the purchase of equipment used to prevent, prepare for, and/or respond to coronavirus. Examples include ventilators, updates to HVAC systems, etc. Capital equipment and inventory may be fully expensed in cases where the purchase was directly related to prevent, prepare for, and respond to the coronavirus. Examples include ventilators CT scanners, ICU equipment put into immediate use or held in inventory, masks, face shields, gloves, gowns, biohazard suits, general PPE, disinfectant supplies, HVAC system, retrofitting a COVID-19 unit, enhancing or reconfiguring ICU capabilities, leasing or purchasing a temporary structure to screen and/or treat patients, leasing a permanent facility to increase hospital or nursing home capacity.
- IT – Expenses paid for IT or interoperability systems to expand or preserve care delivery during the reporting period such as EHR licensing fees, telehealth infrastructure, increased bandwidth, and teleworking to support remote workforce.
- Facilities – Expenses paid for facilities related costs used to prevent, prepare for, and/or respond to coronavirus, such as lease or purchase of permanent or temporary structures, or to modify facilities to accommodate patient treatment practices revised due to coronavirus.
- Other healthcare related expenses – any other expenses not captured above that were paid to prevent, prepare for, and/or respond to coronavirus.
- General & Administrative expenses:
- Mortgage/Rent – payments related to mortgage or rent for a facility (attributable to coronavirus).
- Insurance – insurance premiums paid for property, malpractice, business insurance, or other insurance relevant to operations.
- Personnel – workforce-related actual expenses paid to prevent, prepare for, and/or respond to coronavirus such as workforce staffing, straining, temporary employees or contractor payroll, overhead employees, or security personnel. Expenses to secure and maintain adequate personnel such as offering hiring bonuses and retention payments, childcare, transportation, and temporary housing are allowable if the activity generating the expense was newly incurred after the declaration of the Public Health Emergency and the expenses were necessary to secure and maintain adequate personnel. Hiring additional security personnel, increased hazard pay.
- Fringe Benefits – extra benefits supplementing an employee’s salary, which may include hazard pay, travel reimbursement, and employee health insurance.
- Lease payments – new equipment or software leases.
- Utilities/Operations – lighting, cooling/ventilation, cleaning, or additional third-party vendor services not included in “Personnel.”, increased cost of utilities to operate temporary facilities.
- Other General & Administrative Expenses – Costs not captured above that are generally considered part of overhead structure.
- Lost Revenue:
- Patient related revenue (exclude rent, interest, prior period adjustments, etc.)
- 3 Calculation Methods
- 2019 Actual vs. 2020 Actual
- 2020 Budget vs. 2020 Actual
- Budget must have been approved before CARES Act passed on March 27, 2020
- "Any other reasonable method"
- Subject to greater scrutiny and potential HRSA audit
- Can be beneficial if years are not comparable (started or discontinued a service line for example)
This is a lot of information and may have created more questions rather than answering your questions. If that is the case, please reach out to your engagement team and they will assist you in determining the proper reporting.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.