The Evolution of Provider Relief Funds: Current Status of Rules for Keeping the Funds

The Department of Health & Human Services continues to release significant updates with respect to provider relief funds.  Given the critical need for the funds and the likely government audits down the road, providers should follow these and future updates closely.

Relief Fund Attestation Deadline Extended

As discussed in previous articles, providers who receive relief funds must sign an attestation confirming receipt of the funds and agreeing to the terms and conditions of payment. HHS initially required that the attestation be signed within 30 days of receipt of funds. On May 7, 2020, HHS announced that the deadline would be extended to 45 days from receipt of funds.  As with the initial 30-day deadline, not returning the payment within 45 days of receipt of payment will be viewed as acceptance of the Terms and Conditions. Therefore, it is imperative to understand all terms and conditions prior to this deadline.  For example, if a provider intends to reject the funds because the provider does not want public disclosure of its relief fund payment to be public (which could allow other parties to estimate the provider’s revenue), it should do so prior to the 45 day period.

Clawback Concerns

We previously described the differences in how initial funding provided on April 10 and 17, 2020 and subsequent funding on April 24, 2020, were calculated (e.g., the initial funding was based on a provider’s 2019 Fee for Service Medicare claims and the subsequent funding was based on 2018 net patient revenue). HHS later issued a calculation formula for purposes of distributing both the initial $30B and an additional $20B. Providers have been concerned that, where there is a difference in the amount received from both the $30 billion and $20 billion funds is higher than would have been calculated based on the new HHS formula, the agency may “claw back” the excess funds.  However, in a conversation with industry trade associations, HHS Deputy Secretary Eric Hargan confirmed that HHS does not intend to take back any of the funds from the first distribution based on the calculation determined under the second formula.

HHS Will Not Pursue Relief Fund Recoupment If Conditions Are Followed

In a May 6, 2020 update to the General Distribution “Frequently Asked Questions” document we previously commented on, HHS responded to the following question: “Does HHS intend to recoup any payments made to providers not tied to specific claims for reimbursement, such as the General Distribution payments?”  HHS responded:

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.

(emphasis added).  We have previously noted that providers should carefully document lost revenues and increased expenses attributable to COVID-19.  HHS’ new guidance on recoupment confirms the importance of documentation and should help providers understand the lens through which HHS will review providers’ use of relief funds and therefore where providers should focus their documentation. Providers will find it imperative that they track COVID-related labor costs, supply costs, unplanned capital expenditures, and any other related cost.

Varying Terms and Conditions

HHS initially released a single set of Terms and Conditions for providers that received relief funds. However, HHS has subsequently issued separate Terms and Conditions depending on the funding type (e.g., funding from the initial $30 billion, funding from the subsequent $20 billion, or funding from the Rural Provider Relief Fund). All Terms and Conditions are accessible here.  It is important for providers to carefully review the Terms and Conditions applicable to them, as there are differences.  For example, the Terms and Conditions applicable to recipients of the $20 billion fund contain the following, which are not included in the $30 billion Terms and Conditions:

• “The Recipient shall also submit general revenue data for calendar year 2018 to the Secretary when applying to receive a Payment, or within 30 days of having received a Payment.”
• With regard to HHS publicly publishing funding made to providers, “[t]he Recipient acknowledges that such disclosure may allow some third parties to estimate the Recipient’s gross receipts or sales, program service revenue, or other equivalent information.”

How to Return Relief Funds

In the FAQ document mentioned above, HHS clarified the following steps should a provider wish to decline the relief funds. Note that HHS has not confirmed the steps for returning a portion of the relief funds. At this point, the mechanisms seem to contemplate an all or nothing approach:

1. Providers should go into the attestation portal and indicate they are rejecting the funds.
2. The Attestation Portal will guide providers through the attestation process to reject the funds.
3. The next step depends on whether the funds were received through the Automated Clearinghouse (ACH) or paper check:
   • – If the provider received the money via ACH, the provider must contact their financial institution and ask the institution to refuse the received ACH credit by initiating an ACH return using the ACH return code of “R23 – Credit Entry Refused by Receiver.”
   • – If a provider was paid via paper check, after rejecting the payment in the 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.

For more information, please contact Hedy S. Rubinger or Alexander B. Foster.