On April 10, 2020, HHS announced the distribution of the first tranche of $30 Billion from the Provider Relief Funds authorized and appropriated under the CARES Act and deposited within HHS’s Public Health and Social Services Emergency Fund. The funds released in this tranche are different from the previously announced Accelerated and Advanced Payment Program and are being pushed out to all providers enrolled in the Medicare Fee-for-Service program. Medicare-enrolled providers should look for an ACH payment advice from Optum Bank (an affiliate of the UnitedHealth Group) labeled “HHSPAYMENT”.
Providers regularly paid by check can expect to receive a check within the next few weeks. The amount of the payment will reflect the receiving provider’s proportionate share of the $30 Billion, allocated based on the ratio of the provider’s 2019 Medicare FFS receipts (payments from MA plans are not included) to total 2019 Medicare FFS expenditures. Unlike the AAPP, these payments are grants, not loans, and need not be repaid by eligible providers who certify their willingness to abide by the Terms and Conditions within 30-days of receipt.
While the distribution will be welcome news to providers and achieves HHS’s goal of providing an immediate infusion of much needed capital into the nation’s health care system to address additional costs and losses associated with COVID-19, not all of those who receive these funds will benefit. Indeed, providers should look this gift horse carefully in the mouth since, contrary to HHS’s press release, many providers may not qualify for the funds and may end up needing to repay these deposits or risk exposure to liability under the federal False Claims Act.
Contrary to public statements by certain representatives of the administration, the funds do have strings attached and do come with limitations on their use. For example, only those providers involved in diagnosing, testing or treating actual cases of COVID-19 are eligible for these funds and dollars received must be used to prevent, prepare for, or respond to coronavirus and may cover only expenses or losses related to COVID-19 response.
Providers who receive and chose to keep at least $150,000 total in funds paid under various relief acts, will be responsible for providing quarterly reports detailing how the funds were spent and will also be required to adhere to Office of Management and Budget financial management and record-keeping rules. For these reasons, providers receiving these first tranche distributions would be well advised to take the following steps within 30-days of receipt: (a) segregate these funds or create a separate ledger entry to track these funds for internal accounting and possible external reporting purposes; (b) validate the amount of funds received using the formula provided by HHS; (c) determine their eligibility to retain the funds; (d) determine their ability to implement the necessary administrative requirements associated with retaining the funds; (e) submit the required certification if they elect to retain the funds; (f) assess whether any revisions or adjustment of their compliance programs will be necessary to comply with the Terms and Conditions for the funds; and (g) be on the lookout for further administrative requirements.