The bill, if passed and signed into law, would appropriate an additional $3 billion to the PRF, bringing the total to roughly $38 – 43 billion. There had been some previous discussions in Congress to target some of the new allocations for rural and Indian Health Service providers but these did not make it into the final bill after the appropriation was reduced to a much smaller number.

Of note, the bill would allow providers to calculate lost revenues for any PRF payments received using a budgeted to actual revenue comparison, as outlined by the June 2020 HHS FAQ guidance. However, only providers who had such a budget approved as of March 27, 2020 would be able to use this method of lost revenue calculation.

The June 2020 HHS FAQs discuss lost revenues in the following way:

“The term “lost revenues that are attributable to coronavirus” means any revenue that you as a healthcare provider lost due to coronavirus. This may include revenue losses associated with fewer outpatient visits, canceled elective procedures or services, or increased uncompensated care. 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 encourages the use of funds to cover lost revenue so that providers can respond to the coronavirus public health emergency by maintaining healthcare delivery capacity, such as using Provider Relief Fund payments to cover:

• • Employee or contractor payroll
  • Employee health insurance
  • Rent or mortgage payments
  • Equipment lease payments
  • Electronic health record licensing fees

You may use any reasonable method of estimating the revenue during March and April 2020 compared to the same period had COVID-19 not appeared. For example, if you have a budget prepared without taking into account the impact of COVID-19, the estimated lost revenue could be the difference between your budgeted revenue and actual revenue. It would also be reasonable to compare the revenues to the same period last year.”

It remains unclear from the June 2020 HHS FAQs whether these lost revenue calculations can be completed on a monthly or quarterly basis or if they must be done on an annual basis only. The only thing that is clear from the June 2020 HHS FAQs is that providers who had an approved budget as of March 27, 2020 can opt to calculate lost revenues by comparing budgeted to actual revenue or a year-over-year calculation.However, it is not clear if the approved budget to actual comparison will also be permitted for providers when they examine their first half of 2021. The reporting requirements (November 2020) indicate that the lost revenue calculations for 2021 are calculated by comparison to 2019 revenue.

While this approach will help eligible providers capture lost revenues by allowing them to normalize their year-over-year budgets, previously discussed bipartisan language was much more open-ended on this issue and would have permitted lost revenues to be calculated monthly, quarterly or annually. This bill is silent on this point. We expect that HHS will need to update its FAQs and  November 2020 reporting requirements further to reflect and clarify the change since it is inconsistent with the reporting requirements.

The bill also permits parent organizations to allocate any or all PRF payments received among their eligible health care provider subsidiaries. This includes both general distributions (e.g. Phase1 , 2 and 3) as well as targeted distributions, such as the Nursing Home Infection Control distributions and incentives. The original recipient of the funds retains responsibility for reporting the reallocated reimbursements.

Finally, through this bill, Congress reiterates that eligible health care providers must submit an application justifying the need for the funds and then instructs HHS to use 85% of remaining PRF dollars(estimated to be approximately $35-40 billion) plus the newly-appropriated $3 billion to cover providers’ financial losses and changes in operating expenses for the second half of 2020 and first quarter of 2021. This appears to leave the distribution of the remaining 15% to the discretion of the HHS Secretary and as such could continue to be used for targeted distributions.

Provider Relief Funds are available to HHS until expended but under the HHS FAQs and reporting guidance, providers must use what they are given by June 30, 2021.