HHS Clarifies Provider Relief, While Heroes Act Adds New Funds and Parameters

Regulation | May 15, 2020 | by Nicole Fallon

This week HHS staff provided new insights and clarifications on how they are approaching the distribution and implementation of the Provider Relief Fund(PRF), while the Heroes Act was introduced in the House and includes an additional $100 billion for PRF and new parameters for how the program is run.

HHS Offers Some Answers on PRF

As part of a LeadingAge Member Update call on May 12, Nick Uehlecke, senior advisor to HHS Sec. Alex Azar, discussed plans for future distributions from the PRF that will benefit aging services providers. Specifically, he said they have been sifting through data to ensure they have appropriately identified the Medicaid-only providers who still need funds. He indicated that 333 nursing homes would fall into this category but did not provide a date by which these providers could expect to receive a payment. He also mentioned that HHS is working on a SNF-based tranche of funds recognizing the challenges nursing homes are facing with increased costs for personal protection equipment (PPE) and labor. HHS is also evaluating whether payments from this tranche would be receive an upward adjustment for those providers in COVID-19 hotspots.

On the topic of defining eligible expenses and lost revenues for the program, Uehlecke stressed that HHS is trying to balance program integrity with the need to give providers enough flexibility on which expenses and revenues will be eligible under the program. He pointed out that if HHS provides a defined list of eligible expenses then it may exclude some provider expenses that are COVID-19 related He said that a good guide for providers is to ensure that there is some nexus between their expenses or lost revenues and COVID-19 suggesting HHS is not going to approve a provider buying a jet, for example. However, he did say that increased laundry and food costs would likely be considered directly related. In addition, at this point, it is not clear when eligible expenses or lost revenues will have to be incurred to be counted against the payments received. Ideally, a provider wants to receive less money from PRF than it incurred in expenses and lost revenues. Uehlecke indicated that HHS believes that the public health emergency(PHE) will remain in effect until there has been a steady decline in COVID-19 cases and deaths across the country over a 14-day period. So, expenses and lost revenues during the PHE should be eligible. HHS is working on finalizing FAQs on these issues currently.

PRF payments were made to providers based off of their 2019 net patient revenue for their entire organization. For some providers, this includes multiple service lines such as independent living and assisted living in addition to their nursing home or home health agency. Uehlecke indicated that given that the payment was made based off of an organizations Tax Identification Number (TIN) that he believes HHS would expect providers to report COVID-19-related lost revenues for the all business lines under that TIN and providers would not need to break these out by service line (e.g.. Medicare SNF only). However, an organization should not co-mingle expenses and lost revenues across multiple TINs where each TIN received its own payment. He was quick to add that this guidance has not yet been confirmed by HHS in writing yet and there are some legal questions underlying it. This particular question is on HHS’s list to get answered. So providers may want to wait until this position is stated in writing before submitting their financial data via the General Distribution portal if this is a concern. Providers have until May 24 to attest to the terms and conditions for the first payment received (if received on April 10) and 45 days from receipt of each payment for all other payments. 

Proposed Heroes Act Provisions

Also this week, the House Democrats introduced the Heroes Act which includes an additional $100 billion appropriation for the PRF and new provisions for how the dollars are to be distributed by HHS, spent by providers and reported upon. One important note, if this bill passes as it is currently written, these new parameters would not only apply to the $100 billion of new money appropriated to PRF from the Heroes Act and future appropriations, but also to any unobligated portions of the current PRF appropriations (from the CARES Act and the Paycheck Protection Program and Health Care Enhancement Act (PPPHCE)).

The Heroes Act would:

  • Establish an application process for providers to receive future funds. Up until now, HHS has operated the Provider Relief Fund by sending out funds and asking providers to submit documentation of lost revenues for March and April 2020. The House bill would change this process to requiring providers submit an application quarterly for payments to reimburse them for incurred eligible expenses and lost revenues.
    • These reimbursements would cover 100% of eligible expenses but only 60% of lost revenues after subtracting out other funds (not required to be repaid) that a provider received during the same quarter from the first 4 stimulus bills. 
    • Applications for reimbursement would need to be submitted quarterly within 7 calendar days of the end of the quarter.  
    • HHS would have 14 days from the end of the quarter (or likely only 7 days after a provider submits the application) to reimburse providers.
    • The bill would also allow providers to apply for reimbursement for expenses/lost revenues incurred in the first quarter of 2020 (beginning on or after January 1, 2020) within 7 days of the bill being enacted.

LeadingAge has some concerns about the formula and the timeframe for applying for funds. Related to the formula, the PRF terms and conditions explicitly prohibit providers from double dipping or being reimbursed more than once for the same expense. In addition, they indicate that providers cannot use PRF payments to cover expenses and lost revenues “that have been reimbursed from other sources or that other sources are obligated to reimburse.” Finally, it does not appear that all provider expenses are reimbursable from PRF and as such, those expenses may be covered by other stimulus bill funds such as the Paycheck Protection Program. As for the application timeframe, LeadingAge would be interested to hear from members whether they think 7 calendar days following the end of the quarter is enough time to be prepared to submit all of your eligible expenses and lost revenues incurred during the calendar quarter.

  • Specify a List of Eligible Expenses. The CARES Act provided a list of eligible expenses for which providers could use PRF payments. The Heroes Act restates and adds to this list: in vitro diagnostic tests, serological tests; mobile testing units; retention of workforce; and such other items and services as deemed appropriate by the HHS Secretary in consultation with stakeholders. The bill also explicitly excludes reimbursement of executive compensation or benefits including salary, bonuses, stock awards, or other financial benefits for an officer or employee whose compensation exceeds $425,000 in 2019. It also limits severance and 2020 compensation for these individuals.

LeadingAge believes these are helpful additions to the list of eligible expenses and appreciates that the language still allows HHS to consult with stakeholders about other items or services that should be able to be reimbursed from the PRF.

  • Creates a different approach than HHS to calculating lost revenues. The Heroes Act proposes to calculate lost revenues by first comparing a provider’s 2019 “net patient revenue” for the quarter to its 2020 “net patient revenue” for the same quarter. Next it would subtract any “savings” the provider achieved from foregone wages, benefits and payroll taxes resulting from furloughed or laid off workers during that quarter.  The House defines “net patient revenue” by adding up the weighted reimbursements that the provider receives in the following way: 200% of Medicaid reimbursements received plus 125% of Medicare reimbursements plus 100% of other reimbursements.

LeadingAge is continuing to analyze the impact of this new way of calculating lost revenue but at first glance it appears it would benefit those with high Medicaid lost revenues the most. We would be interested to hear how it may impact organizations that added new business lines in 2020 or providers who were forced to layoff or furlough staff due to social distancing and/or stay at home orders. Alternatively, HHS’s approach to this calculation, to date, allows a provider to compare budgeted to actual revenue for 2020, or year-over-year revenues.  

  • Instructs HHS to prioritize reimbursing providers for expenses first and then lost revenues when there are insufficient PRF funds.  
  • Details what providers must submit in the Application for reimbursement from the PRF. This includes: 1) documentation that you are an eligible health care provider; 2) valid tax identification number, or employer identification number or such other identification number that the Secretary may accept or assign; 3) an attestation that the reported eligible expenses or lost revenues occurred during the calendar quarter; 4) an itemized list of each eligible expense including those for uncompensated care; 5) whether the lost revenue in the 2020 calendar quarter exceeds 10% of net patient revenue for the corresponding 2019 quarter; 6) projections for the next calendar quarter’s eligible expenses and lost revenues; 7) the specific dollar amounts used for each element of the lost revenue calculation; and 8) any other information required by the HHS Secretary to determine COVID-19-related expenses and lost revenues.
  • Restates that providers receiving PRF dollars cannot balance bill patients. Establishes that if a provider is reimbursed from PRF for uncompensated care of uninsured individuals that the provider cannot bill the individual anything. For insured individuals, both in-network and out-of-netowrk providers are limited to charging the applicable in-network cost sharing prescribed by the plan 
  • Outlines HHS reporting requirements related to the PRF.
    • HHS Secretary must post list of all recipients of Provider Relief Funds within 7 days of enactment of the law and include all awards made. It then must be updated every 7 days thereafter until all funds are expended.
    • HHS Secretary to determine the reports to be submitted and documentation maintained by providers to comply with reporting requirements of the Act
    • Requires HHS OIG to issue a final report of audit findings to the House committees on: Energy and Commerce, and on Health, Education, Labor and Pensions, and the House and Senate Appropriations Committees within 3 years after final payments are made.
  • Defines in statute a number of terms related to implementing these provisions, such as: eligible health care provider, presumptive case, and participating and nonparticipating providers. These definitions do not include substantive changes from HHS’s interpretation to date or definitions contained in prior Acts such as the CARES Act.
  • Establish a penalty if providers are reimbursed for the same expenses or lost revenues from more than one source, or violate the executive compensation limitations. This includes permitting HHS to recoup up to the full amount of PRF payments made.
  • Place a $10 billion cap on uncompensated claims reimbursement from the PRF and only permits this funding to come from the unobligated balances from CARES and PPPHCE Act appropriations. So, preventing any of the $100 billion in Heroes Act PRF appropriation to be used for this purpose.

Keep in mind, this is just the beginning of the process for the bill. It will likely go through a number of changes before it reaches passage. If you have concerns about any of the provisions outlined above or suggestions for improving them, please email nfallon@leadingage.org so we can include them in our discussions with lawmakers as this bill winds its way through the process.