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Authored by Mark Ross and Alicia Caldwell

April 30 update: CARES Act provider relief funds

The U.S. Department of Health & Human Services (HHS) began distributing the remaining $20 billion of the $50 billion general distribution to Medicare providers, including skilled nursing facilities (SNFs). This will augment providers’ allocations so the whole $50 billion general distribution is proportional to providers' share of total 2018 net patient revenue.

Proportional distributions

The initial $30 billion was distributed between April 10 and April 17, and the remaining $20 billion began distribution on Friday, April 24. The first $30 billion general distribution was distributed proportionately to providers’ share of Medicare fee-for-service reimbursements in 2019. The remaining $20 billion general distribution is being distributed based off the providers’ revenue data they submit in CMS cost reports.

Required verification of revenue

Medicare providers for whom HHS did not have adequate cost report data on file will need to submit their revenue information to the General Distribution Portal to receive additional general distribution funds and agree to the Terms and Conditions for this additional distribution. Providers who received their additional money automatically will still need to submit their revenue information via the portal.

HHS published a General Distribution Portal FAQ on April 27, which identifies the following data points that providers will need to submit for use in allocating remaining General Distribution funds:

  1. A provider’s “Gross Receipts or Sales” or “Program Service Revenue” as submitted on its federal income tax return
  2. The provider’s estimated revenue losses in March 2020 and April 2020 due to COVID-19
  3. A copy of the provider’s most recently filed federal income tax return
  4. A listing of the TINs of any of the provider’s subsidiary organizations that have received relief funds but that DO NOT file separate tax returns

The FAQ also states that the information above may be used in allocating other Provider Relief Fund distributions. HHS states that lost revenue can be estimated by comparing year-over-year revenue, or by comparing budgeted revenue to actual revenue. For April 2020, an estimate of the total monthly loss based on data from the first few weeks in April or by extrapolation from March data is acceptable.

Providers who received funds from the general distribution also have to sign an attestation confirming receipt of funds, agree to the terms and conditions of payment and confirm the CMS cost report. Click here to sign attestation and accept the terms and conditions.

The terms and conditions include other measures to help prevent fraud and misuse of the funds. All recipients will be required to submit sufficient documentation to ensure that these funds were used for healthcare-related expenses or lost revenue attributable to coronavirus. There will be significant anti-fraud and auditing work done by HHS, including the work of the Office of the Inspector General.

Additional funding

In addition to the $50 billion general allocation there will be several targeted distributions of relief funding.

The COVID-19 Uninsured Program Portal, which allows healthcare providers who have conducted COVID-19 testing or provided treatment for uninsured COVID-19 individuals on or after Feb. 4, 2020, to request claims reimbursement, is now live. Providers can access the portal to register for the program here. Program registration began on April 27, 2020, and providers can begin submitting claims in early May 2020. Steps will involve enrolling as a provider participant, checking patient eligibility and benefits, submitting patient information, submitting claims and receiving payment via direct deposit.

There will be a $10 billion targeted distribution to hospitals in areas that have been particularly impacted by the COVID-19 outbreak. As an example, hospitals serving COVID-19 patients in New York, which has a high percentage of total confirmed COVID-19 cases, are expected to receive a large share of the funds. Hospitals were to apply for a portion of the funds by providing information via an authentication portal before 3 p.m. EST, Saturday, April 25, 2020, which included the total number of intensive care beds as of April 10, 2020, and total number of admissions with a positive diagnosis for COVID-19 from Jan. 1, 2020 to April 10, 2020. The distribution will take into consideration the challenges faced by facilities serving a significantly disproportionate number of low-income patients, as reflected by their Medicare Disproportionate Share Hospital (DSH) Adjustment.

There will also be a $10 billion allocation for rural health clinics and hospitals, most of which operate on especially thin margins and are far less likely to be profitable than their urban counterparts. This money will be distributed as early as next week on the basis of operating expenses, using a methodology that distributes payments proportionately to each facility and clinic.

Lastly, there will be a targeted distribution of $400 million for Indian Health Service facilities, distributed on the basis of operating expenses. Additional separate funding will be provided to providers who solely take Medicaid, including skilled nursing facilities and dentists.

HHS has announced additional allocations of $484 billion in the Paycheck Protection Program and Health Care Enhancement Act, which includes an additional $75 billion for hospitals, health systems and other providers. This will reimburse eligible healthcare providers for healthcare-related expenses or lost revenues not otherwise reimbursed that are directly attributable to COVID-19.

April 23 update: CARES Act provider relief funds

Eligible healthcare providers that have experienced increased expenses or lost revenue related to the coronavirus (COVID-19) have started receiving part of the $100 billion Provider Relief Fund included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted March 27.

“Eligible healthcare providers” include public entities, Medicare or Medicaid enrolled suppliers and providers, and for-profit entities and not-for-profit entities that provide diagnoses, testing or care for individuals with possible or actual cases of COVID-19.

$50 billion general allocation

According to a statement from the Department of Health and Human Services (HHS), $50 billion of the Provider Relief Fund is allocated for general distribution to Medicare facilities and providers impacted by COVID-19, based on eligible providers' 2018 net patient revenue. HHS distributed an initial $30 billion between April 10 and April 17 proportionate to an eligible providers’ share of Medicare fee-for-service reimbursements in 2019. The remaining $20 billion is being distributed beginning April 24. Since the distribution of the $50 billion general allocation is based on eligible providers’ 2018 net patient revenue, each providers’ share of the remaining $20 billion is expected to approximate the difference between what the provider has already been paid (i.e., their proportionate share of the $30 billion using 2019 Medicare fee-for-service reimbursements) and what the provider is entitled to be paid using 2018 net patient revenue (i.e., their proportionate share of the $50 billion using 2018 net patient revenue).

HHS has estimated that total 2018 revenues of Medicare facilities and providers is approximately $2.5 trillion. As such, providers can estimate their expected combined general revenue distribution through the following formula: (Individual Provider Revenues/$2.5 Trillion) X $50 Billion = Expected Combined General Distribution.

According to HHS, some providers will automatically receive an advance payment beginning April 24, based on revenue data they submit in Centers for Medicare & Medicaid Services (CMS) cost reports. Providers without adequate cost report data on file will need to submit their revenue information to HHS through an online portal that was not yet available at the time this article was prepared. Providers who receive their money automatically will still need to submit their revenue information through the online portal so that it can be verified.

Providers who receive funds from the general distribution have to sign an attestation (see CARES Act Provider Relief Fund Payment Attestation Portal) confirming receipt of funds, agree to the terms and conditions of payment, and confirm the CMS cost report.

All recipients will be required to submit documents sufficient to ensure that these funds were used for healthcare-related expenses or lost revenue attributable to COVID-19. HHS is expected to undertake significant anti-fraud and auditing work related to these funds.

Targeted allocations

The CARES Act includes targeted funding for hospitals in areas with high numbers of COVID-19 patients, as well as for rural clinics and hospitals.

  • $10 billion for hospitals in areas that have been particularly impacted by the COVID-19 outbreak. As an example, hospitals serving COVID-19 patients in New York, which has a high percentage of total confirmed COVID-19 cases, are expected to receive a large share of the funds.
  • $10 billion for rural health clinics and hospitals, most of which operate on especially thin margins and are far less likely to be profitable than urban hospitals. This money will be distributed based on operating expenses, using a methodology that distributes payments proportionately to each facility and clinic.

In addition, a portion of the $100 billion Provider Relief Fund will reimburse healthcare providers, at Medicare rates, for COVID-19-related treatment of the uninsured. Every healthcare provider who has provided treatment for uninsured COVID-19 patients on or after Feb. 4, 2020, can request claims reimbursement through the program. Steps will involve: enrolling as a provider participant, checking patient eligibility and benefits, submitting patient information, submitting claims, and receiving payment via direct deposit. Providers can register for the program beginning on April 27, 2020, and start submitting claims in early May 2020. Providers must abstain from "balance billing" any patient for COVID-19-related treatment. For more information, visit coviduninsuredclaim.hrsa.gov.

Finally, other providers will receive funding under the CARES Act, including skilled nursing facilities, dentists and providers that solely take Medicaid. HHS has not determined the methodology and timing of these distributions.

Next round of funding

The Paycheck Protection Program and Health Care Enhancement Act, passed by Congress on April 23, adds $75 billion to the Provider Relief Fund to be disbursed in a similar way to healthcare providers affected by COVID-19. The new legislation also includes an additional $25 billion for COVID-19 testing and contact tracing capabilities.

For more information on this topic, or to learn how Baker Tilly specialists can help,  contact our team.

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Revenue recognition considerations for governments during COVID-19