FAQs From HHS Provide Guidance on Provider Relief Fund Distributions Under The CARES Act

The U.S. Department of Health and Human Services (“HHS”) has been continually updating a helpful Frequently Asked Questions (“FAQ”) document on its website for hospitals and other health care providers that received payments from HHS’s Provider Relief Fund.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”; Pub. L. 116-136) appropriated $100 billion for eligible health care providers and suppliers for expenses and lost revenues attributable to the spread of SARS-CoV-2, the novel coronavirus that causes COVID-19. A little under a month later, Congress appropriated an additional $75 billion for this fund under the Paycheck Protection Program and Health Care Enhancement Act (“PPPHCEA”; Pub. L. 116-139).

Eligible health care providers and suppliers received the initial distributions from the Provider Relief Fund in mid-April, which were followed by “targeted” distributions to COVID-19 hotspots and rural facilities, including critical access hospitals and rural health clinics. The initial distributions totaling $30 billion were calculated based on eligible health care providers’ 2019 share of Medicare fee-for-service reimbursements. Because this methodology was unfavorable to health care providers that do not bill Medicare, such as children’s hospitals, the second distribution was calculated based on eligible health care providers’ 2019 net patient revenue. The second distribution took into account the amount received under the initial distribution so that the entire $50 billion was distributed based on net patient revenue for 2019.

Providers and suppliers who received the funds were generally appreciative of HHS’s efforts to alleviate some of the economic pressures wrought by the spread of COVID-19, but were simultaneously hesitant given the ambiguity surrounding permissible uses of the funds. Two sources control how any provider may use the funds—the language appropriating the funds under the CARES Act and PPPHCEA, in addition to the Terms and Conditions that the providers must attest to as a condition of keeping those funds (HHS provides a listing of those Terms and Conditions here).

The FAQ, last updated as of May 29, 2020, provides some additional guidance for eligible health care providers and suppliers surrounding the use of these funds. For example, although there is no express prohibition on balance billing patients with presumptive or actual cases of COVID-19 who receive care from out-of-network providers under the CARES Act or the PPPHCEA, HHS snuck in the following language in the Terms and Conditions:

“The Secretary has concluded that the COVID-19 public health emergency has caused many healthcare providers to have capacity constraints. As a result, patients that would ordinarily be able to choose to receive all care from in-network healthcare providers may no longer be able to receive such care in-network. Accordingly, for all care for a presumptive or actual case of COVID-19, [the health care provider] certifies that it will not seek to collect from the patient out-of-pocket expenses in an amount greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network [health care provider].”

After the Terms and Conditions were initially released, some industry commenters took the position that the prohibition on balance billing therein applied to all patients during the COVID-19 emergency who seek care from out-of-network providers. In the FAQ, HHS clarified that the prohibition on balance billing applies only to “care for a presumptive or actual case of COVID-19” who receive care from out-of-network providers. The FAQ also provides guidance on how to work with those insurers even if the health care provider or supplier does not have a contract with the insurer.

In addition to the above, the FAQ addresses the following topics which may be of interest to providers and suppliers who have received distributions:

• The process for rejecting the funds and returning the payment either through the ACH process or returning the physical check;
• Whether receipt of distributions under the Provider Relief Fund precludes participation in the Small Business Administration’s Paycheck Protection Program;
• A general description of potential steps HHS or the OIG may take to recoup the distributions if a provider does not comply with the Terms and Conditions; and
• A list of all Medicare providers and suppliers who have received distributions, which range from a $567 million distributed to a single health system in New York City to ten providers or suppliers who each received $1.

As providers and suppliers use funds from the Provider Relief Fund, they should make sure that any such use complies with the language appropriating these funds under the CARES Act and the PPPHCEA, in addition to the applicable Terms and Conditions signed by the provider. In its FAQ, HHS states that it reserves the right to audit the use of these funds; as such, providers and suppliers should keep accurate documentation and records to justify that any use clearly ties back to at least one of those authorized uses. Accurate record keeping and accounting practices tracking the use of these funds will be imperative to demonstrate compliance in the event of any future audits by HHS or OIG.