Deadline to spend HHS relief funds extended for some providers

The American Hospital Association and other groups had called on HHS to extend the original June 30 deadline for spending funds through the end of the public health emergency, but appeared content with the announcement Friday.

“The AHA thanks HHS for listening to our concerns and extending the deadline for hospitals, health systems and other health care providers to use this critical relief funding,” AHA CEO Rick Pollack said in a statement. “Today’s announcement to give some health care providers more time to spend emergency coronavirus funding will help to ensure that hospitals and health systems can continue the battle against COVID-19 as cases persist.”

Providers now have 90 days after the deadlines to meet the reporting requirements, instead of the original 30 days. The reporting portal is set to open July 1.

Still, HHS has not issued any guidance on when the remaining $24 billion in the PRF will be released, including $8.5 billion recently appropriated by Congress for rural providers.

Previous guidance from January broke spending into a first and second round, the first covering all of calendar 2020 and the second covering the first six months of 2021. The new guidance outlines four separate periods in which providers must use and report the funds based on when they were received.

Rick Kes, RSM’s healthcare industry senior analyst, foresees that getting complicated from an accounting standpoint. Previous guidance didn’t require providers to spend money based on when they received it.

“It’s not that they can’t do it, but it’s going to cause more burden on them from a record-keeping perspective,” he said.

The most significant change in Friday’s updated guidance is the new spending and reporting schedule that’s now broken into four periods, said Aparna Venkateswaran, a senior manager with Moss Adams.

Another big change affects providers who received SNF and Nursing Home Infection Control Distribution payments. They must report those along with their Provider Relief Fund grants. That previously had been excluded from the PRF reporting, she said.

The new guidance leaves the reporting requirements largely unchanged. Tong said he thinks the 3-month deadline for reporting after the money is spent should be easy for hospitals to meet. That will be especially true after July 1, when the reporting portal opens and they have a better sense for what it looks like and how to use it, he said.

Providers will still have three options for calculating lost revenue. They can apply the grant toward lost revenue up to the difference between actual patient care revenue; use the difference between budgeted and actual; or calculate lost revenue by any reasonable method.

If providers select the second option, they now will need an executive explicitly attest that their budget had been in place prior to March 27, 2020. Under the third option, providers need a narrative description and calculation and demonstrate the lost revenue was due to COVID and not some other source, Venkateswaran said. If HRSA doesn’t accept the providers’ rationale, they’ll have to go back to the drawing board and use option 1 or 2.

Venkateswaran warned that providers using option three will face an increased likelihood of a HRSA audit.

“Providers that end up using option 3, that’s going to need more care and thought into what they document and what they provide to support that,” she said, “because that will have more scrutiny.”