AMARILLO, TX – HHS has continued to update its guidance and FAQs regarding the distribution of funds to healthcare providers in connection with the $175 billion Provider Relief Fund passed by Congress as part of the CARES Act. For the purposes of this article, we will focus on the $50 billion fund allocated to general disbursements to all providers that billed Medicare in 2019. Below, we include the most interesting and relevant FAQs that will apply to you and provide a brief analysis of each FAQ where needed.

If a provider secures COVID-19-related funding separate from the Provider Relief Fund, such as the Small Business Administration’s Paycheck Protection Program, does that affect how they can use the payments from the Provider Relief Fund? Does accepting Provider Relief Fund payments preclude a provider organization from seeking other funds authorized under the CARES Act?  (Added 5/29/2020)
There is no direct ban under the CARES Act on accepting a payment from the Provider Relief Fund and other sources, so long as the payment from the Provider Relief Fund is used only for permissible purposes and the recipient complies with the Terms and Conditions. By attesting to the Terms and Conditions, the recipient certifies that it will not use the payment to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse.

ANALYSIS:  It is important to note that HHS has made clear that a provider can benefit from both Provider Relief Funds as well as funds from the SBA’s Paycheck Protection Program (“PPP”). Accordingly, if you have been reluctant to apply for a PPP loan, and still qualify for such a loan, we encourage you to apply immediately as the June 30, 2020 deadline for PPP loans is fast approaching and PPP funds remain available.

The Terms and Conditions state that Provider Relief Fund payments will only be used to prevent, prepare for, and respond to coronavirus and shall reimburse the Recipient only for healthcare-related expenses or lost revenues that are attributable to coronavirus. What expenses or lost revenues are considered eligible for reimbursement? (Added 6/2/2020)

The term “health care related expenses attributable to coronavirus” is a broad term that may cover a range of items and services purchased to prevent, prepare for, and respond to coronavirus, including:

• supplies used to provide healthcare services for possible or actual COVID-19 patients;
• equipment used to provide healthcare services for possible or actual COVID-19 patients;
• workforce training;
• developing and staffing emergency operation centers;
• reporting COVID-19 test results to federal, state, or local governments;
• building or constructing temporary structures to expand capacity for COVID-19 patient care or to provide healthcare services to non-COVID-19 patients in a separate area from where COVID-19 patients are being treated; and
• acquiring additional resources, including facilities, equipment, supplies, healthcare practices, staffing, and technology to expand or preserve care delivery.

Providers may have incurred eligible health care related expenses attributable to coronavirus prior to the date on which they received their payment.  Providers can use their Provider Relief Fund payment for such expenses incurred on any date, so long as those expenses were attributable to coronavirus and were used to prevent, prepare for, and respond to coronavirus. HHS expects that it would be highly unusual for providers to have incurred eligible expenses prior to January 1, 2020.

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

All providers receiving Provider Relief Fund payments will be required to comply with the reporting requirements described in the Terms and Conditions and specified in future directions issued by the Secretary. HHS will provide guidance in the future about the type of documentation we expect recipients to submit. Additional guidance will be posted at https://www.hhs.gov/provider-relief/index.html.

ANALYSIS:  The most important part of the above is HHS’ unequivocal restatement of the congressional intent of the CARES Act.  Specifically, HHS states that lost revenue attributable to Coronavirus may be broadly interpreted. This is a question that we answered often for providers that were nervous about signing the attestation to accept Provider Relief Funds and provides a measure of comfort about the expansive interpretation of “lost revenues.”

How did HHS determine the additional payments under the General Distribution? (Modified 5/29/2020)
HHS is distributing an additional $20 billion of the General Distribution to providers to augment their initial allocation so that $50 billion is allocated proportional to providers’ share of 2018 net patient revenue. The allocation methodology is designed to provide relief to providers, who bill Medicare fee-for-service, with at least 2% of that provider’s net patient revenue regardless of the provider’s payer mix. Payments are determined based on the lesser of 2% of a provider’s 2018 (or most recent complete tax year) net patient revenue or the sum of incurred losses for March and April. If the initial General Distribution payment you received between April 10 and April 17 was determined to be at least 2% of your annual patient revenue, you may not receive additional General Distribution payments.

ANALYSIS:  This is a helpful insight and transparency into HHS methodology for distributing the second round of Provider Relief Funds.

How can I estimate 2% of patient revenue to determine my approximate General Distribution payment? (Added 5/14/2020)
In general, providers can estimate payments from the General Distribution of approximately 2% of 2018 (or most recent complete tax year) patient revenue. To estimate your payment, use this equation:

(Individual Provider Revenues/$2.5 Trillion) X $50 Billion = Expected Combined General Distribution.

To estimate your payment, you may need to use “Gross Receipts or Sales” or “Program Service Revenue.” Providers should work with a tax professional for accurate submission.

This includes any payments under the first $30 billion general distribution as well as under the $20 billion general distribution allocations. Providers may not receive a second distribution payment if the provider received a first distribution payment of equal to or more than 2% of patient revenue.

ANALYSIS:  Note that providers who may have received a disproportionate distribution from the first round of funding may not receive any funds from the second distribution but there also will not be a recoupment of any overpayment pursuant to the above calculation.

I am a healthcare provider that received a previous General Distribution payment and I submitted my revenue information through DocuSign. Why am I not receiving an additional payment? (Modified 5/29/2020)
HHS is distributing an additional $20 billion of the General Distribution to providers to augment their initial allocation so that $50 billion is allocated proportional to providers’ share of 2018 net patient revenue. Payments are determined based on the lesser of 2% of a provider’s 2018 (or most recent complete tax year) net patient revenue or the sum of incurred losses for March and April. If the initial General Distribution payment you received between April 10 and April 17 was determined to be at least 2% of your annual patient revenue, you may not receive additional General Distribution payments. There may be additional distributions in the future for which providers are eligible.

ANALYSIS:  The methodology for calculating losses is explored in more detail below but it is important that HHS is using the lesser of 2% of revenue or estimated losses.

How do I estimate lost revenue in March or April?
You may use a reasonable method of estimating the revenue during March and April 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.

ANALYSIS:  This methodology reinforces the industry’s belief that the use of budgets and projections was an appropriate tool to measure lost revenues.

I submitted my revenue information in the Provider Payment Portal.  Why am I being asked to resubmit my information? (Added 6/2/2020)
During the HHS review of the data submitted through the Provider Payment Portal, a number of healthcare providers that submitted their information for payments from the General Distribution were flagged for data verification, and may require additional follow-up and communication prior to receiving funds.  Common issues that prompted a submission to be flagged for further review include information entered not matching tax documentation, providers with significantly lower than expected Medicare revenue, and apparent data entry errors.

ANALYSIS:  We currently have no reason to believe that being flagged to submit additional information will increase the likelihood of future audits or reviews but obviously care should be taken to correct any previous mistakes made and to fully document the source for all data inputted.

What action should I take in order to resubmit my revenue information? (Added 6/2/2020)
Please resubmit your revenue information on the General Distribution Provider Payment Portal for HHS verification.  Resubmissions have the same instructions and requirements as the original DocuSign submission, which can be found here.  Please review these instructions and requirements to ensure that you are submitting the correct information.

ANALYSIS:  Again, care should be taken to input accurate data and to document the source of all data provided.

I was not able to submit my revenue information to the General Distribution Portal by June 3, 2020 to be considered for a portion of the $20 billion General Distribution.  Can I still be considered for these funds? (Added 6/3/2020)
No. The application process for the $20 billion General Distribution closed on June 3, 2020. Providers will still be considered for future Provider Relief Fund Payments. Information on future distributions will be shared when publicly available.

ANALYSIS:  For now, the application period has passed but elsewhere there is a mention of potential future funds being made available. At this time, we do not expect an additional large cash infusion like that made available in the Provider Relief Fund general allocation.

How long does it take for HHS to make a decision on additional General Distribution funding? When can I expect to receive additional funds? (Modified 5/29/2020)
HHS is working to process all providers’ submissions as quickly as possible. HHS is distributing an additional $20 billion of the General Distribution to providers to augment their initial allocation so that $50 billion is allocated proportional to providers’ share of 2018 net patient revenue. Payments are determined based on the lesser of 2% of a provider’s 2018 (or most recent complete tax year) net patient revenue or the sum of incurred losses for March and April. If after further review of your resubmitted revenue information, the initial General Distribution payment you received between April 10 and April 17 was determined to be at least 2% of your annual patient revenue, you may not receive additional General Distribution payments. It is the Department’s intention to distribute relief funds as quickly as possible.

ANALYSIS:  Unfortunately the above does not provide any additional clarity but we understand that the majority of the general allocation has already been made.

How will HHS notify me that my application has been processed? (Modified 5/29/2020)
You will receive an email when your application is completed. You will receive a notification from HHS as to the final status of your application. HHS is distributing an additional $20 billion of the General Distribution to providers to augment their initial allocation so that $50 billion is allocated proportional to providers’ share of 2018 net patient revenue. Payments are determined based on the lesser of 2% of a provider’s 2018 (or most recent complete tax year) net patient revenue or the sum of incurred losses for March and April. If after further review of your resubmitted revenue information, the initial General Distribution payment you received between April 10 and April 17 was determined to be at least 2% of your annual patient revenue, you may not receive additional General Distribution payments.

ANALYSIS:  Be sure to check your email inbox and junk mail folders to ensure that you receive the email mentioned above.

Conclusion
While the above FAQs, and those not included above but included in HHS’ official document at https://www.hhs.gov/sites/default/files/provider-relief-fund-general-distribution-faqs.pdf, do not answer all of the questions that we may have, they do cover a majority of the questions that clients have frequently asked us. Importantly, the FAQs also reinforce much of the early direction that attorneys like us believed to be accurate but that remained subject to interpretation. Unlike some of the guidance surrounding PPP loans, HHS guidance is also consistent with Congressional intent which should create much more certainty in the marketplace about use of these funds and mitigate some fear of future audits.

AAHOMECARE’S EDUCATIONAL WEBINAR

Proper vs Improper Arrangements Between DME Suppliers and Manufacturers

PRESENTED BY: Jeffrey S. Baird, Esq., Brown & Fortunato, P.C. & Todd A. Moody, Esq., Brown & Fortunato, P.C.
DAY: Tuesday, June 16, 2020
1:30-2:30 p.m. CENTRAL TIME
Manufacturers and DME suppliers are dependent on each other. The DME supplier needs to have access to products at a reasonable cost. The manufacturer is dependent on successful DME suppliers that can purchase products from the manufacturer. The law allows manufacturers and suppliers to work together to generate sales for both…so long as certain legal guidelines are met. This webinar will discuss the proper arrangements that manufacturers and DME suppliers can enter into…and those arrangements that need to be avoided. For example, it is legally permissible for the manufacturer to offer volume-based discounts and rebates to suppliers. On the other hand, it is not permissible for a manufacturer to offer discounts, rebates, or anything else of value to a supplier in exchange for the supplier “flipping” its customers from another manufacturer. If a lead visits a manufacturer’s website and expresses an interest in a product, then the manufacturer can forward the lead to a DME supplier so long as certain restrictions are met (e.g., the manufacturer cannot require the supplier to sell the manufacturer’s product to the lead). And a manufacturer and a supplier can enter into a cooperative marketing program so long as they jointly pay the expenses of the program. This program will cover these and other examples of what DME suppliers and manufacturers can…and cannot…do.

Register for Proper vs Improper Arrangements Between DME Suppliers and Manufacturers on Tuesday, June 16, 2020, 1:30-2:30 p.m. CT, with Jeffrey S. Baird, Esq., and Todd A. Moody, Esq., of  Brown & Fortunato, PC.

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Jeffrey S. Baird, JD, is Chairman of the Health Care Group at Brown & Fortunato, PC, a law firm with a national health care practice based in Texas. He represents pharmacies, infusion companies, HME companies and other health care providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization, and can be reached at (806) 345-6320 or [email protected].

Kelly T. Custer, JD, is an attorney with the Health Care Group at Brown & Fortunato, PC, a law firm with a national health care practice based in Texas. He represents pharmacies, infusion companies, HME companies and other health care providers throughout the United States. Mr. Custer can be reached at (806) 345-6343 or [email protected].