HHS Provider Relief Fund Updates

On Friday, September 10, 2021, the Department of Health and Human Services (“HHS”) issued three important updates regarding the Provider Relief Fund (“PRF”). Below, we have highlighted the key takeaways from the HHS announcement, which is available here. As you review this email and the HHS announcement, we are available to help you navigate these issues, so please do not hesitate to reach out.

• Phase 4 of the PRF: On Friday, September 10, HHS announced an additional $25.5 billion in aid to healthcare providers. Of this $25.5 billion, $8.5 billion comes from the American Rescue Plan for rural providers; the remaining $17 billion will come from the original Provider Relief Fund. HHS will be distributing this $17 billion in PRF payments to healthcare providers for lost revenues and expenditures incurred between July 1, 2020 and March 31, 2021. HHS has indicated that this distribution will be aimed in part to reimbursing smaller providers that operate on thinner margins, though larger providers are also eligible to apply. Importantly, the list of eligible providers is broad, including assisted living facilities, pharmacies & durable medical equipment providers, and ancillary services.
  
  75% of the Phase 4 allocation will be calculated based on revenue losses and COVID-related expenses. The remaining 25% will be put towards bonus payments that are based on the amount and type of services recipients provide Medicaid, CHIP, and/or Medicare patients. To attempt to receive Phase 4 PRF payments, providers will need to apply to HHS. The portal for applications to the PRF Phase 4 will open on September 29, 2021. More importantly, providers will be required to disclose any merger or acquisition (“M&A”) activity during the measured period from July 1, 2020 and March 31, 2021, and providers who report and M&A activity may be more likely to be subject to HHS audit.
  
  
• Grace Period for September 30 Reporting Deadline: As a reminder, providers are required to report on their use of PRF payments received between April 10, 2020 and June 30, 2020 by September 30, 2021. Any providers who do not meet this deadline will be considered out of compliance with the terms & conditions of the payment and may be subject to recoupment or other enforcement activities. HHS announced today that it will grant a 60-day grace period for providers who do not meet the September 30, 2021 deadline before it begins any collections or enforcement activities. As a note, providers who do not meet the September 30, 2021 deadline will be considered out of compliance and HHS strongly encourages any provider who is able to do so to meet the established deadline of September 30, 2021. We have attached a slide deck to this email with additional guidance on the reporting process.
  
  
• Detailed Explanation of Phase 3 Payment Methodology: Phase 3 of the PRF, the most recent general distribution from the Fund, was generally distributed in December 2020 and January 2021 following a November 2020 application deadline. For the first time, HHS provided a lengthy and detailed explanation of the Phase 3 distribution methodology, which had previously only been described at a high level, such that it was extremely difficult for providers to determine whether the Phase 3 RF payments received were accurate. As a result of providing a more detailed explanation of Phase 3 payment methodology, HHS announced it will be opening a reconsideration process for providers who believe their Phase 3 payment was not calculated correctly according to the more detailed methodology. Details on this process are forthcoming.