As healthcare providers deal with the effects of the SARS-CoV-2 virus and incidence of COVID-19 (COVID-19), the U.S. Department of Health & Human Services (HHS) started releasing the first $30 billion of the $100 billion Public Health and Social Services Emergency Fund on Friday, April 10, 2020. The HHS partnered with Optum Bank, a subsidiary of UnitedHealthcare, to distribute this first payment to providers based on 2019 Medicare fee-for-service payments received.
There are conditions attached to keeping these funds. Funding relief like this comes with the additional scrutiny of how the funds are spent and accounted for. Within 30 days of payment receipt, providers are required to sign an attestation confirming receipt of the funds and agreeing to the terms and conditions. The portal for signing the attestation should open this week. Our current understanding is that a provider can hold these funds while it evaluates the need for them. If a provider’s qualified expenses and lost revenues don’t equal the amount received or meet the guidelines outlined in the terms and conditions, then the provider may have to pay some of the funds back.
The providers should review the final attestation language carefully when it’s published on the portal. The outlined terms and conditions call for accountability and the related reporting requirements should be taken seriously. History has demonstrated that stimulus spending brings a significant need for increased transparency to help prevent fraudulent activity. The current terms and conditions include, but aren’t limited to, certifying the provider will:
- Only use the funds to prevent, prepare for and respond to COVID-19
- Seek reimbursement for only the healthcare-related expenses or lost revenues attributable to COVID-19
- Not use the funds to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse, e.g., other federal grants or U.S. Small Business Administration Paycheck Protection Program loans
- Maintain appropriate records and cost documentation, including, as applicable, documentation required by 45 CFR Section 75.302 – Financial management and standards for financial management systems:
- Adequate identification of source and application
- Accurate and complete financials
- Sufficient records documenting compliance with federal statutes, regulations and the outlined terms and conditions that the provider certifies
- Effective control over and accountability for all funds, assuring they’re used solely for authorized purposes
- Written procedures for determining the allowability of costs in accordance with 45 CFR Subpart E – Cost Principles
- Adhere to 45 CFR §75.361 – Retention requirements for records – Financial records, supporting documents, statistical records and all other records pertinent to this award must be retained for a period of three years
With what we know today, BKD recommends the following:
- Make a serious commitment to compliance and transparency
- Design effective controls to account for the funds, track the expenses and understand your exposure
- Record these deposits in a separate revenue account with a clear designation. An example would be “COVID-19 Relief – Payment 1 (Medicare).” Note that these funds aren’t Medicare money, only relief funds based on Medicare revenues
- For any identifiable expenses incurred that are COVID-19-related, record them in specific expense accounts on your financials. Examples of additional expenses could include:
- Personal protective equipment
- Additional staffing for screening employees
- Additional incentive pay to retain staff
- Overtime paid due to loss of staffing
- Meals for employees
- Additional expenditures for the implementation of preventive measures with residents/patients
- Cost to develop a separate COVID-19 unit
- Measure and track your loss of revenues and reasons for those losses, including:
- Loss of elective surgery/procedures
- Decline in admissions/visits
- It may be necessary to consult your accounting or reimbursement team to help evaluate the methods used to allocate the additional expenses mentioned above
Each type of healthcare entity should have many similar costs related to the prevention and treatment of COVID-19. However, each provider type should have its own unique expenses dependent on the applicable healthcare setting. In addition, each healthcare entity should have different methods of determining its loss of revenue.
While we haven’t confirmed the information as of publication of this article, we’ve been informed that if providers haven’t received their relief funds, requests can be made online. HHS should have an online request available by Friday, April 17, 2020.
As with most topics related to COVID-19, changes are being made rapidly. Please note that this information is current as of the date of publication. Contact your BKD healthcare advisor or submit the Contact Us form below for additional assistance.