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Key Takeaways from Cares Act Provider Relief Fund Terms and Conditions

Coronavirus Aid, Relief, and Economic Security (“CARES”) Act authorizes $100 billion in relief fund to eligible healthcare providers to respond to COVID-19, which is based on the provider’s Medicare Fee-for-Service reimbursements, as reflected on the provider’s cost reports.

On April 10, 2020, the Department of Health and Human Services (“HHS”) distributed an initial $30 billion in CARES Act relief funds (the “Relief Funds”) to providers.  Beginning on April 24, 2020, HHS is expected to give hospitals another $20 billion in Relief Funds, to be distributed on a weekly, rolling basis. 

Another $10 billion will be allocated to hospitals within COVID-19 hotspots. Hospitals are advised to apply for this additional funding through the HHS’ authentication portal before midnight on April 23, 2020. HHS will consider the volume of low-income patients that the facility treats, as reflected on the facility’s Disproportionate Share Hospital (“DSH”) adjustment, when it distributes these funds.  And, another $10 billion has been set aside for rural facilities, which will likely be distributed the week of April 27, 2020.

To be eligible for these funds, however, healthcare providers must comply with the Terms and Conditions of the Relief Funds.  In light of potential exposure to False Claims Act (“FCA”) liability, providers must be aware of the following Terms and Conditions before it allocates any funds to COVID-19 related expenses or revenue loss:

  • Within 30 days of payment of the Relief Fund money, the provider must access the CARES Provider Relief Fund Attestation Portal, found here: https://covid19.linkhealth.com/#/step/1, to agree to the Terms and Conditions of payment.  Note, \that failure to return funds within 30 days of the provider’s receipt will be deemed acceptance of the Terms and Conditions, even if the provider does not complete the attestation online.
  • Failure to comply with all Terms and Conditions and/or misuse the Relief Fund payments may expose the provider to False Claims Act liability.  The False Claims Act allows for civil penalties and treble damages. Accordingly, it is essential that the provider maintain documentation evidencing how the funds are allocated toward the expenses/lost revenue and to return the funds if the provider believes the Relief Fund eligibility criteria is not met.  Additionally, non-compliance with the Terms and Conditions is grounds for the HHS Secretary to recoup some or all e Relief Fund payments.
  • In general, the Terms and Conditions apply to the receiving provider’s sub-recipients and contractors.  As such, if the provider is sharing the Relief Fund money with contracting providers that bill under the receiving provider’s NPI or TIN, the provider should perform oversight to ensure those providers also abide by the Terms and Conditions.
  • The Relief Fund money must be used to prevent, prepare for, and respond to COVID-19, and can be used for related expenses or lost revenues attributable to COVID-19.  To date, no guidance has been published explaining how to measure lost revenues.  
  • Notwithstanding the foregoing, a provider is eligible for Relief Fund money even if it does not directly treat COVID-19 patients. The Relief Fund is available to providers that, after January 31, 2020, provide, or provided, “diagnoses, testing, or care for individuals with possible or actual cases of COVID-19.” HHS guidance goes further, stating “HHS broadly views every patient as a possible case of COVID-19.”
  • The provider cannot use the Relief Fund payment to reimburse an expense already reimbursed from another source or under obligation of another source. The provider must, therefore, carefully analyze whether it has or will receive reimbursement from another source prior to applying the Relief Fund money toward a specific expense.
  • For all care rendered to patients with a presumptive or actual case of COVID-19, the provider cannot 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 patient received care from an in-network provider (i.e. no balance billing for these types of patients).   The Terms and Conditions, likely, do not prohibit providers from balance billing patients for services that are unrelated to COVID-19, where no state law otherwise prohibits such balance billing.
  • The Relief Funds cannot be used to pay an individual’s salary at a rate in excess of Executive Level II ($197,300.00), according to the OPM 2020 Salary Table.
  • If the provider receives greater than $150,000.00 in total funds under the CARES Act, the Coronavirus Preparedness and Response Supplemental Appropriations, the Families First Coronavirus Response Act, or any other Act primarily making appropriations for COVID-19 response and related activities, then the provider must submit to the Secretary and the Pandemic Response Accountability Committee a report no later than 10 days after the end of each calendar quarter. The report must include the following;
  • The total amount of funds received from HHS under any of the Acts listed above.
    • The amount of funds received that were expended or obligated for each project or activity.
    • A detailed list of all projects/activities for which large covered funds were expended or obligated, including: (i) the name and description of the project/activity; and (ii) the estimated number of jobs created or retained by the project/activity, where applicable. 
    • Detailed information on any level of sub-contracts or subgrants awarded by the provider or its subcontractors or subgrantees, to include the data elements required to comply with the Federal Funding Accountability and Transparency Act of 2006.
  • The provider must maintain records and cost documentation in compliance with 45 CFR s. 75.302 – Financial management and 45 CFR s. 75.361 through 75.365 – Record Retention and Access.  Records must be provided to the HHS Secretary upon request, and the provider must fully cooperate with all audits by the HHS Secretary, Inspector General, or Pandemic Response Accountability Committee.