Kelly T. Custer, Esq

Pharmacies across the country were pleasantly surprised with the release of updated reporting requirements and deadlines in connection with funds received from the CARES Act Provider Relief Fund (PRF). On June 11, 2021, the Department of Health and Human Services (HHS) issued the revised post-payment notice of reporting requirements that supersedes all prior versions of the notice.

The updated requirements reflect the Health Resources and Services Administration’s focus on giving providers equitable amounts of time for use of these funds, maintaining effective safeguards for taxpayer dollars, and incorporating feedback from providers requesting more flexibility and clarity about PRF reporting.

The period for use of funds is based on the date payment is received rather than requiring all payments to be used by June 30, 2021, regardless of when they were received.

Recipients are required to report for each Payment Received Period in which they received one or more payments exceeding $10,000 in the aggregate rather than $10,000 cumulatively across all PRF payments.

Recipients have a 90-day period to complete reporting rather than a 30-day reporting period.

The PRF Reporting Portal opened for providers to submit information on July 1, 2021.

Timing of Required Use of Funds and Reporting Deadlines

The following deadlines apply to payments received. If the pharmacy received funds during more than one of the periods identified below, you will be required to report the use of the funds in each applicable reporting period—it does not appear that there will be a mechanism to report funds from multiple periods in a single report.

Pharmacies will be required to report the use of funds using their normal accounting basis (i.e., cash, accrual, or modified accrual). The following data points, in relevant part, will be required:

For pharmacies that held the PRF payment(s) being reported in an interest-bearing account, the dollar value of interest earned on those PRF payment(s) must be reported.

Other assistance received by quarter, including:

Department of the Treasury or Small Business Administration funding, including from the Paycheck Protection Program

Local, state, and tribal government assistance

Use of general and other targeted distribution payments for general expenses, including:

Other expenses generally considered to be part of general and administrative expenses

Other health care related expenses exclusive of general expenses above, including:

Other expenses related to prevention, preparation for, and/or response to the pandemic

Lost revenues that can be calculated in one of the following three ways:

Difference between actual patient care revenues

Difference between budgeted patient care revenues (prior to March 27, 2020) and actual revenues

Any other reasonable method of estimating revenues

Reporting will also require disclosure of significant additional organizational details. You are encouraged to read the full HHS release and to stay up to date as additional reporting guidance is made available.

Pharmacies that received more than $750,000 in federal funds, including PRF monies, will be subject to single audit requirements. There are two reporting options:

A financial audit of the use of the awards in accordance with Generally Accepted Government Auditing Standards; or

An audit in compliance with the Single Audit Act.

More detail about these options and the corresponding reporting requirements will become available in the coming weeks and months.

Although there are still details to be determined, the new reporting requirements and deadlines are clearly a significant step forward. We expect HHS to issue additional FAQs and guidance, and we encourage all pharmacies to monitor the HHS website for updates. For now, the pharmacy should start documenting what it can and prepare to report at the appropriate time.

Pharmacies should review the updated notice and plan for meeting the reporting requirements as deadlines come closer. The pharmacy should create a reporting system that ensures all deadlines are met for each of the reporting periods in which the pharmacy may have received funds.

Further, if the pharmacy has not already categorized its expenses into those that were permitted by the PRF terms and conditions, now is a good time to start that process. Also, the pharmacy should carefully document lost revenues and be prepared for a detailed audit to occur. The pharmacy should retain all records and contemporaneously note any key items or facts that may be relevant in a future audit. Over-documentation is always preferred.

., is an attorney with the Health Care Group at Brown & Fortunato, 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 kcuster@bf-law.com.

., is Chairman of the Health Care Group at Brown & Fortunato, a law firm with a national health care practice based in Texas.

He represents pharmacies, infusion companies, HME companies, manufacturers, 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 jbaird@bf-law.com.

Articles

Pharmacies that received more than $750,000 in federal funds, including funds from the CARES Act Provider Relief Fund, will be subject to single audit requirements. 

HHS Issues Much Anticipated Updates to Provider Relief Fund Deadlines and Reporting Requirements

It goes without saying that the Provider Relief Fund (PRF), part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act (PL 116-136) and the Paycheck Protection Program (PPP) and Health Care Enhancement Act (PL 116-139), was an important stopgap for many health care providers across the country. 

The PRF stood as one of the key tools in the government’s arsenal for propping up the health care industry during what we knew would be a tough year. A number of articles have been written about the program, its numerous derivations and the crooked path toward funding that many out there have experienced. No less crooked than the road to funding, details on reporting requirements and timing have been elusive.

This is beginning to change—on September 19, the Department of Health and Human Services (HHS) released a document entitled General and Targeted Distribution; Post-Payment Notice of Reporting Requirements.

In the notice, HHS begins to formulate the reporting requirements that providers should be aware of in anticipation of reporting to HHS how PRF funds were spent, along with the economic circumstances that providers were facing during the pandemic. Interestingly, HHS has again delayed the actual implementation of reporting.

The August 14 update to the initial HHS guidance on reporting stated that reporting would begin in October and would be required for all providers by February 15, 2021. In the most recent notice, HHS kicked the can a bit further down the road, now stating that reporting functionality will not be available until the first quarter of 2021 at the earliest.

It is important to point out that the notice is not intended to provide a detailed framework for reporting or specific instructions on how to do so. Instead, the notice appears to have been published to put providers on notice of the categories of data points and elements that will be necessary for reporting.

Further, the notice sets forth that these data points and information will need to include information from fiscal year 2019, an element that had not been made explicitly public to date. Although the requirement that 2019 data be produced is unsurprising given the need for HHS to collect baseline data, it is not necessarily something that providers were expecting.

There is an academic argument to be made that a single year’s worth of data is a poor baseline, but this will likely only be important if HHS determines there should be some consequences for providers that fiscally performed better in 2020 than 2019. This does not appear likely nor consistent with Congressional intent, so a requirement for several years of data points is not likely to be necessary.

Although this article is not intended to exhaustively explore all of the reporting requirements and the associated implications, a few of the high points are detailed below. Providers should familiarize themselves with the full notice by 

The notice initially sets forth 2 broad categories that must be reported by entities:

Health care-related expenses that the entity may attribute to the pandemic that have not been reimbursed from other sources—these expenses can include general and administrative expenses as well as actual health care operating expenses.

The second bucket of amounts to be reported includes losses in net patient care operating revenue from 2019 to 2020 that will be calculated as patient care revenue less patient care related expenses for the 2 fiscal years. This is unexpected as previous guidance on this topic focused solely on lost revenue. This distinction could be meaningful for some providers.

In the notice, HHS does include an additional 6-month period, through the end of June 2021, for providers to expend PRF funds consistent with the formulas described above if the provider has not used all funds by the end of 2020. If any funds remain after 2020, providers will be required to submit a second and final report to HHS on the use of funds by July 31, 2021.

Although there is not explicit language regarding repayment of unused PRF funds at this time, that concept does seem implicit in the notice. We expect more guidance on this topic at a later time, though we acknowledge that the vast majority of readers have likely long since expended all PRF funds in a manner consistent with the standards above.

On a more detailed basis, HHS also provided a list of specific data elements that will be required when reporting, these elements are briefly listed below:

Expenses attributable to Coronavirus not reimbursed by other sources (2020 only)

These expenses can include expenses incurred in treating confirmed or suspected coronavirus cases, preparing for actual or possible coronavirus cases, maintaining health care delivery capacity, etc.

Obviously, this is a fairly expansive definition and would appear to include a host of expenses that were undertaken during the pandemic.

HHS also includes 2 classes of reporting requirements based on the amounts of PRF funds received. Those entities receiving between $10,000 and $499,999 in funds will provide general information and those receiving $500,000 plus in funds will be subject to more detailed and rigorous reporting requirements. The notice incudes additional subcategories of information required from those receiving $500,000 plus in funds, but until full reporting requirements are available, we will not analyze these lists.

HHS is seeking information about negative changes in year-over-year net operating income from patient care related sources.

The revenues and expenses in this section are to include all lost patient care revenues and patient care cost/expense impacts.

Entities should be prepared to report revenue with a breakdown by payer mix and all pandemic-related funding received by the entity, including funds from any federal, state, local, or other source.

Total calendar year expenses will also be reported, with quarterly breakdowns, broken into general and administrative expenses and health care-related expenses.

Additional non-financial data will also be reported, including:

Facility, staffing, and patient care numbers, such as staffing and patient metrics.

Any change of ownership during the reporting periods will need to be reported.

Entities that expended more the $750,000 in aggregated federal financial assistance in 2020 are subject to single audit requirements as set forth in 45 CFR 75.501.

Although we do not yet have all of the information required for entities to prepare to submit reports regarding the use of PRF funds, we do have much more information than was previously available. For now, the best advice is to begin preparing the information noted above, but do not panic—the only constant during this entire pandemic has been change. Expect more but prepare as you can.

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 

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 

The Provider Relief Fund, as part of the CARES Act, was an important stopgap for many health care providers across the country, but details on reporting requirements and timing have been elusive.
 

Provider Relief Fund: Important Announcement and Additional Delay

As has often been the case throughout this pandemic, the Department of Health and Human Services has continued to work behind the scenes to implement the Provider Relief Fund (PRF) and its many requirements. After a period of relative quiet since the introduction of phase 2 funding, there are now some significant updates to share.

The largest developments relate to the “fix” of the unintended exclusion of certain Medicaid/ Children’s Health Insurance Program (CHIP) heavy providers from eligibility for phase 2 funding as well as some movement and expected future announcements regarding the reporting requirements of the PRF.

Solution for the Medicaid/CHIP Provider Eligibility Issue

On June 9, 2020, HHS announced that it was allocating $15 billion of the $175 billion PRF to Medicaid and CHIP providers who have been affected by the COVID-19 pandemic and did not receive prior funding from the PRF. Although this was good news for many pharmacies, the terms of participation in the phase 2 round of funding created an unintended exclusion for pharmacies that primarily serve Medicaid/CHIP patients.

Pursuant to the terms and conditions then in place, if a pharmacy received a small Medicare relief payment in the phase 1 PRF distribution, that pharmacy was barred from applying for phase 2 funding. At the time, it was believed that HHS would fix this issue by amending the terms and conditions of the phase 2 funding. After a series of seemingly contradictory announcements regarding its plan to fix this issue, HHS has announced its solution.

On August 10, 2020, HHS announced via a series of FAQs and a change to the phase 2 terms and conditions, that health care providers who received prior PRF funds are no longer barred from applying for phase 2 funding.

 A selection of the relevant and important published FAQs that address many of the questions from providers follows:

Who is eligible for Phase 2 — General Distribution? (Modified 9/1/2020)

To be eligible to apply, the applicant must meet all of the following requirements:

Providers who have received a payment under Phase 1 of the General Distribution are no longer prohibited from submitting an application under Phase 2 of the General Distribution. Providers who received a previous Phase 1 — General Distribution payment are eligible to apply and, if they have not yet received a payment that is approximately 2% of annual revenue from patient care, may receive additional funds.

For providers who are now eligible for the Phase 2 - General Distribution that had received a payment in the Phase 1 - General Distribution, which eligibility, application requirements and portal should applicants use? (Added 8/10/2020)

Providers who received a Phase 1 - General Distribution payment that was less than 2% of revenue from patient care must meet the revised eligibility requirements for the Phase 2 - General Distribution and follow the application instructions available for the distribution. Applicants should use the Provider Relief Fund Application and Attestation Portal to apply for funds.

Is a health care provider that did not deposit a check from the Phase 1 — General Distribution that was subsequently voided after 90 days, eligible to apply for the Phase 2 – General Distribution? (Added 8/10/2020)

Yes. The health care provider is eligible to apply for a Phase 2 — General Distribution payment if it otherwise meets the eligibility criteria and has not yet received a General Distribution payment of approximately 2% of annual revenue from patient care.

Can a healthcare provider that has not billed Medicaid/CHIP during the eligibility window (January 1, 2018 to December 31, 2019), but was enrolled as a Medicaid/CHIP provider prior to 2020, apply for a Phase 2 — General Distribution payment? (Modified 8/10/2020)

Providers who are enrolled in Medicaid and did not receive a Phase 1 — General Distribution payment may apply for a payment through the Provider Relief Fund Application and Attestation Portal as long as they provided diagnoses, testing, or care for individuals with possible or actual cases of COVID-19 after January 31, 2020. HHS broadly views every patient as a possible case of COVID-19. Providers must meet all five eligibility criteria listed in the application guidance in order to be considered for a payment.

Can a healthcare provider that has a primarily Medicaid-focused practice that received a small initial General Distribution payment, but forewent applying for an additional General Distribution payment, now apply for the Phase 2 — General Distribution? (Modified 8/10/2020)

If a healthcare provider was eligible for Phase 1 — General Distribution payment, it is now eligible for a Phase 2 – General Distribution payment if the provider has not yet received a payment that equals approximately 2% of revenue from patient care.

If I rejected my Phase 1 — General Distribution payment, can I apply for a Phase 2 – General Distribution payment? (Modified 8/10/2020)

Yes, if you were eligible for the Phase 1 — General Distribution and rejected the payment, you are now eligible to apply for Phase 2 – General Distribution payment that is approximately 2% of revenue from patient care.

A subsidiary of ours received payments from the Phase 1 — General Distribution, but another subsidiary of ours did not and is a Medicaid provider – can I apply for this Phase 2 – General Distribution? (Modified 8/10/2020)

Yes, if a provider is on the State-provided list of eligible Medicaid and CHIP providers or HHS-created list of dental providers, then they are eligible to apply. Medicaid or CHIP providers who are not on the State-provided list or dental providers who are not on the HHS-created list will undergo additional validation by HHS.

If a provider received a Phase 1 — General Distribution payment and submitted financial information in the Provider Relief Fund Payment Portal, but has not yet received a payment that is approximately 2% of patient care revenue, does the provider need to resubmit its financial information in the Provider Relief Fund Application and Attestation Portal? (Added 8/10/2020)

Yes. The applicant must resubmit its financial information and fill out a new application in the Provider Relief Fund Application and Attestation Portal. Information submitted in the previous Payment Portal will not carry over into the new portal. Additionally, applications will not be considered until all applications submitted for a Phase 1 — General Distribution payment in the Provider Relief Fund Payment Portal have been adjudicated, either by receiving an additional payment or being determined ineligible for a Phase 1 payment.

If a health care provider received a Phase 1 — General Distribution payment, but did not submit its Terms information as required by the Terms and Conditions, which portal should the provider use to now submit its Terms documents? (Added 8/10/2020)

Providers should use the Provider Relief Fund Application and Attestation Portal to submit the required Terms information. Providers will be considered for additional payment if they have not yet received funds that are approximately 2% of revenue from patient care. If a provider does not want additional funds, it may return the funds and reject the attestation within 90 days of receipt. The Application and Attestation Portal will guide providers through the attestation process to reject the funds.

An organization has prescription sales as part of its revenue. Can these sales be captured in the data submitted as a part of revenue from patient care? (Added 9/3/2020)

Generally no. Only patient care revenues from providing health care, services, and supports, as provided in a medical setting, at home, or in the community may be included. Patient care revenues do include savings obtained by providers through enrollment in the 340B Program. HHS is still reviewing potential exceptions to the rule as related to providers who provide unreported health care services as a part of the furnishings of pharmaceuticals.

Provider Relief Fund Reporting Requirements

On July 20, 2020, HHS issued guidance updating the reporting requirements for those who received PRF payments.

 Although detailed reporting information is not yet available, a brief summary of key elements from this guidance follows:

All recipients who received more than $10,000 will be required to submit reports.

The reporting portal will open October 1, 2020.

Detailed information regarding the required reports will be issued by HHS on August 17, 2020.

All recipients will be required to report within 45 days of the end of 2020 (or February 15, 2020).

Recipients who have used all funds received by December 31, 2020, will be able to submit a single final report detailing use of funds.

Recipients with unused funds at year end must submit a second and final report by July 31, 2021.

Although the above guidelines provide pharmacies with some expectations on timing, little else is available. Importantly, on August 17, 2020, when additional reporting guidance was expected, HHS posted an update that simply promised that requirements would be posted soon. As of the date this article was written, no guidance has been released.

We also note that the reporting threshold appears to have been changed from the CARES Act amount of $150,000 down to $10,000. At this time, we cannot ascertain whether this was a deliberate change, a typo, or whether there will be different reporting requirements based on amounts received ($10,000 vs. $150,000). Pharmacies can begin to prepare now by ensuring that use of funds received from PPP and PRF is well documented.

. [online] Available at: https://www.hhs.gov/coronavirus/cares-act-provider-relief-fund/faqs/general-distribution/index.html#phase2. Accessed 11 September 2020.

HHS.gov. 2020. [online] Available at: https://www.hhs.gov/sites/default/files/provider-post-payment-notice-of-reporting-requirements.pdf?language=en. Accessed 11 September 2020.

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 

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 

The terms of participation in the phase 2 round of the Provider Relief Fund created an unintended exclusion for pharmacies that primarily serve Medicaid/Children’s Health Insurance Program patients.