Wachler & Associates Health Law BlogHHS Expands PRF Payment Use for “Lost Revenue” and Phase 3 Eligibility
On October 22, 2020, the Department of Health and Human Services (“HHS”) announced changes to the allowable uses of a Provider Relief Fund (“PRF”) payment and also expanded the categories of providers eligible to receive a payment in the Phase 3 General Distribution. The PRF is a $175 billion fund created by Congress in the CARES Act and administered by HHS to provide financial relief to healthcare providers during the COVID-19 pandemic.
Acceptance of a PRF payment is conditioned on the acceptance by the provider of certain restrictions on how the payment may be used and the filing of reports in which the provider demonstrates compliance with these restrictions. One such restriction is that the funds may be used for “lost revenue attributable to the coronavirus.” When HHS first released the reporting requirements for PRF payments, it indicates that such lost revenues would be demonstrated by a negative change in year-over-year net patient care revenue from 2019 to 2020. Many saw this as placing an arbitrary cap on the amount of financial relief that struggling providers could receive from the PRF. In response to feedback, HHS has amended this requirement. Regarding use of the PRF payment to cover lost revenue attributable to coronavirus, HHS now requires that, “after reimbursing healthcare related expenses attributable to coronavirus that were unreimbursed by other sources, providers may use remaining PRF funds to cover any lost revenue, measured as a negative change in year-over-year actual revenue from patient care related sources.” (emphasis added).
HHS also announced expansion of the categories of providers who are eligible to apply for payments as part of the Phase 3 General Distribution of the PRF. The PRF previously included $30 billion Phase 1 and $20 billion Phase 2 General Distributions to eligible providers, primarily those that bill Medicare or Medicaid. The $20 billion Phase 3 General Distribution, announced October 1, 2020, was intended to provide financial relief to for providers who were either excluded from the initial two phases, or who were eligible under the first two phases but require additional funding to cover ongoing financial losses accrued during the pandemic. On October 22, 2020, HHS announced it was expanding Phase 3 eligibility to include the following providers, regardless of whether they accept Medicare or Medicaid:
- Behavioral Health Providers
- Allopathic & Osteopathic Physicians
- Dental Providers
- Assisted Living Facilities
- Chiropractors
- Nursing Service and Related Providers
- Hospice Providers
- Respiratory, Developmental, Rehabilitative and Restorative Service Providers
- Emergency Medical Service Providers
- Hospital Units
- Residential Treatment Facilities
- Laboratories
- Ambulatory Health Care Facilities
- Eye and Vision Services Providers
- Physician Assistants & Advanced Practice Nursing Providers
- Nursing & Custodial Care Facilities
- Podiatric Medicine & Surgery Service Providers
The Phase 3 application window opened on October 5, 2020 and will end at 11:59 p.m. on November 6, 2020. Once validated, eligible providers will receive a baseline payment of approximately 2% of annual revenue from patient care, plus an add-on payment that considers changes in operating revenues and expenses from patient care, including expenses incurred related to coronavirus. HHS indicates that applications for Phase 3 payments are processed on a rolling basis and so asks that providers not wait until the last day or week of the application period to apply.
For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters. If you or your healthcare entity has any questions pertaining to Provider Relief Fund reporting, audits, or healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com.