CARES Act Funding and Medicare Reimbursement – How It Could Affect You

InsightsCovid 19 Resources, Tax News

Over the last year, multiple distributions have been received by providers from the Department of Health and Human Services (HHS) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.  These distributions were made before any guidance was provided on allowable costs and the future reporting requirements.  Since then, there has been an abundance of new information released regarding those allowable costs and reporting requirements.  While these are necessary communications, one aspect of this reporting has not had as much attention.  That is, how does this affect Medicare reimbursement and reporting?

One thing has been made clear: CARES Act funds are the payor of last resort (beyond even FEMA), and reimbursement for the same expense from multiple sources is not allowed.  This is not a new concept; however, it does require more thought about how providers report to HHS, especially for cost-reimbursed services.  With Medicare not requiring an offset of the CARES Act funding on the annual cost reports, a critical access hospital (CAH) is, in essence, being reimbursed for any expenses that were incurred during that period at 101% of allowable cost.  Therefore, those Medicare reimbursed costs should be removed from any HHS reporting.  HHS reporting is based on a calendar year and may not match up with the provider’s fiscal year, creating another hurdle in removing those costs appropriately.  Medicare cost report settlements can be significant and are not always available at year end.  These settlements directly affect a provider’s net patient revenues through contractual allowances and should also be considered in reporting to HHS.  There are numerous ways to determine the Medicare cost-based reimbursement including interim cost report preparation or a quick estimate using Excel.  Determining how much time is available and what resources are needed to come to these conclusions can be daunting but is necessary to ensure appropriate reporting under the CARES Act.

Another way duplicate reimbursement should be avoided is on the Worksheet S-10 of the Medicare cost report, which is used to determine a facility’s cost of uncompensated care. The inclusion of these uninsured COVID-19 patients would inflate the cost of that care erroneously.  Part of the funding available to providers is explicitly for the care of uninsured COVID-19 patients.  Therefore, those patients are no longer considered to be uninsured in the eyes of Medicare and are treated as any other patient covered by a third party.

While there are other impacts on reimbursement, the two discussed above are worth mentioning now.  Amid cost report filing deadlines and extensions, there is no time like the present to make sure all reporting is done properly.