Lost Revenue

The Department of Health and Human Services (HHS) has updated its guidance and information on the use of the Provider Relief Funds (PRF).  From the October 22nd HHS release, HHS has amended “…the reporting instructions to increase flexibility around how providers can apply Provider Relief Fund money toward lost revenues attributable to coronavirus. 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.”

Specifically, the Post-Payment Notice of Reporting Requirements dated October 22, 2020 details the information as follows:

Recipients will report their use of PRF payments using their normal method of accounting (cash or accrual basis), by submitting the following information:

  1. Healthcare related expenses attributable to coronavirus that another source has not reimbursed and is not obligated to reimburse, which may include General and Administrative (G&A) or healthcare related operating expenses.
  2. PRF payment amounts not fully expended on healthcare related expenses attributable to coronavirus are then applied to patient care lost revenues, net of the healthcare related expenses attributable to coronavirus calculated under step 1. Recipients may apply PRF payments toward lost revenue, up to the amount of the difference between their 2019 and 2020 actual patient care revenue.

The Post-Payment Notice further explains, “…Reporting Entities provide information used to calculate lost revenues attributable to coronavirus, represented as a negative change in year-over-year actual revenue from patient care related sources.”

Quarterly data for calendar years 2019 and 2020 is due by February 15, 2021.  If PRF funds are not fully expended by December 31, 2020, an additional report is due by July 31, 2021 for funds used through June 30, 2021.  In this instance, the lost revenue determination will be based on the reporting period January – June 2021 compared to the same period in 2019.

Phase 3 Funds

Up to $20 billion in new funding is available under the Provider Relief Fund – Phase 3 General Distribution.  The deadline to submit is November 6, 2020.  According to HHS, “…providers are encouraged to apply if you have experienced a decrease in operating income attributable to coronavirus.”

Payment is based on:

  • Assessed revenue losses and expenses attributable to COVID-19
  • 2% of annual patient care revenue (if not previously received)
  • Prior Provider Relief Fund distributions

While HHS has made payments on a rolling basis under previous general distributions, Phase 3 final payment amounts for applicants who have already received payments equaling 2% of annual patient care revenue will be determined once all applications have been received and reviewed.  The payments received under this phase are to follow the same terms and conditions and restrictions on use of funds as the other PRF General Distributions.

Single Audit Information

The substantial funding provided under the Provider Relief Fund is likely to cause a significant increase in the number of hospitals and other healthcare providers that may be subject to a single audit for the first time.  HHS has confirmed Provider Relief Funds (CFDA 93.498) are subject to single audit. Entities expending $750,000 or more of these federal award funds during the entity’s fiscal year are subject to the single audit compliance requirements.  Entity financial statement audit and single audit will be performed in accordance with Generally Accepted Government Auditing Standards and the financial statement reporting package will be submitted to the Federal Audit Clearinghouse.  If you are new to single audit, we have developed a resource, Single Audit Auditee Summary, to learn more about the requirements and how to prepare for a single audit.

For more information about the HHS lost revenues calculation, Phase 3 application process, or single audit resources, please contact our Albany office at (229) 883-7878 or our Atlanta office at (404) 220-8494.

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