Monday, September 21, 2020
On September 19, 2020, the US Division of Well being and Human Companies launched up to date steerage indicating how recipients of Supplier Reduction Fund (PRF) funds should account for and report misplaced revenues and bills. PRF recipients should evaluate this steerage, perceive the impression of those new obligations and proceed to watch for evolving data as a part of their ongoing compliance efforts.
On September 19, 2020, the US Division of Well being and Human Companies (HHS) launched much-anticipated Supplier Reduction Fund (PRF) steerage articulating how misplaced revenues and bills shall be accounted for and addressing recipient reporting necessities. The steerage applies usually to PRF recipients that obtained a number of PRF funds exceeding $10,000 within the combination, however doesn’t apply to the Nursing Dwelling An infection Management distribution, the Rural Well being Clinic Testing distribution, and reimbursement from the Well being Sources and Companies Administration (HRSA) Uninsured Program. It’s crucial that PRF recipients contemplate the attainable implications of this up to date steerage, particularly the style wherein HHS has articulated recipients could use PRF funds to cowl “misplaced income.” Recipients also needs to proceed to watch the PRF FAQs steerage for extra clarifications on reporting necessities.
The Supplier Reduction Fund (PRF) is funded by means of appropriations within the Coronavirus Help, Reduction, and Financial Safety (CARES) Act (P.L. 116-136) and the Paycheck Safety Program and Well being Care Enhancement Act (P.L. 116-139). The CARES Act imposed sure reporting obligations on PRF recipients and licensed HHS to impose extra reporting and doc retention necessities. In flip, the PRF Phrases and Circumstances (T&Cs), to which recipients should attest to maintain their PRF funds, require recipients to submit reviews on the usage of the PRF funds as specified by the HHS Secretary. For an summary of the PRF distributions, see our MWE/M+ abstract chart.
In response to the brand new steerage, recipients will report on the usage of their PRF funds by first submitting data on their healthcare-related bills attributable to coronavirus for which one other funding supply isn’t financially accountable. This will likely embody basic and administrative (G&A) bills and/or healthcare-related working bills.
Subsequent, any PRF fee quantities that weren’t totally expended on healthcare-related bills attributable to coronavirus are then utilized to the supplier’s “misplaced revenues,” now outlined because the supplier’s misplaced margin. Specifically, the remaining PRF funds could also be utilized to offset the unfavourable change in year-over-year internet affected person care working revenue (affected person care income much less patient-care-related bills), internet of the healthcare-related bills attributable to coronavirus calculated in the 1st step. The steerage additional notes that recipients that reported unfavourable internet working revenue from affected person care in 2019 could apply PRF quantities to misplaced revenues as much as a internet zero achieve/loss in 2020.
Some observers could not have anticipated these clarifications as a result of HHS repeatedly referred to “misplaced revenues” usually in earlier steerage, and the time period “misplaced revenues” is now being outlined inconsistently with the frequent which means of the time period (i.e., as misplaced revenue/margin). The CARES Act statutory textual content and Phrases and Circumstances for the affected distributions merely check with “misplaced revenues” and prior steerage recommended a extra customary definition of “misplaced revenues.” It’s price noting, nevertheless, that if misplaced revenues might have been utilized to bills no matter the impression on margin, this is able to have launched the opportunity of PRF funding making a healthcare supplier extra worthwhile in 2020 than it was in 2019, relying on whether or not that recipient diminished its bills. This improvement might result in authorized challenges of HHS’ definition of “misplaced revenues” within the PRF program, notably given the sub-regulatory nature of the definition.
If recipients don’t expend their PRF funds in full by the top of calendar 12 months 2020, they are going to have an extra six months to make use of the remaining quantities. The additional six-month reporting interval (January–June 2021) shall be in comparison with the identical interval in 2019 for the needs of creating calculations.
The up to date steerage doesn’t cowl auditing necessities. Extra data relating to relevant auditing necessities will be discovered within the PRF FAQs steerage and in our MWE/M+ abstract chart.
Below the brand new steerage, recipients shall be required to report a number of information parts, together with demographic data, details about their bills attributable to coronavirus, details about their misplaced revenues and extra (non-financial) data. Recipients additionally should report data on adjustments in possession and their Single Audit standing (if identified on the time of reporting).
Recipients that obtained between $10,000 and $499,999 in aggregated PRF funds should report healthcare-related bills attributable to coronavirus (internet of different reimbursed sources) in two aggregated classes: (1) basic and administrative (G&A) bills and (2) different healthcare-related bills. Recipients that obtained $500,000 or extra in PRF funds are required to report healthcare-related bills attributable to coronavirus (internet of different reimbursed sources) by reporting extra detailed data inside these two classes, in line with a number of sub-categories enumerated within the steerage.
Recipients should additionally present data on their misplaced revenues attributable to coronavirus. First, recipients will report data on their whole income/internet fees from patient-care-related sources for calendar years 2019 and 2020. Recipients with unused funds after December 31, 2020, will later submit extra data that features patient-care-related income quantities earned between January 1 and June 30, 2021. Recipients will report this income data by payer kind. Recipients can even be required to report data on different help they obtained in 2020.
Lastly, HHS would require recipients to submit sure non-financial information. This data will embody metrics on personnel, sufferers and amenities. Recipients that acquired or divested of associated subsidiaries should additionally submit data relating to that change in possession. Recipients should additionally report whether or not they’re topic to Single Audit necessities in 2020. If that’s the case, they need to report whether or not their PRF funds have been chosen as inside the scope of their Single Audit (if the recipient is aware of this data on the time of reporting).
The up to date steerage didn’t explicitly revise the deadlines articulated within the earlier steerage launched on July 20, 2020, besides to say that the reporting portal shall be accessible in early 2021 (as an alternative of on October 1, 2020). The opposite deadlines seem to stay unchanged. Nonetheless, as with earlier PRF deadlines, these deadlines could also be adjusted because the reporting mechanism is applied. Vital reporting deadlines are highlighted under:
All recipients should report inside 45 days of the top of the calendar 12 months 2020 (i.e., by February 15, 2021) on their expenditures by means of the interval ending December 31, 2020. Observe: 45 days falls on Sunday, February 14, 2021, so we count on additional clarification.
Recipients who’ve expended funds in full previous to December 31, 2020, could submit a single remaining report at any time throughout the first reporting window (early 2021 by means of February 15, 2021).
Recipients with funds nonetheless unexpended after December 31, 2020, should submit a second and remaining report no later than July 31, 2021.
CARES Act Part 15011 Reporting Necessities
As well as, Part 15011 of the CARES Act (and the PRF T&Cs) requires recipients of greater than $150,000 in whole funds appropriated below the CARES Act, the Households First Coronavirus Response Act (P.L. 116-127), or another Act “primarily making appropriations for the coronavirus response and associated actions” to submit a report back to HHS and the Pandemic Response Accountability Committee inside ten (10) days following the top of every calendar quarter. HHS beforehand indicated that PRF recipients’ reporting obligations below Part 15011 of the CARES Act are happy by HHS’s public reporting on the id of PRF recipients and the quantity of PRF funds obtained.
The September 19, 2020, up to date steerage didn’t present additional clarification on whether or not HHS’s public reporting will proceed to fulfill the Part 15011 requirement and didn’t additional specify how (or whether or not) the reporting data introduced within the steerage pertains to the Part 15011 requirement. Recipients ought to proceed to watch the PRF web site and steerage for updates on the Part 15011 requirement and any future PRF reporting particulars. For now, the up to date steerage offers necessary particulars for recipients who might want to submit reviews in 2021 on their use of the PRF funds.
Guaranteeing Supplier Reduction Fund funds are spent appropriately is prone to stay a excessive precedence for HHS. As developments relating to misplaced income calculations reporting reveal, recipients ought to carefully monitor evolving Supplier Reduction Fund steerage to assist their ongoing compliance efforts and may look at the attainable implications of this up to date reporting steerage.