By STEPHEN SHAVER
The outbreak of COVID-19 sent shockwaves through the healthcare industry. Drastic declines in the hospital and healthcare provider revenue have hamstrung their ability to response to the outbreak and, in some cases, caused providers to shut down entirely. In response, Congress passed the Coronavirus Aid, Relief and Economic Security (CARES) Act, which included the creation of the Provider Relief Fund. The fund’s goal is to provide direct financial relief to hospitals and healthcare providers. The Department of Health and Human Services (HHS) has been charged with distributing the fund’s $175 billion war chest.

The fund’s distributions have been divided into general allocations, to be distributed to a wide range of providers, and targeted allocations, to be distributed to areas of need to address the COVID-19 outbreak. To be eligible for a portion of the $50 billion general allocations, a provider must have billed Medicare in 2019 and provided care for actual or possible cases of COVID-19 after Jan. 31, 2020. Guidance indicates HHS considers all patients to be possible cases of COVID-19. Most of this allocation was deposited in early- and mid-April 2020 directly into bank accounts associated with each qualifying recipient’s Tax Identification Number (TIN). Additional general allocation funds were made available by application to providers whose need was not fully met by the initial direct deposit. The targeted allocations include $10 billion for hospitals in areas that have been particularly affected by COVID-19, $10 billion for rural health clinics and hospitals, $400 million for Indian Health Service facilities, and an unspecified allocation for treatment of the uninsured. HHS indicates distribution of these target allocations will begin in early May and more targeted allocations will likely be announced.

These payments are considered grants, not loans, and do not need to be repaid if the recipient complies with the fund’s terms and conditions. Failure to comply may lead to HHS recoupment of the funds. The payments are also subject to the provision of the False Claims Act. The recipient may affirmatively accept the term and conditions through the CARES Act Provider Relief Fund Attestation Portal on the HHS website. However, any recipient of a Relief Fund payment who retains the money for 30 days without contacting HHS to remit the payment shall be deemed by HHS to have accepted the terms and conditions.

While the terms of conditions vary by type of allocation, many of the core terms create compliance pitfalls for the recipients. First, the recipient must certify that the payment will only be used to prevent, prepare for and respond to coronavirus, and shall reimburse the recipient only for healthcare related expenses or lost revenues that are attributable to coronavirus. Next, the recipient must certify that it will not use the payment to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse. Lastly, all recipients must submit reports to HHS to ensure compliance, the form and content of which have not yet been specified. Recipients of more than $150,000 from the Provider Relief Fund or other federal responses to COVID-19 must also submit quarterly reports to HHS containing detailed information regarding the receipt and use of all COVID-19 related federal funds.

HHS guidance so far has largely focused on eligibility criteria and information providers need to apply for payments. This focus has left many providers in the dark about how they can use the funds that, in many cases, have already been deposited into their accounts. Overlapping sources of relief funds, such as the Paycheck Protection Program, which often come with their own compliance challenges, along with complex contractual relationships and obligations between providers add more uncertainty.

In this environment, the best defense is often thorough documentation of what relief funds have been received, from what source, and how these funds are deployed. This documentation likely will be crucial when submitting reports to HHS and responding to potential audits. Thorough documentation in the present is the key to avoiding compliance issues in the future.