By DANIEL AYYASH & SHEA MACE
Wachler & Associates, P.C.
Overview
In response to the enormous economic challenges faced by healthcare providers during the COVID-19 public health emergency (PHE), the Coronavirus Aid, Relief, and Economic Security (CARES) Act established the Provider Relief Fund (PRF) in an effort to provide financial support to providers across the nation. Congress allocated $178 billion to the PRF program, which was then disbursed to providers in multiple phases through general and targeted distributions. The Health Resources & Services Administration (HRSA), a subagency of the Department of Health and Human Services (HHS), was tasked with administering PRF disbursements and overseeing compliance with the program’s terms and conditions.
The primary compliance requirements attached to PRF distributions mandated that the funds only be used to prevent, prepare for, and respond to COVID-19, and that providers submit reports to HRSA regarding use of the funds. The reporting requirements, including the timeline for reporting, changed multiple times throughout the years following the program’s inception, creating significant confusion amongst providers.
Furthermore, while HRSA stated that providers who received PRF funds were required to accept a corresponding set of terms and conditions, all providers who retained those funds for longer than 90 days without contacting HHS or returning the funds were deemed to have implicitly accepted the terms and conditions. Additionally, if a provider rejected the terms and condition but did not return the funds within 15 days, the provider remained subject to the terms and conditions. Notably, most of the Phase 1 PRF distributions, made in the Spring and Summer of 2020, were unsolicited and automatically deposited directly into providers’ bank accounts without prior request, application, or notice. During a time of unprecedented uncertainty, the severe lack of notice and information in connection with PRF disbursements or the program’s terms and conditions was bound to create widespread compliance concerns and a web of confusion amongst innocent providers.
Mystifying Reporting Requirements
In June 2021, over a year after the PRF disbursements began, HRSA established the reporting schedule and deadlines. These deadlines were classified into four Reporting Periods, depending on when a provider received PRF funds. For example, Reporting Period 1 included funds disbursed between April 10, 2020 and June 30, 2020, constituting many of the early and unsolicited distributions. HRSA subsequently began sending letters to providers in March 2022 who had not timely filed reports, demanding the return of all PRF funds within 30 days. These letters resulted in a widespread outcry amongst providers and industry groups, which prompted HRSA to amend their demands by allowing providers to file requests for extensions. However, providers were only given 11 calendar days to file these requests, and submission of an extension request by no means guaranteed approval.
The nebulous and constantly changing nature of the reporting requirements resulted in many providers not knowing how or what to report, all while navigating the extreme challenges presented by trying to stay afloat during a pandemic. In fact, many providers currently facing repayment demands from the government received PRF funds during these early distribution phases. Many of these providers were granted disbursements without ever requesting the funds in the first place, and without clear notice or guidance regarding the reporting requirements and other terms and conditions.
Repayment Demands and Collection Efforts
Despite the confusion surrounding notice and acceptance of the PRF terms and conditions, HRSA initiated aggressive collection efforts for funds disbursed to providers who HRSA claims failed to meet the requisite reporting requirements. Although HRSA maintains that it takes multiple steps to communicate with recipients of PRF payments prior to collection efforts, many providers have reported a conspicuous lack of any preliminary communications. The American Medical Association, in an April 2022 letter to HRSA, stated that a “staggering” number of physicians were unaware of the reporting deadlines, highlighting the problems surrounding HRSA’s communication efforts. Several providers have reported that they first became aware of any alleged non-compliance only after receiving a collection letter from HRSA, or in some cases, from the Department of Treasury.
HRSA is supposed to issue a Final Repayment Notice to inform providers that HRSA has determined a provider is out of compliance with the PRF program’s terms and conditions. This notice typically includes a statement that, due to this supposed non-compliance, the provider must return all PRF funds received during the relevant disbursement period. Further, this notice should also afford a provider the right to request a review of HRSA’s determination of non-compliance and allow a provider to dispute the demand to return PRF funds. If a provider does not request a review or return the PRF funds within 60 days of the Final Repayment Notice, then the amount of PRF funds at issue is treated as a debt and is referred to the HHS Program Support Center (PSC) for debt collection. HRSA has taken the position that once it initiates collection efforts, there is no way to reinstate compliance, and states that a provider cannot come into compliance to halt debt collection once HRSA refers a debt to HHS PSC. HRSA further states that providers who have PRF debts referred for collection no longer have the opportunity to report, as applicable, or take other actions to resolve the debts, and that HRSA has no authority to waive a debt.
If not paid, PSC will then refer the debt to the Treasury’s Centralized Receivables Service (CRS). At this stage, a provider has the opportunity to dispute the debt through a CRS dispute process. However, although there is a CRS dispute process in place, it appears to be rarely successful. Generally, PRF debts that reach the CRS stage continue down the debt collection pipeline, regardless of whether a provider submits a timely dispute. If the debt is not paid within 90 days of being referred to CRS, it is then transferred to the Treasury’s Cross-Servicing Program. Once a debt reaches Cross-Servicing, the Treasury acts as a routine debt collector and will seek to collect on the PRF debt as if it were any other sum of money owed to the federal government. Providers should be wary of debts held by the Treasury. Unlike HRSA’s comparatively benign collection efforts, the Treasury has the authority to impose significant adverse consequences upon providers for which it receives debts. If a debt under the Treasury’s purview remains unpaid, the Treasury has the authority to garnish a provider’s wages and offset payments for federal healthcare benefit programs (e.g., Medicare payments) in order to satisfy the debt, among other aggressive actions. All the while, the debt is accruing interest, fees, and other penalties. Furthermore, the Treasury may also refer the matter to the Department of Justice for litigation and other enforcement actions. Once referred to the Treasury, HRSA states they will no longer communicate with providers regarding their debt. This leaves providers in an extremely difficult position, as it remains uncertain whether HRSA or the Treasury is willing to allow providers to demonstrate compliance.
Conclusion
While the Provider Relief Fund may have been established with good intentions, many providers found the implementation of the program to be convoluted at best. Providers who received PRF disbursements should be aware of the reporting requirements and HRSA’s apparently unwavering commitment to recoup funds from providers who HRSA claims did not comply with the program’s terms and conditions. Providers who received PRF funds and spent the money in the proper areas, but have simply not reported in a timely manner, should seek guidance in disputing any alleged debts and the ability to demonstrate compliance.