The CARES Act was the single largest stimulus act in American history, providing 2.2 Trillion of relief across a variety of programs. For many, the Paycheck Protection Program Loans or expanded Tax Credits were of the most interest for their practices as this looked to provide the quickest relief for their most pressing concerns. However, the CARES Act also included relief funds for many programs, several of which were targeted at healthcare providers.
The CARES Act allocated $100,000,000,000 to a “Provider Relief Fund” as part of the sweeping reform. Of this, HHS and CMS have immediately used $30,000,000,000 to provide an immediate infusion into the healthcare system.
On Friday, April 10th, many providers saw a deposit, typically titled “US HHS Stimulus.” HHS has stated they are also using the UnitedHealth Group to distribute these payments so that some providers may see this payment differently. The payment is based on your share of 2019 Medicare fee-for-service billing in proportion to the entire healthcare system fee-for-service billing.
The payment received is not a loan, but rather a payment to providers that will not need to be repaid. However, the grant does come with Terms and Conditions that providers should review.
Among the key terms and conditions listed
- The provider has billed Medicare in 2019; currently provides diagnoses, testing or care for individuals with possible or actual cases of COVID-19 and is currently an eligible Medicare participant.
- The funds will be used to prevent, prepare for, and respond to coronavirus and shall reimburse for health care related expenses or lost revenues that are attributable to coronavirus.
- The provider will submit reports as needed as determined by the HHS Secretary.
- The provider will comply with appropriate recordkeeping as required by Medicare
- Providers will not seek to collect from out-of-network patients beyond what otherwise would have been required by an in-network recipient.
- Within 30 days of receipt, providers must sign an attestation confirming receipt and agreeing to terms. If a provider cannot or does not wish to comply with the terms and conditions, they must contact HHS within 30 days of receipt and remit the payment to HHS as instructed. As of now, there is no contact information.
The key issue for many providers will be how the first bullet point is interpreted and regulated. There are many who may not provide direct care but received these payments regardless, which could result in not being able to comply with these terms and having to return the payment. We have seen with other CARES Act programs that the terms and conditions can change quickly.
As part of the HHS initial release, they noted that “This quick dispersal of funds will provide relief to both providers in areas heavily impacted by the COVID-19 pandemic and those providers who are struggling to keep their doors open due to healthy patients delaying care and canceled elective service,” which can be a signal of a very liberal reading of the first term and condition and that all providers are deemed affected by this. It is also unlikely that HHS would send out a blanket payment to all providers if it intended to recapture much of it. We believe if they intended to limit these funds, they would have instead implemented a claim program for those who are eligible.
Given the uncertainty, providers (particularly those without any direct COVID-19 care) should be wary of using these funds until it is clear how the terms and conditions will be interpreted. A payment is a welcome infusion of cash, but if it requires short-term repayment to the HHS as a result of the terms and conditions, it may not be easy to do given the current economic circumstances.
Also, note that this program is a different program than the CMS Accelerated and Advance payment program. That program requires a separate application process and is a loan to providers.
As more information becomes available on this program, we will send out updates.
Edward McWilliams, CPA
Ed is a Partner in the firm’s tax and business advisory practice focusing on providing services to middle market private companies across different industries as well as to early stage startups. Ed has over a decade of experience providing tax and business consulting services to these companies of different sizes and across different industries, bringing a broad and diverse knowledge base and strategic solutions to the many complex issues that businesses face.