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New Coronavirus Relief Package, December 2020- Healthcare specific updates

Tiffany Karlin

December 22, 2020

Health and Human Services Definition of Lost revenue: The Act gave clarification on guidance reporting for FAQ’s (CARES Act Provider Relief Fund: FAQs | to revert back to what is more consistent to the original definition that recipients can calculate based on budgeted losses.  

With approval of this bill, recipients are no longer restricted to calculating lost revenue based on a year-to-year actual patient care revenue comparison, as described in current HHS guidance.

“[a] provider may calculate such lost revenues using the Frequently Asked Questions guidance released by the Department of Health and Human Services in June 2020, including the difference between such provider’s budgeted and actual revenue budget if such budget had been established and approved prior to March 27, 2020.”

FAQ’s detailed in the Act reported on June 2020, and then again updated on October 28, will provide greater flexibility in deciding what the financial impact was to the provider. 

As stated in the FAQ’s, “the term “lost revenues that are attributable to coronavirus” are defined as any revenue that you as a healthcare provider lost due to coronavirus. This may include:

  • revenue losses associated with fewer outpatient visits;
  • canceled elective procedures or services; or
  • increased uncompensated care.

Providers can use Provider Relief Fund payments to cover any cost that lost revenue otherwise would have covered, so long as that cost prevents, prepares for, or responds to coronavirus. Thus, these costs do not need to be specific to providing care for possible, or actual coronavirus patients; but the lost revenue that Provider Relief Fund payments cover must have been lost due to coronavirus.

Health and Human Services Allocation of Targeted Funds:  As with the General Distribution of Provider Relief Funds, the Act will allow parent organizations to now allocate “Targeted Distributions” to subsidiaries.

“. . . for any reimbursement by the Secretary from the Provider Relief Fund to an eligible health care provider that is a subsidiary of a parent organization, the parent organization may, allocate (through transfers or otherwise) all or any portion of such reimbursement among the subsidiary eligible health care providers of the parent organization, including reimbursements referred to by the Secretary as ‘‘Targeted Distribution’’ payments, among subsidiary eligible health care providers of the parent organization except that responsibility for reporting the reallocated reimbursement shall remain with the original recipient of such reimbursement.”

This updated guidance will allow parent organizations to allocate General Distribution and Targeted Distribution payments to subsidiary organizations. Reporting of these funds, no matter the allocation to each subsidiary, will remain a requirement for each provider who receives the distribution. Tracking of allocated funds will be essential to meet reporting guidelines.

As stated by the FAQ’s for General Distribution, but now applies to Targeted: “Yes, a parent organization can accept and allocate General Distribution funds at its discretion to its subsidiaries. The Terms and Conditions place restrictions on how the funds can be used. In particular, the parent organization will be required to substantiate that these funds were used for increased health care-related expenses or lost revenue attributable to COVID-19, and that those expenses or losses were not reimbursed from other sources and other sources were not obligated to reimburse them.”

Additional Provider Relief Funding: The Act would appropriate an additional $3 billion to the Provider Relief Fund.

Medicare Sequestration: The Act provided an extension of Medicare sequester moratorium through March 31, 2021.

We are here to help you comply with reporting and tracking compliance. Please contact us for any assistance.

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