CARES Act Reporting Requirements for Healthcare Providers: What You Need to Know
Note: These reporting requirements have been updated as of June 11, 2021. To learn more about the most recent round of updated guidance, read this blog.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act created multiple programs to assist healthcare providers in weathering the COVID-19 storm. And while the financial support has been welcomed by the industry, it introduced many new deadlines, rules, and reporting requirements. Here is a summary of what you need to know.
First, these are the hard deadlines:
- Nov. 6, 2020: Deadline for requesting Phase 3 of Provider Relief Fund (PRF) proceeds
- Jan. 21, 2021: Opening of the Department of Health and Human Services (HHS) portal for PRF reporting
- Feb. 15, 2021: Deadline for submitted PRF report, assuming all proceeds were accounted for in 2020
- July 31, 2021: Final deadline for submitted PRF report
- Sept. 30, 2021: Due date for the single audit or program-specific audit reports for a Dec. 31 year-end or the earlier of 60 days from the date of the issuance of the audit report.
If you took a Paycheck Protection Program (PPP) loan, make sure you know the following:
- The expiration of the expenditure window, based on the issuance of your loan, is likely in October or November 2020. The exact date will be 24 weeks from when funds were received.
- Once the 24-week PPP expenditure window has closed, or before then if you have expended all funds and met the other requirements, you may apply for loan forgiveness.
- Check with your lender to ensure they are accepting applications.
Provider Relief Funds
Another round of Provider Relief funding is now available. Healthcare providers must actively apply for these funds – they will not be distributed automatically. You may submit an application through the HHS portal until Nov. 6. Eligibility for these funds has been expanded to include behavioral health and dental providers. If you received proceeds from either of the prior funding rounds, you are most likely eligible for this round. This third phase of Provider Relief funds is meant to equalize payments at 2% of annual net revenue and enable additional payments for COVID-attributable expenses and lost revenue. You will be required to submit financial documentation and tax information as part of the application. Recipients are still bound by the program’s terms and conditions and are required to report how the funds were utilized.
Beginning Jan. 21, 2021, PRF recipients can begin submitting PRF reports documenting how funds were spent or attributed. The level of reporting varies by the amount received:
- Entities that received less than $10,000 in total from the PRF do not have to file a report.
- Entities that received more than $10,000 but less than $500,000 must submit a simplified report with only these broad expense categories: general administrative expenses and other healthcare-related expenses.
- Entities that received more than $500,000 in PRF must submit a detailed report described below.
- Entities that received over $750,000 in PRF may also be subject to an audit per federal regulations (45 CFR 75.501, single audit requirements). More on this subject is below.
The PRF is designed to pay eligible COVID-19 expenses (actual or suspected cases) first and then may be used to offset lost revenue. Eligible expenses are broadly defined by HHS: “Expenses attributable to coronavirus may be incurred in both direct patient care overhead activities related to treatment of confirmed or suspected cases of coronavirus, preparing for possible or actual coronavirus cases, maintaining healthcare delivery capacity, which includes operating and maintaining facilities, etc.”
If you have remaining PRF proceeds after considering expenses, you may allocate them to lost revenue. HHS was initially stringent in how lost revenue was calculated but has recently relaxed their position to allow providers “to apply PRF payments against all lost revenue without limitation.” While expense data must still be provided, a negative change (decrease) in revenue from the prior year will be sufficient for PRF reporting.
To adequately prepare for PRF reporting in January 2021, we recommend physician practices and other providers take the following steps:
- Ensure your financial reporting groups revenue sources in the following categories:
- Medicare Part A+B
- Medicare Part C
- Commercial insurance
- Self-pay (no insurance)
- Any other patient care revenue
- All revenue data is to be provided net of insurance adjustments, bad debt, and other write-offs. This will be similar to collections or receipts for most providers. We recommend you document charge and collection activity as well as accounts receivable changes on an insurance plan-specific schedule.
- Ensure your financial reporting captures these expenses using the definitions provided by HHS. Expenses must be reported net of other reimbursed sources such as insurance, patients, or other government payments. If, for instance, you received PPP funds, you may not also apply PRF dollars to the same salary and wage expenses.
- Mortgage/Rent: Monthly payments related to mortgage or rent for a facility
- Insurance: Premiums paid for property, malpractice, business insurance, or other insurance relevant to operations
- Personnel: Workforce-related actual expenses paid to prevent, prepare for, or respond to the coronavirus during the reporting period, such as workforce training, staffing, temporary employee or contractor payroll, overhead employees, or security personnel
- Fringe Benefits: Extra benefits supplementing an employee’s salary, which may include hazard pay, travel reimbursement, employee health insurance, and employer paid payroll taxes
- Equipment Lease Payments: New equipment or software lease
- Utilities/Operations: Lighting, cooling/ventilation, cleaning, or additional third-party vendor services not included in “Personnel”
- Other General and Administrative Expenses
- Healthcare Supplies: Expenses paid for the purchase of supplies used to prevent, prepare for, or respond to the coronavirus during the reporting period, such as personal protective equipment (PPE), hand sanitizer, or supplies for patient screening
- Healthcare Equipment: Expenses paid for the purchase of equipment used to prevent, prepare for, or respond to the coronavirus during the reporting period, such as ventilators, updates to HVAC systems, etc.
- Healthcare Information Technology (IT): Expenses paid for IT or interoperability systems to expand or preserve care delivery during the reporting period, such as electronic health record licensing fees, telehealth infrastructure, increased bandwidth, and teleworking to support a remote workforce
- Healthcare Facilities: Expenses paid for facility-related costs used to prevent, prepare for, or respond to the coronavirus during the reporting period, such as lease or purchase of permanent or temporary structures, or to modify facilities to accommodate patient treatment practices revised due to coronavirus
- Other Healthcare-Related Expenses: Any other actual expenses, not previously captured above, that were paid to prevent, prepare for, or respond to the coronavirus
- Prepare a schedule of the amounts received from these programs:
- Department of the Treasury, Small Business Administration (SBA), and the CARES Act/PPP
- FEMA CARES Act
- CARES Act testing
- Local, state, and tribal government assistance
- Business insurance
- Other assistance
- Prepare and maintain a staffing report documenting these personnel metrics for 2020:
- Total personnel by labor category (full-time, part-time, contract, other)
- Total re-hires
- Total new hires
- Total personnel separations by labor category
- Prepare quarterly activity reports for both in-person and telehealth patient visits in 2020.
- If you acquired or divested of a subsidiary in 2020, additional documentation will be required.
If you received over $750,000 in PRF, you may need to have an audit per existing federal regulations. Audits are required for entities (non-profit and commercial as it relates to PRF, per HHS guidelines) that expended over $750,000 from federal grant funds in a reporting period. Note that receiving $750,000 is not the same as expending $750,000 because some funds could have been received in cash but not yet expended.
We’re Here to Help
Though the regulations and reporting may seem daunting, we’re here to help you navigate the complexities. This flowchart may be useful in helping you understand your reporting obligations for PRF:
If you need help navigating these compliance requirements or strategizing how you can best position your organization, our team stands ready to help. Please reach out to your KSM advisor or complete this form.
Keeping you updated on COVID-19 and its impact on businesses and individuals.