As Provider Relief Audits Loom and Scrutiny Increases, Tracing Dollars to Care Vital to Avoid Clawbacks

Health care providers that received more than $750,000 in federal awards from the federal coronavirus Provider Relief Funds (PRF) will face a single audit or program-specific audit, and they need to ensure that the funds are used in accordance with the federal government’s terms and conditions — especially since they can’t be classified as a loan or a grant.

That’s according to an August 3 webinar held by the professional services firm CliftonLarsonAllen (CLA), which cited a quote from the Department of Health and Human Services (HHS) describing the funds as “neither a loan nor a grant. This is a payment.”

However, the HHS FAQ notes that if the terms and conditions for the use of the funds are met, the payments do not need to be repaid at a later date.


The funds were created by the CARES Act coronavirus stimulus package passed in March, and HHS has made several distributions of funds for providers based on Medicare and Medicaid reimbursements, as well as two dedicated programs for SNFs of $4.9 billion and $5 billion each.

The webinar came during the same week that the Washington Post ran an in-depth story identifying nursing home chains with a history of Medicare fraud accusations receiving federal relief funds, highlighting growing scrutiny of how health care providers will use the government’s COVID-19 largesse — which federal officials have repeatedly emphasized was designed to prioritize speed over accuracy.

CLA detailed the various audit and reporting options, the requirements for single audits and program audits, as well as considerations for the PRF audits.


“If you look at some of the terms and conditions in there, they state that non-compliance is really grounds for potential recoupment,” CLA principal Trent Fast said on the webinar. “If we’re non-compliant, if the funds aren’t spent appropriately… there’s potential for recoupment. So that’s really a big piece of what the testing of the single audit’s going to look like.”

The single audit consists of an audit of financial statements to obtain understanding and test internal controls and compliance with the terms and conditions of the federal awards that affect the major programs.

There are three layers of audit requirements: generally accepted audit standards (GAAS), general accepted government audit standards (GAGAS) – Yellow Book, and uniform guidance, according to the presentation.

The main issue is whether funds are spent appropriately and going to the right places, Fast said.

Single audit requirements and guidance for the PRF is expected in August, according to CLA, as they are found in the Office of Management and Budget (OMB) Compliance Supplement, which is updated each year.

PRF payments cannot be used to reimburse expenses reimbursed by other sources, such as the Paycheck Protection Program (PPP), and CLA recommends identifying and attributing qualifying expenditures to PRF receipts as close as possible to when the expenses occur.

One of the key parts of the terms and conditions is the fact that recipients of PRF funds need to certify that “the payment will only be used to prevent, prepare for, and respond to coronavirus, and shall reimburse the recipient only for health care related expenses or lost revenues that are attributable to coronavirus,” CLA director Jennifer Boese noted on the webinar.

“They would ask for money back if you are not really staying with the terms and conditions,” she said. “If you cannot justify that you have enough lost revenues or health care expenses for the amount, then potentially yes. If you aren’t keeping with the terms and conditions, potentially yes. And if you have dollars remaining at the end of the time period of the pandemic and the deadline, then potentially yes, you will have to return those dollars.”

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