HHS Relaxes Rules for Using Provider Relief Funds to Cover Lost Revenue

The federal government this week amended its rules for how providers can use coronavirus relief funding, specifically removing limitations around covering lost revenues not directly related to COVID-19.

The Department of Health and Human Services (HHS) announced the change in the wake of criticism from providers and some lawmakers.

“In response to concerns raised, HHS is amending the reporting instructions to increase flexibility around how providers can apply PRF money toward lost revenues attributable to coronavirus,” the agency wrote this week. “After reimbursing health care-related expenses attributable to coronavirus that were unreimbursed by other sources, providers may use remaining PRF funds to cover any lost revenue, measured as a negative change in year-over-year actual revenue from patient care related sources.”

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Prior to the shift, HHS had attempted to more closely confine the hundreds of billions in PRF funds — granted as part of the larger CARES Act stimulus package — to costs directly associated with COVID-19, with the goal of ensuring that operators did not actually increase profits over 2019 levels with the federal cash.

“This decision to prohibit most providers from using PRF payments to become more profitable than they were pre-pandemic, in order to conserve resources to allocate to providers who were less profitable, has generated significant attention and opposition from many stakeholders and Members of Congress,” HHS noted in an FAQ about its methodology.

HHS had carved out an exception for operators that lost money in 2019, allowing them to cover lost expenses with PRF money to the point where they broke even in 2020, but the agency still faced pressure from a variety of voices to go even further.

“There is consensus among stakeholders and members of Congress who have reached out to HHS that the PRF should allow a provider to apply PRF payments against all lost revenues without limitation,” HHS concluded. “In consideration of this feedback, HHS has amended its reporting instructions to provide for the full applicability PRF distributions to lost revenues.”

The news came as HHS also expanded the roster of providers that can apply for relief under the latest $20 billion relief phase announced at the start of October, with a specific mention of “nursing and custodial care facilities.”

Nursing home operators have been able to access PRF cash through multiple sources, including general distributions for Medicare and Medicaid providers, and targeted tranches aimed solely at the sector. A recent survey of SNN readers found that 85% had taken advantage of the program; payroll expenses and personal protective equipment (PPE) procurement were the most common primary uses of the federal largesse.

The move marks the second significant relaxation of rules around federal support for health care facilities in recent weeks. The Centers for Medicare & Medicaid Services (CMS) earlier this month extended repayment terms for its Medicare Accelerated and Advance Payment Program (AAP) up to 29 months, with additional delays of up to five years for operators in significant financial distress.

“In the throes of an unprecedented pandemic, providers and suppliers on the frontlines needed a lifeline to help keep them afloat,” CMS administrator Seema Verma said in a statement. “CMS’ advanced payments were loans given to providers and suppliers to avoid having to close their doors and potentially causing a disruption in service for seniors. While we are seeing patients return to hospitals and doctors providing care we are not yet back to normal.”