HHS Loosens Restrictions on COVID Relief Fund Spending

Responding to the concerns of physician and hospital associations and some members of Congress, the Department of Health and Human Services (HHS) has backed off from recent reporting requirements for groups that have received payments from the Provider Relief Fund (PRF), a $175 billion fund established by the CARES Act. However, it’s unclear whether HHS’ new approach will satisfy healthcare providers.

In an October 22 policy statement and guidance that significantly revised the content of guidance released on September 19, HHS explained that it had imposed the reporting requirements to prevent PRF payments from making some providers more profitable in 2020 than they were before the coronavirus pandemic.

HHS’ September guidance “has generated significant attention and opposition from many stakeholders and members of Congress,” the department said. “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.”

The American Group Medical Association (AMGA) sent HHS a letter on October 21, the day before the policy change, in which it explained what’s at stake. Earlier guidance from the department, AMGA noted, had indicated that the providers could calculate COVID-related lost revenues by using “any reasonable method.” That included basing the calculation on the difference between budgeted and actual revenue in 2020.

The September guidance document, in contrast, said that providers had to calculate their lost revenues by computing the negative change in their net operating income from 2019 to 2020.

“Earlier guidance allowed our members to use ‘any reasonable method’ to determine their expenses and losses due to COVID-19,” the letter said. “Now, HHS is changing that calculation to one that will not capture the extent of their losses. AMGA members are still facing severe financial headwinds as they continue to deal with new COVID outbreaks and a difficult economic outlook. Changing the rules in the middle of this pandemic just adds to our members’ existing burdens. HHS should reinstate the earlier standard.”

The October update of the guidance, however, does not do that. Instead, HHS said, “Recipients may apply PRF payments toward lost revenue, up to the amount of the difference between their 2019 and 2020 actual patient care revenue.”

AMGA spokesman Matt Clark told Medscape Medical News that because AMGA members had not yet been asked for their reaction to the new policy, the association could not comment on it.

The Medical Group Management Association (MGMA), which agreed with AMGA’s objections, also had no substantive comment. “This latest update is definitely welcome, but it’s complicated, and we have to analyze it to determine whether it meets our concerns or whether it still needs improvement,” said Mollie Gelburd, associate director of government affairs for MGMA, in an interview with Medscape Medical News.

Getting Down to Nuts and Bolts

Under both sets of reporting requirements, physician practices that received more than $10,000 in PRF payments must report their healthcare-related expenses attributable to the coronavirus that haven’t been reimbursed by

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