CARES Provider Relief Fund (PRF) Reporting Update

Client Alert

January 14, 2022

CARES PROVIDER RELIEF FUND (PRF)

Period 2 Reporting Update

Toyon is pleased to provide this update on the CARES Provider Relief Fund (PRF). Please feel free to contact Fred Fisher at 888.514.9312, or [email protected] with any questions.

Providers in receipt of PRF related to Period 2 are now able to report on the use of the funding. Period 2 represents PRF received from July 1, 2020, through December 31, 2020 and is aligned with COVID-19 expenses and lost revenues from January 1, 2020 through December 31, 2021 (with no duplication of expenses and lost revenue reported in Period 1). The Period 2 reporting deadline is March 31, 2022.

I. HRSA Provides Additional Resources

HRSA's website has new resources for PRF Period 2, including:

Notably, the Parent-Subsidiary Reporting Fact Sheet highlights flexibilities for reporting on the use of General Funds, while reiterating the complexities of transferring Targeting Funds between Parents and their respective Subsidiaries.

On the reporting of Targeted Funds between Parent and Subsidiary providers, HRSA explains:

“A parent TIN cannot report on a subsidiary's Targeted Distribution payments. The original recipient of a Targeted Distribution payment must always be the Reporting Entity for that payment.”

However, although a Parent cannot report on a Subsidiary’s Targeted Funds, Targeted Funds may be transferred between the Parent and its Subsidiaries (increases the likelihood of HRSA audit). Providers are required to enter Targeted Funds transferred to/by the Parent entity in the Period 2 portal. The Parent-Subsidiary Fact Sheet states:

“Parent entities may transfer and re-distribute Targeted Distribution payments to, between, and among its eligible health care provider subsidiaries^[1]

…The entity that ultimately receives the transferred Targeted Distribution funds should provide the original recipient with necessary information on its use of the funds. This information should be included in the reporting submission completed by the original recipient.”

II. Period 2 Reporting Supports the Carryforward of Unused Expenses and Lost Revenues from Period 1

Reporting Period 2 COVID-19 Expenses

The period of availability to report expenses towards PRF in Period 2 overlaps with Period 1. Accordingly, with no duplication^[2] from amounts reported in Period 1, providers may report expenses from January 1, 2020 through June 30, 2021. Furthermore, in PRF Period 2, providers may report an additional six months of expenses from July 1, 2021 through December 31, 2021.

Reporting Period 2 Lost Revenues

PRF in excess of COVID-19 expenses will then be applied against quarterly losses to operating revenue from January 1, 2020 through December 31, 2021, that were not previously applied in Period 1. This is highlighted in Example 1 of Lost Revenues Guide - Reporting Period 2, stating:

“When the provider comes in to report in Reporting Period 2, if the provider did not already apply the entire $60M (losses from January 1 2020 through June 30, 2021) to payments in Reporting Period 1, the provider will be able to apply the remaining unreimbursed lost revenues up to the PRF payments received and not used on expenses attributable to coronavirus in Reporting Period 2.”

Providers may also change amounts of reported losses in the pre-populated cells from Reporting Period 1 (i.e., losses from January 1, 2020 through June 30, 2021) “if there was a change

to patient care revenue since the RP1 report was filed”^[3^]. Providers revising losses from Reporting Period 1 are required to enter a justification limited to 1,000 characters. HRSA is also permitting providers to switch Lost Revenue Methodologies, as discussed in item #3 below.

III. Providers May Switch the Methodology for Determining Lost Revenue

Providers reporting lost revenues against residual PRF (after expenses) will be asked to select the Lost Revenue Methodology: Actual (Option i), Budget (Option ii), or Alternate (Option iii). Providers may change the methodology that was used in Reporting Period 1, provided the change is used across the entire Period 2 period of availability (lost revenues from January 1, 2020 to December 31, 2021). Any provider wishing to change its Lost Revenue Methodology must submit a “justification for change in lost revenues calculation method” with a narrative limited to 1,000 characters.

Providers reporting lost revenues under Alternate Methodology (Option iii) must confirm prepopulated information is accurate and are able to provide new documentation appliable to Reporting Period 2.

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^[1] The Targeted Distribution payment allocation may not exceed the Parent entity’s pro rata ownership share of the Subsidiary. Further, transferred Targeted Distribution payments face an increased likelihood of HRSA audit.

^[2]Per the What’s New in Period 2 Fact Sheet: “The Period of Availability for RP2 payments overlaps with payments received in RP1. Therefore, providers will need to show how payments were applied to expenses and lost revenues from Q1 2020 through Q4 of 2021. The expenses and lost revenues for Q3 2021 and Q4 2021 must not be duplicative of those included in the RP1 report for Q1 2020 through Q2 2021.”

^[3] What’s New in Reporting Period 2 Fact Sheet