On Friday, September 10, 2021, the Department of Health and Human Services (HHS) announced several developments related to the Provider Relief Fund (PRF).
60-Day Grace Period
First, HHS announced a 60-day grace period (beginning on October 1, 2021, and ending on November 30, 2021) for the September 30, 2021, deadline for PRF Reporting Period 1. HHS is offering this 60-day grace period due to difficulties experienced by providers across the country stemming from natural disasters and the COVID-19 delta variant. HHS clarified that while this is not an extension of the original September 30, 2021, PRF Reporting Period 1 deadline, HHS will not initiate collection activities or similar enforcement actions for noncompliant providers during the 60-day grace period.
Keep in mind, while HHS is offering a 60-day grace period for PRF Reporting Period 1, all deadlines to use funds and the associated reporting time periods will not change.
Additional $25.5 Billion in Funding
Additionally, HHS announced the availability of $25.5 billion in COVID-19 provider funding. This funding is comprised of $17 billion for PRF Phase 4, dedicated to a broad range of providers who can document revenue loss and expenses associated with the pandemic, and $8.5 billion in American Rescue Plan (ARP) funds, for providers who serve rural Medicaid, Children’s Health Insurance Program (CHIP), and/or Medicare patients.
The PRF Phase 4 funds correspond to providers’ lost revenues and expenditures between July 1, 2020, and March 31, 2021. Smaller providers will be reimbursed for revenue loss at a higher rate than larger providers with bonuses going toward providers who treat Medicaid, Children’s Health Insurance Program (CHIP), and/or Medicare patients.
75% of Phase 4 allocations will be calculated based on revenue losses and COVID-related expenses. The remaining 25% will be allocated toward the aforementioned bonus payments.
Combined applications for both Phase 4 and ARP funds will open on September 29, 2021, and HHS has provided some limited guidance on the application process for its future payments, including eligibility requirements, tips for preparing for the upcoming application process, and terms and conditions for Phase 4 and ARP funding. Importantly, the terms and conditions specify that to help ensure these provider funds are used for patient care, PRF recipients will be required to notify the HHS secretary of any merger with or acquisition of another health care provider during their payment received period. In HHS’ words, “Providers who report a merger or acquisition may be more likely to be audited to confirm their funds were used for coronavirus-related costs, consistent with an overall risk-based audit strategy.”
Phase 3 Payment Calculation and Dispute Resolution
Finally, HHS released a payment calculation methodology that describes how Phase 3 payments were calculated. Providers who believe their Phase 3 distribution was not calculated correctly according to the new methodology will now have an opportunity to request a reconsideration. The linked PDF lays out the following seven steps that the Human Resources and Services Administration (HRSA) took when calculating how much providers should receive under Phase 3:
A. Calculate 2% of annual patient care revenue
B. Calculate initial loss ratio and provider-type loss ratios
C. Cap loss ratios and other pre-payment value adjustments
D. Calculate 88% of adjusted losses
E. Select the greater of calculated A or D
F. Deduct all prior PRF payments from the result of E
G. Flag and conduct manual review of flagged potential payments
Currently, the HRSA is asking providers who may have an issue with their Phase 3 determination and would like to know about future options to email: PRFReconsiderations@hrsa.gov.
Key Takeaways
The 60-day grace period for PRF Reporting Period 1 will come as a welcome relief to many providers, and those providers still feeling the effects of COVID-19 now have yet another possible lifeline in the form of Phase 4 PRF and ARP funding. Additionally, those providers questioning the funding they received from Phase 3 distributions can now understand how their payment was calculated and should soon be able to pursue reconsideration with HRSA.
