What You Need to Know about the CARES Act $175 Billion Provider Relief Fund

April 10, 2020 | Article

The CARES Act was intended to provide relief funding for numerous organizations and individuals impacted by the COVID-19 pandemic. Within the CARES Act is $175 billion specifically allocated to healthcare organizations to help them fight COVID-19 for their patients.

Known as the Provider Relief Fund, these funds are intended to cover healthcare-related expenses or a loss in revenue due to COVID-19. It can also help cover expenses for patients who need testing and treatment related to COVID-19 without receiving a bill.

While total funding equates to $175 billion, funding has been disbursed in different segments. Most recently, the Department of Health and Human Services began distributing $10 billion in funding for high impact COVID-19 area hospitals. Payments from this particular portion of the $10 billion distribution will provide relief to more than 1,000 hospitals across the nation. The previous round totaled $12 billion for high impact funding to 395 hospitals.

Who Can Take Part in the Provider Relief Fund?
Initial funds went to hospitals and providers enrolled in Medicare. According to the Department of Health and Human Services (HHS), facilities and providers were allotted a portion of the original $30 billion based on their share of the 2019 Medicare fee-for-service (FFS) reimbursements.

The use of Medicare FFS was merely a means of quickly distributing funds using a transparent interim methodology. Ultimately, the intent of this portion of the Provider Relief Fund is to support all healthcare providers as equitably as possible. Therefore, the remaining $20 billion was used to augment the original allocation so that the entire $50 billion is allocated as proportional as possible based on providers’ shares of net patient revenue.

HHS has determined that net patient revenue from 2018 to be the best metric to utilize, likely due to the extended due date of cost reports and ongoing strain put on the accounting and finance departments of certain healthcare organizations still trying to close out 2019 information.

Organizations and providers that are not required to submit a cost report will need to submit certain revenue and tax information to HHS in order to participate. Initial payments began on April 24 and continue weekly as more information is obtained and verified.

The payments are not loans and will not need to be repaid, unless conditions of participation are not met.

While the initial funding only applied to physicians, hospitals and other healthcare providers, the Provider Relief Fund has now been opened to dentists.

What are the Terms and Conditions Related to These Provider Relief Funds?
While funds are not considered loans, there are specific terms and conditions listed on the HHS Website that are fairly expansive. Some key provisions include:

  • The recipient certifies that it will not use the payment to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse.
  • Not later than 10 days after the end of each calendar quarter, any recipient that is an entity receiving more than $150,000 total in funds under the Coronavirus Aid, Relief, and Economics Security Act (P.L. 116-136), the Coronavirus Preparedness and Response Supplemental Appropriations Act (P.L. 116-123), the Families First Coronavirus Response Act (P.L. 116-127), or any other act primarily making appropriations for the coronavirus response and related activities, shall submit to the Secretary and the Pandemic Response Accountability Committee a report. This report shall contain:
  1. The total amount of funds received from HHS under one of the foregoing enumerated acts.
  2. The amount of funds received that were expended or obligated for reach project or activity.
  3. A detailed list of all projects or activities for which large covered funds were expended or obligated, including: the name and description of the project or activity, and the estimated number of jobs created or retained by the project or activity, where applicable.
  4. Detailed information on any level of sub-contracts or subgrants awarded by the covered recipient or its subcontractors or subgrantees, to include the data elements required to comply with the Federal Funding Accountability and Transparency Act of 2006 allowing aggregate reporting on awards below $50,000 or to individuals, as prescribed by the Director of the Office of Management and Budget.
  • The guidance also includes a variety of prohibitions and limitations including such areas as executive pay, lobbying, and various other areas discussed in the terms and conditions that providers should make themselves familiar with.

How Should I Account for the Funds Received?
There are numerous accounting and financial reporting considerations applied to these funds.

  1. In order to easily track and report amounts received by HHS under the various COVID-19 related acts, we recommend establishing a separate general ledger account specifically for these receipts.
  2. While the funds are considered payments and not loans, a healthcare organization will need to ensure that it is complying or can comply with the terms and conditions attached to such funds, otherwise, they may be considered contingent and reported as deferred or unearned revenue until such terms and conditions are met.
  3. Once recognized as revenue, the presentation on the income statement will need to be determined and there are likely numerous options available.
  • For organizations that follow the FASB standards, we would recommend reporting these amounts as a separate line item within operating revenues but separate from patient service revenue.

For organizations that follow the GASB standards, the transaction will need to be analyzed in comparison with the organization’s definition of operations. For many, treatment as a separate line item within operations, but separate from patient service revenue, would also be a preferred option.

How Will Provider Relief Funds be Distributed?
Providers will be paid via Automated Clearing House account information on file with UHG, UnitedHealthcare, or Optum Bank, or used for reimbursements from the Centers for Medicare & Medicaid Services (CMS). If you normally receive a paper check for reimbursement from CMS, you’ll also receive a paper check for this payment.

How Will Payment Apply to Different Types of Providers?
All relief payments are being made to providers and according to their tax identification number (TIN).

  • Large Organizations and Health Systems: Large organizations will receive relief payments for each of their billing TINs that bill Medicare. Each organization should look to the part of their organization that bills Medicare to identify details on Medicare payments for 2019 or to identify the accounts where they should expect relief payments.
  • Employed Physicians: Employed physicians should not expect to receive an individual payment directly. The employer organization will receive the relief payment as the billing organization.
  • Physicians in a Group Practice: Individual physicians and providers in a group practice are unlikely to receive individual payments directly, as the group practice will receive the relief fund payment as the billing organization. Providers should look to the part of their organization that bills Medicare to identify details on Medicare payments for 2019 or to identify the accounts where they should expect relief payments.
  • Solo Practitioners: Solo practitioners who bill Medicare will receive a payment under the TIN used to bill Medicare.

What Do You Need to Do Next?
Once providers receive payment, an attestation confirming receipt of the funds and agreeing to the terms and conditions of the payment must be signed within 30 days.

To complete the attestation, you’ll need:

  • Taxpayer identification number (either Employer Identification Number or Social Security number) connected to the billing entity(ies) that are eligible. Multiple TINs may be entered.
  • For each TIN, the last six digits of the deposit account in which the funds were received and the amount of funds received in that account with “HHSPAYMENT” as the payment description.

To attest to the terms and conditions of the provider relief fund payments, go here.

What Else Should Providers Consider?
As providers review the funds they will receive under this program, they should also pay attention to various other stimulus programs in determining priority for how different funds are supported by underlying costs or lost revenues as required by the programs. Many of the stimulus programs include limitations on using the same expenses to support funds received from different sources.

Please note that information continues to be released and the information above is based on guidance issued as of the date of publication. Eide Bailly will continue to provide updates as necessary.

Stay current on your favorite topics


Learn More

See what more we can bring to organizations just like yours.

Healthcare Critical Access Hospitals Health Systems Medical Practices Senior Living Dental Practices