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Three Key Things in Health Care 

by Mark Hedberg, Matthew Jenkins, Kurt Larkin, James Pinna, Elizabeth Breen, Holly Cerasano

Published: September, 2020

Submission: October, 2020

 



  • Moving the Goalposts: The New Notice of Reporting Requirements for Provider Relief Fund (“PRF”) General and Targeted Distributions

    • On September 19, the Centers for Medicare and Medicaid Services (“CMS”) published its General and Targeted Distribution Post-Payment Notice of Reporting Requirements (“Reporting Requirements”). The Reporting Requirements make material changes to prior reporting guidance from CMS, switching from lost revenues to lost profits and requiring qualifying expenses to be reimbursed first, before lost revenues (profits) can be considered.

    • Prior to publication of the Reporting Requirements, the CARES Act and relevant guidance reflected that PRF payments could be used “to reimburse … eligible health care providers for health care related expenses or lost revenues that are attributable to coronavirus.” This was presented as an “either-or” proposition: providers could use PRF payments to reimburse qualifying expenses or lost revenues; there was no indication that providers had to count both, or that one would have priority over the other.

    • Moreover, in a June 19, 2020 frequently asked question (“FAQ”) addressing which “expenses or lost revenues are considered eligible for reimbursement” from PRF payments, CMS indicated providers would have great flexibility when it came to quantifying lost revenues.

      • “The term ‘lost revenues that are attributable to coronavirus’ means any revenue that you as a health care provider lost due to coronavirus. This may include revenue losses associated with fewer outpatient visits, canceled elective procedures or services, or increased uncompensated care.”

      • You may use any reasonable method of estimating … revenue” including the “difference between your budgeted revenue and actual revenue” or a comparison to revenues in the same period in the prior year.


    • The Reporting Requirements establish a completely different approach.

      • First, in a significant deviation from the statutory language, “lost revenues” now means lost profits: “lost revenues [are] represented as a negative change in year-over-year net patient care operating income (i.e., patient care revenue less patient care related expenses for the Reporting Entity … that received funding.)”

      • Second, expenses attributable to coronavirus must now be tracked and reimbursed from PRF payments first. “PRF payment amounts not fully expended on healthcare related expenses attributable to coronavirus are then applied to lost revenues.”


    • Health care providers that have accounted for the “earned” portion of PRF based on the prior guidance from CMS and reported such amounts in public filings should reconsider their historical accounting methodology based on the new Reporting Requirements.

    • Key Takeaway: The Reporting Requirements establish a new, unexpected paradigm for reporting and accounting for use of PRF payments. Providers must pay careful attention to new definitions in the Reporting Requirements and ensure they have systems in place to track all required reporting elements, including any they may not have been tracking prior to September 19.

  • Read more here

 



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