By Beth Anne Jackson and Monique Pena, Brown & Fortunato, P.C.
The Public Health and Social Services Emergency Fund for provider relief (the Provider Relief Fund) of the CARES Act is currently concluding its second phase of General Distribution funding. The deadline to apply had been extended to September 13, 2020. As most providers are aware, after each payment from the Provider Relief Fund, providers must attest to compliance with the terms and conditions of retaining payments from the fund (the Terms). The Terms include requirements for providers to submit reports and cooperate in all audits as designated by the Secretary of the U.S. Department of Health and Human Services (HHS) and the Office of Inspector General (OIG). In late July and August, HHS issued new guidance on reporting and auditing requirements that may impact recipients of Provider Relief Fund payments and providers that have recently applied for funds.
On August 14, 2020, HHS released a Post-Payment Notice of Reporting Requirements (Reporting Notice), which updated its previous policy and detailed the timing of reporting requirements for recipients of one or more payments exceeding a total amount of $10,000 (Recipients) from the Provider Relief Fund, whether from General Distributions (initial and additional Medicare, Medicaid, Dental, and CHIP distributions) and Targeted Distributions (high impact area, rural, skilled nursing facilities, and Indian Health Service distributions). Recipients are subject to the reporting obligations and must demonstrate compliance with the Terms, including the proper use of funds under the Terms for each payment received from the Provider Relief Fund.
With respect to the timing of the reports, the Reporting Notice states that a reporting system will become available to recipients for reporting on October 1, 2020. According to the Reporting Notice, recipients must report their expenditures of Provider Relief funds through December 31, 2020, within 45 days of the end of calendar year 2020. If a recipient’s funds are expended in full prior to December 31, 2020, they may only need to submit a single final report from October 1, 2020 through February 15, 2021. However, if recipients have remaining funds after December 31, 2020, they must submit a second and final report no later than July 31, 2021, suggesting that HHS anticipates recipients to expend their funds by this deadline. While HHS did not provide the form, content, or instructions for the required report, it states that it will be releasing detailed reporting instructions soon and plans to provide recipients with Q&A Sessions via Webinar.
Additionally, HHS has provided a definitive response regarding audit requirements in an FAQ published on July 30, 2020, that will impact non-Federal entities and commercial (for-profit) organizations. Commercial organizations that receive $750,000 or more in annual awards (including Provider Relief Fund payments and Uninsured Testing and Treatment reimbursement payments) are subject to an annual audit and have two options in regards to conducting the audit:
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(1) a financial related audit of the award(s) in accordance with Government Auditing Standards, or (2) an audit in conformance with the requirements of 45 CFR 75 Subpart F. Non-Federal entities, including state and local governments and non-profit organizations, may also be subject to audit requirements in accordance with 45 CFR 75 Subpart F if they receive $750,000 or more in annual awards. HHS has indicated that an organization may be able to get an extension beyond the due date for audit reports by submitting a request to the Health Resources & Services Administration’s Division of Financial Integrity. Additional information is also available on the Office of Management and Budget website.
In light of HHS’s new guidance on reporting and auditing requirements, it is especially important now for providers to organize and document all items and expenses on which payments from the Provider Relief Fund were spent, as well as to engage their audit firms in discussions regarding incorporating this audit into either their existing audit processes or by conducting a separate audit as different standards may apply. As discussed in our previous article in MJH’s May issue, Provider Relief Fund – Pay Attention to the Strings Attached, the first step to tracking payments might be segregating these funds into a separate account to facilitate tracking of monies spent. The second would be to create an appropriate paper trail and document as the money is spent in order to prepare for reporting obligations. A spreadsheet with all receipts/invoices attached or numbered to correspond with the spreadsheet will go further to satisfy an auditor and reporting obligations than a disorganized box of invoices and credit card statements. Further, providers who have recently applied for Provider Relief Funds or new recipients of funds should pay close attention to this new guidance before attesting to compliance with the Terms and accepting payment. HHS will ensure that payments from the Provider Relief Fund are properly expended by recipients and improper expenditures or false representation of such expenditures can potentially subject providers not only to a repayment obligation, but also to False Claims Act liability if amounts are not timely repaid.
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