What Your Medical Practice Needs to Know about the Medicare Relief Fund Payments

As part of the CARES Act, $100 billion was appropriated to the Department of Health and Human Services (HHS) to reimburse healthcare providers for expenses and lost revenue due to the COVID-19 pandemic because many providers have suspended elective procedures and/or incurred additional costs related to the treatment and diagnosis of COVID-19 patients.

Of the $100 billion appropriated, a $30 billion grant was distributed to providers who received Medicare fee for service reimbursements in 2019. This initial $30 billion was set to be distributed immediately, with payments beginning to arrive to eligible providers on April 10.

Here are what healthcare providers need to know about this “relief fund.” 

Who is Eligible?

Providers that received Medicare fee for service (FFS) reimbursements in 2019 are eligible for the initial distribution of $30 billion. Any provider who treated or diagnosed potential COVID-19 patients is eligible under the grant program. HHS has clarified that all patients are deemed to be potential COVID-19 patients.

Providers who have ceased operations as a result of the pandemic are still eligible for the payments as long as they treated potential COVID-19 patients for a period after Jan. 31, 2020.

How the Initial Grant is Calculated

The payments are calculated using the following methodology: the provider’s share of total Medicare FFS reimbursements in 2019 multiplied by the total FFS payments in 2019 over the $30 billion in grants to be distributed (a factor of approximately 6.2%).

How Payments Were Distributed

United Healthcare Group (UHG) has administered the payments.  Generally, payments have been made by direct deposit via Optum Bank.  Payments are via Automated Clearing House account information on file with UHG or the Centers for Medicare and Medicaid Services (CMS).  The payments will come to providers via Optum Bank with “HHSPAYMENT” in the description.  Those providers who normally receive a paper check for reimbursement from CMS will receive a paper check in the mail.

Terms of Repayment

None, the funds do not need to be repaid.

How to Accept the Funds

Providers must log in to the attestation portal (https://covid19.linkhealth.com/#/step/1) to accept payment within 30 days of receipt of funds. Providers are subject to certain terms and conditions noted below.  If providers do not respond within 30 days by accepting or rejecting the funds they will be viewed as accepting the terms and conditions by default.

Terms and Conditions (T&Cs)

Providers must attest to the following terms and conditions.  Note that the below is not an exhaustive list.  Full terms and conditions are provided on HHS’s website.

• Funds cannot be used to reimburse expenses otherwise reimbursed by other sources.
• Providers cannot balance bill any patient for COVID-19-related treatment.
• Collections of out of pocket payments are limited to what would be collected from in-network patients.

The terms and conditions, available at https://www.hhs.gov/sites/default/files/relief-fund-payment-terms-and-conditions.pdf, also prohibit usage of funds for lobbying, executive pay, etc.

Reporting Requirements

HHS requires that providers who receive payments over $150,000 submit quarterly reports to HHS and the Pandemic Response Accountability Committee.  Additional clarification is needed regarding the reporting process.  Other recipients may be required to submit reports with HHS on an as-needed basis.

Providers need to utilize a system and process to document their use of funds.  If providers cannot properly support their use of funds, then HHS has the right to recover amounts paid.  The T&Cs require that documentation be based on 45 CFR §75.302 – Financial management and 45 CFR § 75.361 through 75.365 – Record Retention and Access, and other information required by future program instructions to substantiate the award. Oversight will be done by the Secretary, Inspector General, or Pandemic Response Accountability Committee to ensure compliance.  Providers should expect to have their records audited.

Aprio can help healthcare providers with the documentation process to ensure they are complying with all T&Cs and assist with audit preparation.

Taxability

There is no present guidance that comments as to the relief funds’ taxability.  Until there is additional clarification provided, amounts received would be treated as taxable income.  Aprio will be monitoring announcements and medical providers should stay in touch with us regarding any change in tax treatment.

If the funds are subsequently determined to be non-taxable, like PPP loan forgiveness, further considerations should be made regarding the impact to flow thru entities’ shareholder or member’s basis in their medical practice.

What’s Next

HHS will begin to distribute an additional $20 billion to providers on April 24.  These amounts will be distributed based off prior year cost reports submitted to CMS.  Similar to the first $30 billion in funds, providers will need to log in to the attestation portal to confirm receipt of payment, attest to the terms and conditions, and confirm the CMS cost report data that was used to calculate the payment.