On October 22, the Department of Health and Human Services (HHS) updated its guidance on how hospitals and other providers should report their use of the nearly $135 billion in Provider Relief Fund payments that have been distributed.  The Provider Relief Fund, initially established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, is intended to cover provider expenses and lost revenues attributable to the coronavirus pandemic.  HHS’s latest guidance is a huge victory for providers on how much of the funds may be used for lost revenues.  Providers are to calculate and report their use of the funds for lost revenue “up to the amount of the difference between their 2019 and 2020 actual patient care revenue.”  The funds may also be used to replace coronavirus-related revenue losses in the first half of 2021, by performing similar comparisons to 2019 revenue.

HHS’s latest instruction overrides its guidance from September limiting eligible “lost revenues” to lost profits from patient revenue.  But that September guidance surprised providers because it appeared to contradict the agency’s original instruction, from a June 2019 FAQ, that the funds may be used to replace any revenue lost due to the coronavirus and used to cover any costs the lost revenue would otherwise have covered (except salary amounts over $197,300).  HHS explained that it has reversed course because the September guidance “generated significant … opposition from many stakeholders and Members of Congress” and the consensus is that providers should be allowed to apply Provider Relief Fund “payments against all lost revenues without limitation.”

HHS’s guidance provides detailed instructions for reporting additional expenses and revenue losses.  The portal for reporting the use of Provider Relief Funds is scheduled to open on January 15, 2021, and the first reports are due on February 15, 2021.