HHS Releases Updates to CARES Act FAQ Guidance
On October 28, 2020, the U.S. Department of Health & Human Services (HHS) released an update to its frequently asked questions (FAQ) guidance. The most noteworthy updates to the FAQ were related to the amended Post-Payment Notice of Reporting Requirements, which were released on October 22, 2020. Significant updates include:
- Definition and calculation of lost revenues – Lost revenue is computed as the change between calendar-year (CY) 2020 and 2019 patient service revenue. The maximum amount of lost revenues eligible for reimbursement through Provider Relief Funds (PRF) is the total change in patient service revenue from CY 2019 to CY 2020. It’s unclear if the normalization of operating activities will be allowed.
- Example calculations of expenses attributable to coronavirus not reimbursed by other sources – The FAQ provides guidance on how direct and general and administrative expenses are defined as well as example calculations for a provider to estimate the amount of expenses not reimbursed by other sources, such as patient payments, third-party payors, other grants, etc.
- Capital equipment – It appears only healthcare-related capital equipment expenditures attributable to coronavirus with a useful life of 12 months or less or depreciation expense for one year are allowable PRF costs. The FAQ states that providers may report the relevant depreciation amount based on the equipment useful life, purchase price, and depreciation methodology.
- Cost reimbursed to providers – Indicates that only incremental costs not reimbursed through full cost reimbursement methodologies are eligible expenses attributable to coronavirus under the PRF. For instance, a critical access hospital that’s reimbursed 100 percent of its costs from Medicare wouldn’t have any eligible expenses attributable to coronavirus to report for Medicare patients, since those costs were fully reimbursed.
- Timeline for spending – PRF must be expended by June 30, 2021, and final reporting is due July 31, 2021. Future guidance from HHS will outline how unspent or ineligible funds are to be returned to HHS. If applicable, any accrued interest on unspent funds must be included in the amount returned to HHS.
While the updated FAQ addressed many recent reporting changes, there are still several remaining outstanding questions. For more information, reach out to your BKD Trusted Advisor™ or submit the Contact Us form below.