Additional Clarification for Use of Provider Relief Funds

Thoughtware Alert Nov 19, 2020
COVID-19 medicare checklist

On November 18, the U.S. Department of Health & Human Services (HHS) issued two long-awaited clarifications related to Provider Relief Fund (PRF) reporting. These clarifications relate to the treatment of capital expenditures and year-over-year lost revenue calculations. Both clarifications are generally considered favorable to providers in PRF reporting.

Capital Expenditures 

In previous notices, HHS changed its guidance to providers by stating that providers could claim only the value of depreciation for COVID-19-related capital purchases with useful lives of more than 12 months. While this wasn’t a popular position, providers submitted questions to HHS related to fully expensing capital purchases. The newest frequently asked questions (FAQ) issued by HHS addressed the expensing of capital expenditures. The new guidance states that expenditures for capital equipment and facilities directly related to preventing, preparing, or responding to COVID-19 may be fully expensed. In addition, this guidance also clarified that inventory purchases directly related to preventing, preparing, or responding to COVID-19 may be fully expensed. The treatment of inventory was another area of concern for providers. The FAQ included examples of the types of expenditures that could be fully expensed and included:

  • Ventilators, computerized tomography scanners, and other intensive care unit-related equipment put into immediate use or held in inventory 
  • Upgrading heating, ventilation, and air conditioning systems to support negative pressure units
  • Retrofitting COVID-19 units
  • Enhancing or reconfiguring intensive care unit capabilities
  • Leasing or purchasing temporary structures to screen and/or treat patients
  • Leasing permanent facilities to increase hospital capacity

This guidance to expense the capital expenditures is only for reporting purposes under the PRFs. These capital additions should continue to be capitalized on the provider’s general ledger and financial statements in accordance with their existing capitalization policies.

Year-over-Year Net Patient Service Revenue Comparisons 

HHS previously hadn’t addressed changes in net patient service revenue that were due to settlements or payments to or from third parties related to care delivery outside the reporting period as they related to the PRF lost report reporting requirements. The new guidance provides clarification on exclusion. HHS agreed that amounts shall be excluded from the reporting of patient revenue for lost revenue year-to-year comparison purposes if the settlements didn’t relate to care provided during 2019 or 2020.  

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