What You Should Know About Recent Updates to CARES Act Reporting Requirements for Healthcare Providers

The Coronavirus Aid, Relief, and Economic Security (CARES) Act Provider Relief Fund was initially established to provide funding to healthcare service providers impacted by the COVID-19 pandemic. While the financial support has provided much-needed relief, the programs introduced some additional rules and reporting requirements for healthcare providers. On October 22, 2020, the Department of Health and Human Services (HHS) updated its guidance on how providers should report their Provider Relief Fund (PRF) payments that have been allocated for expenses and lost revenues as a result of the pandemic. Below is an overview of what you need to know.

Key Clarifications to Instructions

Addressing some of the ambiguity present in the previous September 19 update, two key clarifications were set forth.

  • Method of accounting: The HHS has clarified that PRF payments should be reported using the provider’s normal method of accounting (cash or accrual basis).
  • Lost revenue definition: In a twist from prior instructions, which defined lost revenue as a negative change in year-over-year net patient care operating income, recipients may now apply PRF payments up to the amount of the differences between their 2019 and 2020 actual patient care revenue.

If recipients do not use PRF funds in full by the end of the 2020 calendar year, they will have a further six-month period in which to utilize leftover amounts for expenses attributable to the pandemic but not repaid by other sources, or to apply toward lost revenues in an amount not greater than the difference between 2019 and 2021 actual revenue.

PRF Reporting Requirements

The deadlines from here on out are as follows:

  • January 21, 2021: HHS portal opens for PRF reporting
  • February 15, 2021: Reporting deadline for all providers on use of funds, assuming all proceeds were accounted for in 2020
  • July 31, 2021: Final reporting deadline for providers who did not fully spend PRF funds before December 31, 2020
  • September 30, 2021: Due date for the single audit or program-specific audit reports for a December 31 year-end or the earlier of 60 days from the date of the issuance of the audit report

PRF recipients can start submitting PRF reports documenting how funds were spent or attributed beginning January 15, 2021. The level of reporting requirements differs by the amount received as follows:

  • Entities that received less than $10,000 in total from the PRF do not have to file a report
  • Entities that received more than $10,000 but less than $500,000 must submit a simplified report with only these broad expense categories: general administrative expenses and other healthcare-related expenses.
  • Entities that received more than $500,000 in PRF must submit a detailed report described below.
  • Entities that received over $750,000 in PRF may also be subject to an audit per federal regulations.

Audit Requirements

If an entity received more than $750,000 in PRF, they may be subject to an audit per federal regulations. Audits are required for entities (non-profit and commercial as it relates to PRF per HHS guidelines) that spent over $750,000 from federal grant funds in a reporting period. Note the difference between receiving $750,000 and spending $750,000. Some funds could have been received in cash but not yet spent.

Let MKR CPAs & Advisors help

Our trusted advisors are equipped with the expertise to help you unravel the complexities of these reporting requirements. If you need assistance, contact an MKR advisor today to get the conversation started.