If your radiology practice received payments from the United States Department of Health and Human Services (HHS) Supplier Relief Fund (PRF) or a Paycheck Protection Program (PPP) loan in 2020, you are probably aware of the reporting requirements and potential audits that are looming. by 2021.

We’ve summarized the key information you need to know about reporting requirements and upcoming audits, as well as how to start preparing for such obligations. Please be aware that the parameters and guidelines for PRF payments and PPP loans are constantly evolving and the information provided here is subject to change.

PRF REPORTING REQUIREMENTS

The CARES Act limits the use of PRF payments to healthcare-related expenses or lost income due to the coronavirus. In order to ensure that all providers who have received PRF payments have used their funds in accordance with these usage restrictions and other terms and conditions associated with those payments, HHS requires all payees to comply with certain reporting requirements.

General reporting requirements

All recipients of PRF payments are required to comply with the reporting requirements described in the terms and conditions applicable to their distribution. See HHS website for a copy of your terms and conditions.

Beneficiaries over $ 10,000

Any recipient with more than $ 10,000 in FRP payments is also required to report the use of funds and other data elements. These data elements, at a high level, include the following:

• DEMOGRAPHIC INFORMATION – Each recipient will be required to submit demographic information including their Tax Identification Number (TIN), Social Security Number (SSN) or Employer Identification Number (EIN) (depending on the recipient’s entity type) , as well as its fiscal year end date and federal tax classification.
• CORONAVIRUS EXPENDITURE – For the 2020 calendar year only, beneficiaries must report all expenses attributable to the coronavirus that are not reimbursed by other sources. Note that recipients who have received $ 500,000 or more in FRP payments will have increased reporting requirements in specified subcategories.
• LOSS OF REVENUE ATTRIBUTABLE TO CORONAVIRUS – Recipients will be required to provide income and expense information to HHS to calculate lost income attributable to the coronavirus (i.e. income that you have lost as a health care provider due to the coronavirus).
• NON-FINANCIAL DATA (PER QUARTER) – Recipients will be required to provide certain non-financial data for each quarter, including measurements of facilities, staff and patient care, information on changes in ownership and whether the reporting entity is subject to the requirement to single audit in 2020.
• HELP RECEIVED FROM OTHER SOURCES IN 2020 – Recipients will be required to report any other assistance received in 2020, including, without limitation, any PPP loans, FEMA CARES Act assistance, CARES Act testing, local government assistance, or state, commercial insurance, etc.

REPORT STEPS

Recipients who have received $ 500,000 or more will be required to submit more detailed reports, but at a high level, HHS has indicated that recipients will be required to report – and therefore may appropriately use FRP funds – as follows:

Step 1

A beneficiary must total their 2020 expenses attributable to COVID-19 that another source has not reimbursed and is not required to reimburse. These expenses include general and administrative (G&A) expenses and operating expenses related to healthcare. A recipient must first allocate their PRF funds to these 2020 expenses.

2nd step

If a recipient’s FRP funds are not fully spent on 2020 expenses (see step one), they should apply them to lost income for 2020. We’ve come a long and winding road in HHS guidance regarding which constitutes lost earnings, and the definition of this term has changed significantly several times since the first frequently asked question (FAQ) on this concept was made available by HHS on the evening of June 2, 2020. More recently, the Consolidated Appropriations Act, 2021 (the Act) – passed by both the Senate and the House on December 21, 2020 and enacted by former President Donald Trump on December 27, 2020 – shaken things up on this definition yet again, reverting to the original HHS guidance of June 2, 2020. The law essentially overrides the current HHS position, which required providers to calculate lost earnings by comparing actual patient care earnings in 2019 to actual patient care revenues in 2020.

Instead, the law now states that suppliers can calculate lost revenue “using the [FAQ] guidelines published by [HHS] in June 2020, including the difference between [a] the supplier’s budgeted and actual revenue budget if such a budget had been established and approved before March 27, 2020. ”The law does not specify which June 2020 FAQ it refers to, but we believe the intention may be to refer to this FAQ of June 2, 2020, which describes the expenses or lost income eligible for reimbursement with FRP funds.

This FAQ was subsequently modified on June 19, 2020, then again on October 28, 2020. In short, it provides that Loss of income is broadly defined as “any income that you, as a health care provider, have lost due to the coronavirus”. The HHS said on June 2, 2020 that providers can use PRF payments to cover “any cost that lost revenue would otherwise have covered, as long as that cost is preventing, preparing for, or responding to the coronavirus.” The HHS further stated that these costs “need not be specific to providing care to patients with potential or actual coronaviruses, but to the loss of revenue that the [PRF] payment covers must have been lost due to the coronavirus. “

On June 19, 2020, changes to this FAQ also included the key statement that FRP recipients could “use any reasonable method” to estimate the loss of earnings from the coronavirus. HHS gave an example of this type of reasonable method, commenting that if an FRP beneficiary had a budget prepared without considering the impact of COVID-19, the estimated loss of income could be the difference between the beneficiary’s budgeted income. and its actual income. As we have already learned, indications of lost income are constantly evolving, and we anticipate that further clarifications from the HHS will be forthcoming to reconcile the new requirements of the law with its previous FAQ from June 2020.

Step 3

If a beneficiary has not spent all of their PRF funds by December 2020, they will have an additional six months – between January 1, 2021 and June 30, 2021 – to use their remaining amounts for expenses attributable to COVID. -19 or to compensate for the loss of income in 2021.

Key reporting deadline: July 31 – This is the final reporting deadline for providers who have not fully spent PRF payments by December 31, 2020, and therefore spent the rest of their funds between January 1, 2021 and June 30, 2021 .

Again, we expect HHS to likely clarify its guidance on calculating lost earnings for 2021 in light of the new requirements of the law.

AUDITS – PRF, PPP AND SINGLE AUDIT REQUIREMENTS

PRF – Audits

In addition to the PRF reporting requirements, recipients of one or more PRF payments should also prepare for a potential audit by the HHS to ensure the accuracy of the data submitted for payment. In the event of an audit, you will need to provide certain records and cost documents to prove that you have used all PRF payments appropriately (i.e. for approved health care related expenses or to cover loss of income attributable to the coronavirus). Any vendor identified as having provided inaccurate information to HHS will be subject to reimbursement of payment and other legal action.

PPP loan – Audits

The Small Business Association (SBA), in consultation with the Treasury Department, decided to audit all PPP loans over $ 2 million following a lender’s submission of a loan cancellation request for a borrower, and reserves the right to “seek to verify” any lower PPP loan amount at its discretion. This means that any beneficiary of a PPP loan can be audited. In the event of an audit, the SBA will take into account your:

• ELIGIBILITY – that is, if you were eligible for a PPP loan under the CARES Act and one of the SBA rules and guidelines available at the time of your application
• AMOUNT OF THE LOAN – that is, if you have correctly calculated the amount of your loan
• USE OF THE LOAN – that is, if you used your loan to keep workers paid and employed, which may include costs associated with payroll, interest on mortgages, rent, utilities, and interest on the debts
• LOAN FORGIVENESS – that is, if you correctly calculated the expected amount of your loan forgiveness on your initial application

Single audit requirements

In addition to the PRF reporting requirements and potential HHS and SBA audits, any entity that spent $ 750,000 or more in federal financial assistance in 2020 (including PRF payments and other federal financial assistance) will also be subject to the requirements of single audit. Note that PPP loans are not subject to single audit requirements since these loans are granted through local financial institutions. Therefore, you should not consider your P3 loan when calculating whether you meet the one-time audit threshold of $ 750,000.

For more information on how to respond to audits, see Expand your strategic response to government audits related to COVID on page 8 (of the digital edition).

HOW TO PREPARE FOR THE NEXT REPORTS AND AUDITS

So what can you do now to prepare for upcoming reporting deadlines and potential audits? We recommend that you begin collecting the recorded information and documenting, organizing, and being prepared to advocate for your need and use of each form of financial assistance received.