AHA: Reinstate June’s Provider Relief Fund Reporting Requirements

September 30, 2020 - The American Hospital Association (AHA) is urging HHS to reinstate Provider Relief Fund reporting requirements outlined in a June 19 FAQ rather than move forward with those detailed in a Sept. 19 notice to hospitals.

“Communities rely on America’s hospitals and health systems to be strong and resilient so they can provide essential public services, particularly during emergencies and public health challenges,” AHA said in a recent letter to HHS. “The PRF funds have helped them continue to put the health and safety of patients and personnel first, and in many cases, ensure they are able to keep their doors open. HHS’s Sept. 19 guidance jeopardizes this position and will come at the cost of access to care for patients and communities.”

The reporting requirement in question is the definition of lost revenues, which providers must report to HHS in order to demonstrate that they complied with the Terms and Conditions they signed when accepting Provider Relief Funds.

In the June FAQ, HHS define lost revenues as “any revenue that … a health care provider lost due to coronavirus.” The department also stated in the FAQ that hospitals could “use any reasonable method of estimating the revenue during March and April 2020 compared to the same period had COVID-19 not appeared.”

As an example, the June FAQ said if a hospital had prepared a budget that did not account for the impact of COVID-19, then the estimated lost revenue could be the difference between budgeted and actual revenue.

It also said it “would be reasonable to compare the revenues to the same period last year.”

However, on Sept. 19, HHS issued guidance that defined lost revenues “as a negative change in year-over-year net patient care operating income.” The guidance also specified that after hospitals use Provider Relief Fund payments on expenses related to COVID-19, the facilities could only apply the federal aid toward lost revenue up to the amount of their 2019 net patient operating income.

“HHS’s new definition will require many hospitals to return PRF funds based on a new formula and set of metrics that are simply unfair and unrealistic,” AHA said.

One member hospital, which is a rural safety-net provider, would have to return approximately $16 million out of the $20 million it received in Provider Relief Funds under the new reporting requirements, the hospital group reported. Another member also said 10 of its rural hospitals would be forced to return $20 million of the $65 million it received from the fund.

HHS has made targeted distributions of Provider Relief Fund payments to hospitals in rural areas, as well as to those that serve vulnerable communities. The department recognized that the hospitals face unique challenges during the pandemic.

But the AHA stated that the new Provider Relief Fund reporting requirements “runs counter to this reasoning, and to the interest of their patients and communities.”

“This is especially true as those hospitals must work to rebuild their capacity, while continuing to remain in a constant state of readiness for any emergencies, particularly in regard to confronting the pandemic,” AHA added in the letter.

The hospital group urged HHS to walk back the definition of lost revenues to the one outlined in the June FAQ. This would prevent hospitals that need the federal aid from having to return payments they received during the public health emergency, according to the group.

Reverting to the original definition would also avoid “an administrative and accounting disaster” for hospitals already struggling to contain and recover from the pandemic.

“For example, if ‘paying back’ fiscal year 2020 income after the books have been closed leads to a revised margin for the year that is negative, a hospital’s rating with the bond rating agencies may be negatively affected,” the letter stated. “These agencies play a critical role in hospitals’ access to capital at affordable interest rates. Higher bond interest rates have a long lasting negative impact on hospitals’ financial viability.”

Providers must submit data on lost revenues and other Provider Relief Fund reporting requirements within 45 days of the end of calendar year 2020.

Some hospitals have indicated to the AHA that claiming expenses related to COVID-19 in addition to lost revenues could prevent them from having to return Provider Relief Funds. However, the hospital group noted that it does not believe that approach is “universally accurate.”