CARES Act Provider Relief Fund Update
Many of our clients have applied for grants through the CARES Act Provider Relief Fund (PRF). Some received funding in phase 2, and some received funding in phase 3. There are significant changes to the Terms and Conditions for all providers who received funding, no matter what tranche the money was received. A couple of key points to consider are as follows:
Funds received under this program can be used for healthcare-related expenses incurred between the date of receipt and June 30, 2021, or on “lost revenues due to COVID-19”.
The department of Health and Human Services (HHS) has recently changed its definition of what is considered “lost revenues,” and it is an important distinction. The current definition of “lost revenues” is defined as a reduction in income from patient care from the annual 2019 revenue to the annual 2020 revenue after adding back in any CARES Act Provider Relief Funds received. For example – If your 2019 collections were $1,000,000 and your 2020 collections are $900,000, and you received $20,000 in CARES Act funding, then you are still deemed to have “lost revenues due to COVID-19” of $80,000 per the current definition. It is important to note that the HHS does not include PPP funds received when calculating “lost revenues due to COVID-19”.
The Terms and Conditions of the PRF have changed to say that all recipients must certify that they have provided diagnosis, testing, or care for individuals with possible or actual cases of COVID-19. However, the FAQs on the PRF state that the “HHS broadly views every patient as a possible case of COVID-19.”
PRF funds received are taxable in the year of receipt.
In general, the terms and conditions for accepting the CARES Act PRF grant have gotten much more favorable over time. Although it now appears that most of our clients can accept these funds without fear of violating the conditions for acceptance, you should still spend the time to review the below Terms and Conditions and FAQs carefully and look at your 2019 and 2020 collections before you decide to retain the funds.
CARES Act Provider Relief Fund Phase 3 Terms & Conditions
If you feel that your practice cannot keep the funds, you can return the funds within 90 of receipt with no issues.
If you have retained the funds after 90 days, you are deemed to have agreed to the funds’ terms and conditions and will be expected to comply with reporting requirements due on January 15, 2021. For a summary of what is to be included in the required reporting, please see the Reporting Requirements Summary below.