On June 10, 2020, the U.S. Department of Health and Human Services (“HHS”) released details on the distribution of more CARES Act Provider Relief Fund payments. After allocating $50 billion to Medicare providers through its General Distribution fund, HHS has now announced that it will distribute $15 billion to eligible Medicaid and CHIP providers who apply by the deadline through a Targeted Distribution. Applicants must apply through the Enhanced Provider Relief Fund Payment Portal. The application form itself can be found on the HHS website and is due by July 20, 2020.
In order to qualify for part of the Targeted Distribution for Medicaid and CHIP providers, practices and individual practitioners must meet all of the following requirements:
- Must not have received payment from the $50 billion General Distribution; and
- Must have directly billed Medicaid (or Medicaid Managed Care Plans) for healthcare-related services during the period of January 1, 2018, to December 31, 2019, or (ii) own (on the application date) an included subsidiary that has billed Medicaid for healthcare-related services during the period of January 1, 2018, to December 31, 2019; and
- Must have either (i) filed a federal income tax return for fiscal years 2017, 2018 or 2019 or (ii) be an entity exempt from the requirement to file a federal income tax return and have no beneficial owner that is required to file a federal income tax return. (e.g. a state-owned hospital or healthcare clinic); and
- Must have provided patient care after January 31, 2020; and
- Must not have permanently ceased providing patient care directly, or indirectly through included subsidiaries; and
- If the applicant is an individual, have gross receipts or sales from providing patient care reported on Form 1040, Schedule C, Line 1, excluding income reported on a W-2 as a (statutory) employee.
Note that if a provider received a General Distribution payment and returned it, they will not be eligible for this Targeted Distribution.
The final amount each provider receives will be determined after the data is submitted, including information about the number of Medicaid patients the provider serves. Payments will be allocated based on this formula:
Payment Allocation = 2% (Gross Revenues x Percent of Gross Revenues from Patient Care)
The provider requesting an allocation will specify in their application whether they want to base this calculation on calendar year 2017, 2018 or 2019 revenues. Payments will be disbursed on a rolling basis, as information is validated by HHS. Providers who qualify should apply as soon as possible to ensure they meet the July 20th deadline and do not get stuck waiting for validation.
Once a provider is approved for and receives Targeted Distribution funds, they will have 90 days to accept the payment and attest to certain Terms & Conditions. The Terms & Conditions are very similar to the General Distribution attestations, but recipients of the Targeted Distribution funds should read through them carefully to ensure they can truthfully attest to each one. If a provider finds they cannot satisfy one of the Terms & Conditions they should return their payment back to HHS within the 90-day period following receipt of the payment.
Also like the General Distribution funds, the Targeted Distribution funds may only be used to reimburse the provider for health care expenses incurred in the prevention, preparation for, and response to coronavirus or for lost revenues attributable to coronavirus. Providers may not use the Targeted Distribution funds to pay for expenses or losses that have been reimbursed from other sources. Additionally, the Targeted Distributions Funds are characterized as federal grants, which require the provider to take the following steps:
- Adopt a policy regarding the proper use of the funds, procedure for ensuring proper use of the funds, and appointment of a compliance officer.
- Ensure proper maintenance of records and documentation of expenditures as HHS can audit over a 3-year lookback period.
- If the provider has received Paycheck Protection Program or other coronavirus-related funds, the provider must submit separate reports and account for each pool of funds separately.
For those interested, HHS is hosting complimentary webcasts next week. Click here for more information.
If you need assistance in determining whether you qualify for a Targeted Distribution or have questions about the application, please contact BMD Health Law Attorney Ashley Watson at email@example.com. If you received Provider Relief Funds from either the General Distribution or Targeted Distribution, please contact Amanda Waesch at firstname.lastname@example.org or 330-253-9185 for questions related to the HHS Provider Relief Fund Policy.