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Should I Apply for Phase 3 Funds? Important Considerations Every Provider Should Know

On October 1, 2020, the Department of Health and Human Services (“HHS”) announced an additional $20 billion in new funding for providers through a Phase 3 distribution. Importantly, providers that previously received HHS Provider Relief Funds or already received payments of approximately 2% of annual revenue from patient care are eligible to apply. Eligible providers have until November 6, 2020 to apply for these Phase 3 Funds. However, the question from providers continues to be: Should I Apply for Phase 3 Funds

The Provider Relief Funds have been fraught with uncertainty and frustration. Initially touted as a “no strings attached” relief payment, HHS quickly distributed the Phase 1 $20 billion in Provider Relief Funds (seemingly overnight) to providers that billed Medicare in 2019 without any initial application, proof of eligibility, or demonstration of need. While the funds came as an immediate relief to many providers, HHS required these providers to attest to receipt of the funds as well as a 10-page Terms and Conditions with multiple requirements. Notably, HHS required recipients to comply with certain HRSA grant requirements related to accounting of funds and record-keeping requirements. 

Following the initial $20 billion distribution, HHS then made available an additional $30 billion in funds, but only for those providers that received an initial distribution. This was an application-based distribution and providers that received an initial distribution were essentially capped at a maximum of 2% of gross receipts from 2019. Providers were also required to provide information on lost revenues in March and April 2020 to justify eligibility.  

HHS distributed additional funds through a Phase 2 general distribution to: those providers that were ineligible for Phase 1 distributions (e.g. Medicaid, CHIP, and dental providers); providers that did not receive funds equaling 2% of 2019 gross receipts; or providers that returned Phase 1 funds, but changed their mind and would like to receive Provider Relief Funds. Again, providers were required to submit an application for Phase 2 funds. Additionally, HHS capped Phase 2 distributions at 2% of 2019 total patient care revenues and required providers to attest to Terms and Conditions.

Now HHS has announced its Phase 3 general distribution, with an application deadline of November 6, 2020. HHS continually delayed the quarterly reporting requirements set forth in the original Terms and Conditions. However, HHS has continued to issue guidance notifying providers that they must be prepared to demonstrate (1) lost revenues, and (2) increased expenses attributable to COVID-19 in order to justify the receipt and use of these funds. On the heels of the Phase 3 general distribution, HHS recently issued clarifications on the Provider Relief Fund Reporting Requirements, which will begin on January 15, 2021. 

Providers with more than $10,000 in Provider Relief Fund payments must report on the use of the funds through December 31, 2020. The reporting window will begin on January 15, 2021 and providers must complete reporting obligations for FY 2020 by February 15, 2021 through a portal designed by HHS. However, providers that have unexpended funds as of December 31, 2020, will have an additional 6 months to use the remaining funds through June 30, 2021. These providers must submit a second and final report no later than July 31, 2021.

With the deadline for Phase 3 looming and the recent reporting clarifications, here are some important considerations for providers that are determining whether to apply for Phase 3 funds:

  • Per the IRS, providers must include all Provider Relief Funds in gross income. As such, providers must calculate increased tax liability due to the receipt of the Provider Relief Funds. Additionally, if the provider received a PPP loan, the provider may also have increased tax liability due to the use of the PPP funds and the nondeducibility of certain expenses paid for with PPP monies.
  • The new reporting obligations will no longer focus on just April and May 2020. HHS now requires the provider to review year-over-year data comparing 2019 to 2020 in order to calculate changes in increased expenses and lost revenue attributable to COVID-19.
  • When calculating increased expenses and determining lost revenues, providers must calculate and report other income and grants received such as PPP funds, EIDL, FEMA monies, grants from state and local governments, etc. Additionally, a provider’s lost revenue calculation will look at operating revenues from patient care services; the calculation cannot include shareholder or partnership payments.
  • The Provider Relief Funds cannot be used to repay Medicare Accelerated/Advance Payments.
  • HHS has made clear that providers that do not have or do not anticipate that they will have eligible expenses or lost revenue in excess of the Provider Relief Funds must return the funds. Providers must carefully calculate increased expenses attributable to COVID-19 and lost revenue due to COVID-19 in accordance with the new guidance issued by HHS. 
    • HHS has the right to audit providers’ use of the funds and calculation of increased expenses and lost revenue through a 3-year statutory lookback period.
  • If the Provider Relief Funds were held in an interest-bearing account, the interest must be reported as “Other Assistance” and used towards a reportable use of funds. If the provider does not use the funds towards a reportable use, HHS requires the provider to return the unexpended earned interest.  
    • If the provider must return any unused portion of the Provider Relief Funds, the provider must also return any earned interest on the funds.

For more information on the HHS Provider Relief Fund Reporting Requirements, please visit our website at www.bmdllc.com. For more information on the HHS Provider Relief Funds, please contact Amanda Waesch at alwaesch@bmdllc.com or 330-253-9185.

 

A New Formation Solution – is the SSLC Right for Your Business?

In early January 2021, Ohio adopted Senate Bill 276 which established a Revised Limited Liability Company Act (“ORLLCA”) as Ohio Revised Code Chapter 1706, which effectively replaces the current Ohio Limited Liability Company Act (Ohio Revised Code Chapter 1706). The ORLLCA will become effective on January 1, 2022. One of the principal changes within the ORLLCA is the ability to establish “series LLCs”. Ohio becomes the 15th state to adopt a “series LLC” (“SLLC”). The below FAQs will help you better understand the mechanics and nuances of a series LLC.

Surprise! A Cautionary Tale for Out-Of-Network Billing: The No Surprises Act and the Impact on Healthcare Providers

SURPRISE! Congress passed The No Surprises Act at the end of 2020. Providers, particularly those billing as out-of-network providers, should start thinking about strategies to comply with this new law, set to take effect on January 1, 2022. In its most basic sense, the new law prohibits providers from billing patients for more than the in-network cost-sharing amount in most situations where surprise bills happen. It specifically applies to non-government payers and the amounts will be set through a process described in the new law. In particular, the established in-network cost-sharing amount must be billed for the following services:

Ohio Enacts Substantial Changes to Employment Discrimination Laws

In January, Governor Mike DeWine signed into law the Employment Law Uniformity Act, amending the employment protections in the Ohio Civil Rights Act in several significant ways. Such changes to the state’s anti-discrimination and anti-harassment laws have been considered and debated for years and finally made their way into Ohio law. What has changed for employment claims under the amended Ohio Civil Rights Act?

OHIO ADOPTS THE SERIES LLC: Implementation of Ohio’s Revised Limited Liability Company Act is Coming

On January 7, 2021, Ohio adopted S.B. 276. The new legislation establishes the Ohio Revised Limited Liability Company Act (“ORLLCA”) which effectively replaces the current Ohio LLC Act. ORLLCA will be fully effective as of January 2022. While the new law contains numerous changes to the existing LLC landscape, below is an overview of some of the key differences under the ORLLCA.

Will Federal Legislation Open Cannabis Acquisition Floodgate?

Are potential buyers quietly lobbying at federal and state levels to kick open the door to launch a new round of strategic acquisitions? Will presently pending federal legislation, the SAFE and MORE Acts, providing safe harbor for banks and re- or de-scheduling marijuana, be sufficient to mobilize into action major non-cannabis companies that previously shunned the cannabis industry due to the unknown implications of owning businesses whose activities are illegal under federal law?