The Department of Health and Human Services Health Resources and Services Administration (“HRSA”) released multiple key Provider Relief Fund (“PRF”) updates over the past four weeks, which include opening a new application for additional PRF funding. The new funding application process and other updates are discussed in more detail below.

Practical Takeaways

  • The applications for funding from the PRF Phase 4 General Distribution and American Rescue Plan (“ARP”) Rural Distribution is due October 26, 2021;
  • Providers should immediately begin preparing to submit an application for these additional funds and should apply prior to the deadline;
  • Phase one reporting for PRF payments received prior to June 30, 2020 continues for recipients taking advantage of the 60-day grace period that runs through November 30, 2021;
  • HRSA continues to publish new and revised PRF guidance and host PRF webinars; and
  • Recipients should continue to monitor HRSA resources for important changes to the PRF reporting and application processes.

First Reporting Period Continues

In mid-September HRSA announced a 60-day grace period for the first PRF Reporting Period. The grace period began October 1, 2021 and continues through November 30, 2021. Rather than simply delaying the reporting deadline for 60 days, HRSA instead said it was keeping the September 30, 2021 deadline but providing the 60-day grace period to allow “providers to come into compliance with their PRF reporting requirements should they fail to meet the September 30, 2021 deadline.”

While HRSA encouraged recipients to complete the first report by September 30, 2021, many recipients have decided to take advantage of the additional time for a variety of pragmatic and strategic reasons. Providers did not need to apply for the grace period or demonstrate recipient‑specific circumstances to qualify for the extended reporting period, recipients only need to submit the report by November 30, 2021.

Additional Funding and Application Deadline

Recipients can now apply for additional funding from the Phase 4 General Distribution and the ARP Rural Distribution through a single application. The application deadline for these distributions is October 26, 2021 at 11:59 PM EST. HRSA has warned that the application process involves multiple steps (including validating applicable Tax Identification Numbers) that may take multiple days to complete and process. As a result, recipients should begin preparing their application immediately.

Also note, HRSA published an FAQ stating that “applications must be consolidated across eligible subsidiaries and submitted by the parent entity. Applications must be made at the filing TIN level, whenever possible.” Earlier distributions that required an application did not require related entities to file a consolidated application, so this will be a new process for some organizations.

On the HRSA PRF website, HRSA has included extensive new guidance describing distributions, eligibility criteria and payment determinations, and the application process. Recipients should review this information closely to prepare the application. Highlights about both distributions include:

  • Phase 4 General Distribution:
    • HRSA is allocating $17 billion for the Phase 4 General Distribution.
    • Approximately 75% of the funding will be allocated to providers based on the providers reported changes in operating revenues and expenses from July 1, 2020 to March 31, 2021.
    • Note, however, that if a provider receives a Phase 4 General Distribution payment, the provider can still use these payments to cover eligible health care-related expenses or lost revenues that are attributable to coronavirus incurred between January 1, 2020 and the end of applicable period of availability – December 21, 2022.
    • Approximately 25% of the funding will be used to pay bonus payments based on the provider’s level of participation in Medicaid, the Children’s Health Insurance Program (“CHIP”) and Medicare.
    • HRSA suggests the bonus payment will be to “price Medicaid and CHIP claims at Medicare rates.”
    • No provider will receive a Phase 4 payment that exceeds 100% of their reported losses and expenses.
    • HRSA will use a pre-payment “risk mitigation” process and will make payment adjustments as necessary based on internal reviews as more fully described below.
  • ARP Rural Distribution:
    • The ARP Rural fund includes $8.5 billion appropriated under the American Rescue Plan Act of 2021.
    • Payments will be made to providers based on the amount and type of services they provide to Medicare, Medicaid and CHIP patients who live in rural areas.
    • Importantly, it is NOT the physical location of the provider that determines whether a facility or provider is eligible for an ARP Rural payment. This means that providers which are physically located in urban or other non-rural areas may still qualify for an ARP Rural payment if the provider serves patients that live in rural areas.
    • Payments will be based on Medicare, Medicaid and CHIP administrative claims data from January 1, 2019 through September 30, 2020.
    • HRSA will use data that it already has access to for determining eligibility and payment amounts for this distribution.
    • ARP Rural payments may NOT be transferred to other entities. These payments must remain with the entity that was eligible and receives the payment. This is in contrast to other General and Targeted Distribution payments that can be transferred among related entities.

Recipients of prior PRF payments are encouraged to submit an application prior to the October 26, 2021 deadline in order to potentially receive funding from one or both of these distributions.

Phase 3 and Phase 4 Reconsideration Process

HRSA also established a formal reconsideration process for PRF Phase 3 payments distributed in late 2020 and early 2021. For most recipients, Phase 3 payments were the greater of 88% of losses in revenue net of expenses for the first and second quarters of 2020 or 2% of net patient revenue as reported on a recipient’s application submission, minus prior PRF payments. HRSA, however, also applied certain “pre-payment risk mitigation/cost containment safeguards” when determining individual payments amounts. These safeguards included adjusting payments to providers “where applications triggered a flag for concerns, such as significant deviations between claimed quarterly and annual revenues or expenses, reporting figures outside of the expected range related to similar providers, or, for applications that needed manual review or offered insufficient financial documentation.”

HRSA has now published additional details about the specific payment calculation methodology used for the Phase 3 payments, including the application of the pre-payment risk mitigation and cost containment safeguards. Recipients can review this information to assess whether they believe their Phase 3 payment was potentially calculated incorrectly. In these circumstances, the recipient can request a reconsideration of the Phase 3 payment calculation. The deadline to submit a reconsideration request is November 12, 2021.

The Phase 4 payment calculations are subject to similar pre-payment risk mitigation safeguards. Specifically, if it identifies certain flags in an application, including anomalous financial information, HRSA will conduct an in-depth review of the application and supporting documentation. HRSA will then decide whether to adjust the payment amount based on the findings of the in-depth review. This can result in no payment to a recipient in some cases.

HRSA Continues Publishing Updated Guidance

HRSA continues to publish new and revised PRF guidance relevant to past payments, future payments, and reporting obligations. This includes:

  • Detailed eligibility and payment methodology webpages for the Phase 4 and ARP Rural Distributions;
  • Application instructions;
  • A sample application form;
  • Multiple fact sheets, worksheets and flow charts related to the new distributions; and
  • Over 40 new FAQs since September 29, 2021.

HRSA is also hosting four webinar sessions for Phase 4 and ARP Rural applicants, featuring guidance on how to navigate the application portal.

Providers should continue to monitor the constantly evolving guidance and upcoming reporting and application deadlines.