HHS changes calculation for keeping COVID-19 relief funds

HHS AGAIN CHANGED the rules over documentation requirements for Provider Relief Fund grants, which could cause headaches for healthcare stakeholders.

Prior HHS guidance indicated that healthcare providers could calculate lost revenue by comparing 2020 revenue with budgeted revenue or with revenue from 2019, but a new notice says providers have to use net operating income instead. The document also caps how much lost revenue providers can claim.

Both of these changes have providers again trying to figure out how to account for $100 billion in Provider Relief Fund grants and insulate themselves from False Claims Act liability and other potential consequences.

Revenue figures would have been simple to report, consultants and accountants advising providers said; net operating income is a more complex calculation that takes expenses into account.

“When you start adding in all of these expenses over the course of the year, you are diluting what would have been a single metric. Will it always work out the same way? No,” said Colleen Faddick, healthcare operations chair at law firm Polsinelli.

The guidance also caps lost revenue providers can claim to their net 2019 gain, or net zero if the provider had negative net operating income last year.

The formula limits providers to their 2019 financial performance if they want to qualify for the grant funds to help with lost revenue, Faddick noted.

The net operating income measure could be an issue if a provider recently added a service line or opened a new unit expected to bring in new revenue streams compared with last year.

Providers had 90 days to decide whether to keep the funds, and guidance has continually changed since the first dollars rolled out in April.

Heather Meade, a principal at Washington Council Ernst & Young, said use of the net operating income metric penalizes hospitals that moved early

● to cut operating costs.