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Additional Details Regarding $50 Billion Provider Relief Fund General Distributions

May 13, 2020 | Category: Corporate and Taxation, Firm News, Health Law

The Department of Health and Human Services (HHS) is in the process of completing a $50 billion general distribution (General Distribution) from the $100 billion available to health care providers through the Public Health and Social Services Emergency Fund (Provider Relief Fund) as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act. 

HHS intends for this $50 billion General Distribution to replace a percentage of a provider’s annual gross receipts, sales or program service revenue.  HHS will distribute additional money via targeted distributions (Targeted Distributions) that include, among other things, financial support for providers disproportionately impacted by COVID-19, rural providers and providers who have treated uninsured. 

The $50 Billion General Distribution

The initial $30 billion tranche of General Distribution funds paid to providers was based on each provider’s share of the $484 billion of Medicare fee-for-service payments made to all providers in 2019. This initial payment to providers, which HHS distributed between April 10 and April 17, 2020, amounted to approximately 6.2% of each provider’s share of the Medicare fee-for-service payments it received in 2019. While providers did not have to apply for funds from the initial $30 billion distribution, they were instructed to sign an attestation and agree to HHS’ terms and conditions for that distribution to keep those funds.

On April 24, HHS began distributing the second $20 billion tranche of General Distribution funds to providers using a different formula. Payments from this tranche of funds are calculated so that a provider’s allocation from the entire $50 billion General Distribution will be proportional to such provider’s 2018 net patient revenue. Since total revenues of Medicare facilities and providers in 2018 were approximately $2.5 trillion, a provider can estimate its expected General Distribution revenue using the following formula: (Individual Provider 2018 Revenue/$2.5 trillion) x $50 billion = Expected General Distribution Revenue.

In general, if a provider’s revenue from Medicare fee-for-service is less than 33% of its net patient revenue, there should be an additional payment made from the second $20 billion tranche of General Distribution funds. If Medicare fee-for-service revenue accounts for a greater percentage of the provider’s net patient revenue, HHS may recoup the difference.

Additional Terms and Conditions Related to the $20 Billion Tranche of General Distribution Funds

Providers seeking funds from the $20 billion tranche of General Distribution funds must sign an attestation and agree to the HHS terms and conditions related to the $20 billion General Distribution.  A provider should not attest if the payments it has received exceed its estimated total distribution.

Providers who believe they have received an overpayment should contact the CARES Provider Relief Hotline at 866-569-3522.  

The HHS terms and conditions for the $20 billion General Distribution track the terms and conditions for the prior $30 billion General Distribution. There are two additional terms and conditions: 

  • The recipient must submit general revenue data for calendar year 2018 when applying to receive a payment, or within 30 days after receipt of a payment.
  • The recipient must agree that HHS can publicly disclose any payments a provider receives from the Provider Relief Fund and acknowledge that such disclosure may allow third parties to estimate the recipient’s gross receipts or sales, program service revenue or other equivalent information.

 HHS Provider Relief Fund General Distribution Portal Application Guidance

Any provider who received a payment from the Provider Relief Fund as of 5 p.m. EST on April 24 is eligible to apply for additional funding from the second $20 billion tranche of General Distribution by submitting revenue information through the Provider Relief Fund General Distribution Portal (Portal). HHS sent some providers an advanced payment in connection with the second $20 billion tranche of funds based on the revenue data they submitted in their Medicare cost reports. Providers who received these funds in advance must submit their revenue information through the Portal for verification. Providers without adequate cost report data on file will need to submit their revenue information through the Portal in order to apply for additional General Distribution funds. 

Providers who did not receive funding as of 5 p.m. EST on April 24 are not eligible to use the Portal to apply for funding. However, those providers may be eligible for payments from the Provider Relief Fund through other mechanisms, such as the Targeted Distributions (including potential future Targeted Distributions not yet announced).

HHS is collecting the additional information through the Portal to aid distribution of the additional $20 billion in Provider Relief Funds. Providers must provide the following information: 

  • “Gross Receipt of Sales” or “Program Service Revenue” as submitted on its federal income tax return, which HHS will use to understand the provider’s usual operations
  • Estimated revenue losses in March and April 2020 due to COVID-19, which will help HHS quantify the impact of COVID-19
  • A copy of the most recently filed income tax return, which will allow HHS to verify all self-reported information
  • A listing of the taxpayer identification numbers (TINs) for any subsidiary organizations that have received relief funds but do not file separate tax returns, which HHS will use to ensure that it does not overpay or underpay providers who file tax returns covering multiple legal entities

Providers must estimate lost revenue from March and April 2020. Providers can estimate March losses by comparing year-over-year revenue, and they can estimate April losses by using data from the first few weeks of April to estimate total monthly losses, or by extrapolating total monthly losses using data from March. HHS also states that providers can estimate lost revenue by using the difference between budgeted revenue and actual revenues.

While HHS has not announced a deadline to apply for these funds, as with the PPP loan program, providers should apply for these funds as soon as possible to guarantee they receive a distribution.

HHS expects to distribute funds within 10 business days after receipt of a provider’s revenue submission. HHS will not take direct inquiries from providers, and there are no appeals or any dispute resolution process to contest a distribution. HHS provided several General Distribution FAQs related to the additional $20 billion in Provider Relief Funds.


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