By Kate Hickner

The CARES Act Provider Relief Fund

Healthcare providers across the country have received substantial amounts from the federal government as part of the $100 billion Public Health and Social Services Emergency Fund (the “Provider Relief Fund”) established under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to support health care providers in their fight against COVID-19. Broadly summarized, there are two key parts of the Provider Relief Fund: (1) $50 billion for general distribution (the “General Distribution”), and (2) $50 billion for targeted distribution to providers treating uninsured individuals and for COVID-19 high impact areas, rural providers, the Indian Health Service and others (the “Targeted Distribution”).

$50 Billion General Distribution

The first $30 billion traunch of the General Distribution was distributed to providers beginning April 10, 2020 through direct deposits or via check based upon their 2019 Medicare fee-for-service revenue. The second $20 billion traunch of the General Distribution is being distributed to providers beginning April 24, 2020 based upon cost report or other financial data. The goal is that, once all $50 billion is distributed, providers will have received a share that is proportional to their share of net patient revenue. The federal government has issued helpful FAQs to provide further guidance regarding the General Distribution.

The General Distribution was intended to provide fast and meaningful financial relief to providers who have been negatively impacted by the COVID-19 pandemic. However, the funds are subject to important conditions and compliance requirements. In the event that providers retain such funds without complying with the required conditions, they may be subject to substantial civil, administrative or criminal repercussions, depending upon the circumstances.

General Distribution Compliance Checklist

During this extraordinary time when providers are rightly focused on taking care of their patients, protecting their employees and ensuring the survival of their organizations, it’s easy for providers to overlook important Provider Relief Fund compliance requirements. Here is a compliance checklist with respect to the General Distribution that may be helpful for your leadership team:

  • Confirm that your organization has received all of the General Distribution payments to which it is entitled. Unlike the SBA Paycheck Protection Program (“SBA PPP”) loans or advances through the CMS Accelerated and Advance Payment Program, each of which are completely separate from the Provider Relief Fund, General Distribution amounts do not need to be repaid unless a provider is unable to comply with the required Terms and Conditions.  They are grants and not loans. Further, note that the General Distribution payments are not on a first come, first served basis. If you haven’t had time to focus on this financial relief and obtain all the amounts available to you, you still have time. However, earlier this month, the federal government stated that eligible providers have only until June 3, 2020, to accept the Terms and Conditions and submit their revenue information to support receiving an additional payment from the Provider Relief Fund $50 billion General Distribution. As further explained in the American Medical Association’s Fact Sheet: Provider Relief Fund Second General Distribution, providers may estimate their expected General Distribution by dividing their 2018 program service revenue by $2.5 trillion and then multiplying that amount by $50 billion.
  • Review and understand the required Terms and Conditions. All providers who retain General Distribution funds must agree to certain standard Terms and Conditions. Briefly summarized, these Terms and Conditions include, for example, the following:
    • 2019 Medicare Billings. The recipient certifies that it billed Medicare in 2019.
    • Patients Treated After Jan. 31, 2020. The recipient provides or provided after Jan. 31, 2020 diagnoses, testing or care for individuals with possible or actual cases of COVID-19. The government has interpreted this requirement broadly by considering every patient as a possible COVID-19 patient.
    • No Program Exclusion. The recipient is not currently terminated from participation in Medicare or precluded from receiving payment through Medicare Advantage or Part D; is not currently excluded from participation in Medicare, Medicaid and other federal health care programs; and does not currently have Medicare billing privileges revoked.
    • Permissible Use of Funds. The recipient certifies that the payment will only be used to prevent, prepare for and respond to coronavirus, and that the payment shall reimburse the recipient only for health care related expenses or lost revenues that are attributable to coronavirus.
    • No Double Dipping. The recipient certifies that it will not use the payment to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse.
    • Documentation and Audit Trail. Recipients must maintain appropriate records and other information required to substantiate that the amounts were used for permissible purposes. The Recipient shall promptly submit copies of such records upon the request of the Secretary of the U.S. Department of Health and Human Services (the “Secretary”) and pursuant to audits by the federal government.
    • No Balance Billing. For all care for a presumptive or actual case of COVID-19, recipient certifies that it will not seek to collect from the patient out-of-pocket expenses in an amount greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network provider.
    • Miscellaneous Conditions. In addition, numerous statutory provisions apply that prohibit the funds to be used for certain executive pay, to advocate or promote gun control, for certain lobbying, for any abortion, for human embryo research, for the promotion of the legalization of medical marijuana, human trafficking and numerous other uses.
  • Complete the required attestation process within 45 days. Within 45 days of receiving the payments, providers must sign an attestation confirming receipt of the funds and agreeing to the Terms and Conditions of payment. As discussed above, it’s imperative that recipients understand the Terms and Conditions before signing the attestation. The federal government has clarified that it will engage in significant auditing and anti-fraud activity related to the Provider Relief Fund. Depending upon the circumstances, non-compliance may result in the Secretary recouping the payments or in criminal, civil or administrative penalties, including but not limited to revocation of Medicare billing privileges, the exclusion from federal health care programs, the imposition of fines or imprisonment. In the event that a recipient is unable to agree to the Terms and Conditions, the recipient should complete the attestation to so indicate. Not returning the payment within 45 days of receipt will be viewed as acceptance of the Terms and Conditions.
  • Submit revenue information via the General Distribution Portal. A portion of providers will automatically receive the second traunch of the General Distribution based off the revenue data they submit in CMS cost reports but others without adequate cost report data on file will need to submit their revenue information to the General Distribution Portal. Further, even providers who received the second traunch of funding automatically will still need to submit their revenue information via the portal so that it can be verified. Additional information is available in the Provider Relief Fund User Guide.
  • Document compliance with each of the Terms and Conditions. As discussed above, recipients are required in the Terms and Conditions to maintain appropriate records to substantiate compliance with the Provider Relief Fund requirements. Providers should assume that their receipt and use of the funds will be subject to governmental scrutiny and should be prepared to defend their actions. For that reason, it’s advisable to prepare such documentation thoughtfully and thoroughly with advice from legal counsel and under attorney client privilege. The records must be sufficient to permit the tracing of funds to confirm that the funds have been used according to the federal laws and regulations. For example, records may include receipts for personal protective equipment (PPE) and other COVID-19 related expenses and may describe decreases in revenue month over month or compared to the budget. It’s also often advisable for providers to utilize separate bank accounts or cost centers for these funds. Many accounting firms and practice management companies have developed tracking tools to assist providers in accounting for and documenting the Provider Relief Funds as well as other relief such as the SBA PPP loans.
  • If you received more than $150,000 in funds, submit quarterly reports. Not later than 10 days after the end of each calendar quarter, any recipient that is an entity that receives more than $150,000 total in funds under the federal COVID-19 stimulus bills or certain other federal laws primarily making appropriations for the coronavirus response and related activities shall submit a report to the Secretary and the Pandemic Response Accountability Committee. Such reports are required to include: (a) the total amount of funds received under such federal laws, (b) the amounts expended or obligated for each project or activity, (c) a detailed list of all projects or activities for which large covered funds were expended or obligated (including the name and description of the project or activity and the estimated number of jobs created or retained by the project or activity, where applicable), and (d) detailed information on any level of sub-contracts or subgrants awarded by the recipient or its subcontractors or subgrantees (including the information required to comply with the Federal Funding Accountability and Transparency Act of 2006 allowing aggregate reporting on awards below $50,000 or to individuals, as prescribed by the Director of the Office of Management and Budget). There are currently many questions surrounding this reporting requirement and it is anticipated that additional guidance will be issued soon.

It’s imperative for healthcare organizations to be cognizant of and adhere to regulatory compliance obligations, especially during this time when the state and federal laws and guidance are rapidly evolving. If you have any questions regarding the Provider Relief Fund or other challenging issues during the coronavirus pandemic, please contact Kate Hickner at or 216.736.7279.