New Guidance about PPP and Provider Relief Funds for Healthcare Providers

Centers for Medicare and Medicaid Services recently issued about Paycheck Protection Program loans and Provider Relief Fund payments related to cost reports.

According to the new Q&A, PPP loans and PRF payments likely won’t be offset against allowable costs in a facility’s cost report. In fact, much of the information in the Q&A is favorable for cost-based providers.

Below is a high-level look at some of the issues surrounding PPP loans and PRF payments as they relate to cost reports. You can view the full guidance document here.

• According to question No. 5 under the Cost Reporting section, healthcare facilities should not offset Small Business Administration loan forgiveness amounts against expenses unless those amounts are attributable to specific claims — such as payments for the uninsured.
• Question No. 3 of the Cost Reporting section details how healthcare providers should report SBA loan forgiveness amounts they receive. If a provider receives any loan forgiveness, they’ll need to report the forgiven amount on the cost report’s statement of revenues for informational purposes. If the provider doesn’t get any kind of forgiveness, then there’s nothing to report. And if the provider pays interest on an SBA loan, they can report that interest — similar to other interest expenses — on the cost report.
• Healthcare providers must report Provider Relief Fund payments on the cost report’s statement of revenues for informational purposes. The revenue amount must be identified as COVID-19 PHE PRF. You can see which forms you’ll need to use under question No. 2 of the Cost Reporting section.
• Providers can defer the payment and deposit of the employer’s share of Social Security taxes in limited circumstances. The deferral applies to those deposits and payments that a provider would need to make from March 27, 2020, through December 31, 2020.

According to the Q&A, providers shouldn’t adjust the expenses on the Medicare cost report based on PRF any payments they received. However, they have to follow the HRSA’s guidance regarding appropriate uses of PRF payments to make sure they used the money for permissible purposes, which are those related to the coronavirus.

In addition, providers need to make sure PRF are not used to reimburse expenses or losses that other sources have reimbused or are obligated to reimburse.

This would seem to contradict the Q&A that states providers shouldn’t adjust related expenses. We’re hopeful CMS releases additional guidance related to this issue. You can find more information about the terms and conditions here.

Also, providers shouldn’t use PRF amounts that aren’t related to patient-specific claims and aren’t PRF payment amounts from the Uninsured Program to offset expenses on the Medicare cost report.

Providers that take advantage of the deferral can expense the liability on the Medicare cost report in the year they incurred the costs. According to the CMS Q&A, “if, within the 1-year time limit, the provider furnishes to the contractor sufficient written justification (based upon documented evidence) for nonpayment of the liability, the contractor may grant an extension for good cause. The extension may not exceed 3 years beyond the end of the cost reporting period in which the liability was incurred.”

However, if a provider received SBA loans that were forgiven, then they’re not eligible for deferral relief.

If you have questions or need more information about the CMS’s latest guidance, please reach out to us.

This communication is intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.