New Guidance Recently Issued for Healthcare Providers

Some recent CARES Act funding guidance has implications for government, nonprofit, and for-profit healthcare facilities.

The U.S. Department of Health and Human Services released additional information about reporting requirements for the various funds. Healthcare providers that received more than $10,000 must file a report HHS detailing how the funds were used. Previous guidance indicated providers who received more than $150,000 in funding would be required to report how they spent the funds.

Other key takeaways:

• Payments to tax-exempt providers under the CARES Act Provider Relief Fund are taxable, according to HHS. According to an IRS FAQ, “[A] payment received by a tax-exempt health care provider from the Provider Relief Fund may be subject to tax under section 511 if the payment reimburses the provider for expenses or lost revenue attributable to an unrelated trade or business as defined in section 513.”
• HHS also released an additional FAQ that states that a Provider Relief Fund payment is includable in gross income under section 61 of the Code. Accordingly, payments from the Provider Relief Fund will have tax implications for for-profit businesses.
• Each Provider Relief Fund distribution a healthcare provider received will need to be accounted for separately to accommodate required HHS reporting.
• Provider Relief Fund General and Targeted Distributions payments must be included in determining if a healthcare provider is subject to audit requirements under 45 CFR 75 Part 75, Subpart F (single audit requirements). Nonprofit, for-profit, and governmental entities are subject to the single audit requirements if they report annual total federal fund expenditures equal to or above $750,000. Refer to the first two FAQs under the Audit and reporting Requirements for further guidance.

You can read the HHS’s updated reporting requirements here.

Also, the Healthcare Financial Management Association released accounting guidance related to funding from the CARES Act.

It’s important to note that the HFMA’s guidance about the Paycheck Protection Program conflicts with actual authoritative guidance. The HFMA says PPP funds should not be removed as a liability until there’s formal loan forgiveness. However, the authoritative guidance would allow for a reduction of the PPP loan liability before the loan was formally forgiven.

At this time, we don’t know if the HFMA’s interpretation will become the healthcare specific authoritative guidance. However, we’re monitoring the situation and will let you know when we have a more definite answer.

You can read the HFMA’s accounting guidance here.

If you have questions about any current or previous guidance, reach out to our Healthcare Team.

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.