HHS will soon distribute a second tranche of $20 billion in non-targeted Provider Relief Funds as part of the Public Health and Social Services Emergency Fund (“PHSSEF”) appropriation. Under the CARES Act, HHS received a $100 billion appropriation to be spent to assist providers that lost revenues or incurred additional costs due to coronavirus. An additional $75 billion has subsequently been appropriated for the same purpose.
HHS initially disbursed a tranche of $30 billion to providers—based on 2019 Medicare billings—without requiring any application (although providers were later required to accept terms/conditions via an online attestation). In contrast, the second tranche of $20 billion does require an application.
- Note that although some limited set of providers may receive funds prior to submitting any application, the application will still be required.
- Please also note that HHS is planning to make targeted distributions as well, which may have different application processes.
Providers that meet the following characteristics are eligible to apply:
- The provider received funds from the first $30 billion tranche of Provider Relief Funds as of 5:00 EST Friday April 24; and
- The provider has filed a federal income tax return for 2017, 2018, or 2019.
In order to apply for second tranche funds, the provider will need to submit an application through the following portal: https://covid19.linkhealth.com/docusign/#/step/1.
While HHS says that this second tranche of funding is not first-come, first-served, HHS will be processing applications in batches each week if submitted before noon Eastern each Wednesday. According to HHS, applications will be processed and funds disbursed within 10 days. Given the timing, it is likely best for most providers to apply as soon as they have gathered the necessary information/documents.
The methodology for allocation of funds has not been fully-disclosed. However, loss of revenue in March/April is a key factor.
The following is a summary of the application requirements:
- Providers must provide their Medicare ID (from PECOS).
- Providers must have a CAQH Provider ID for the CAQH ProView interface.
- If a provider does not have one yet, it can self-register through the following portal: https://proview.caqh.org/pr.
- Providers must be ready to submit copies of prior income tax returns, which may include returns from 2017, 2018, and/or 2019.
- Note that a provider will need to know how it is classified for federal tax purposes (e.g., C-Corporation (using form 1120), tax-exempt organization (using form 990), partnership (using form 1065), etc.). We are happy to discuss as necessary.
- Providers must identify their “gross receipts or sales” or “program revenue” as submitted on prior income tax return(s).
- Depending on the tax form that the provider uses for filing, this will come from the following line items: 1040 (Box 1 of schedule C); 1065 (Box 1a); 1120 (Box 1a); 1120-S (Box 1a); 990 (Part I, 9 “Program Services revenue”); or 1041 (Box 1 of Form 1040 Schedule C).
- Providers must submit estimated revenue losses in March 2020 and April 2020 due to COVID-19.
- A provider may use any reasonable method of estimating the loss of revenue during March and April compared to the same period had COVID-19 not appeared. HHS has provided the following example methods:
- Comparing revenues from March/April to a budgeted revenue for that period; or
- Comparing March/April 2020 revenues to March/April 2019 revenues.
- A provider may use any reasonable method of estimating the loss of revenue during March and April compared to the same period had COVID-19 not appeared. HHS has provided the following example methods:
- If a provider has any subsidiaries that meet the following characteristics, then it must submit a list of all of the TINs for such subsidiaries:
- Received Provider Relief Funds (e.g., in the First General Tranche); and
- Does not file separate tax returns.
- Note that if any subsidiary both received Provider Relief Funds in the First General Tranche and does file separate tax returns, then it should submit its own application for Second General Tranche funds.
- Each provider must able to verify information regarding its initial disbursement from the First General Tranche, including:
- The account number that received First General Tranche Funds; and
- The payment amount received for First General Tranche Funds (and if applicable a check number).
- A provider should also have copies of its form W-9 in-hand to answer the following questions (as reported on the W-9)
- Federal Tax Classification;
- Exempt Payee Code;
- Exemption from FACTA Reporting Code;
- Address (as reported on W-9);
- Account Numbers.
Additionally, please note that providers will be asked to consent to disclose tax information to CMS/HHS. In addition, providers should be aware that the amount of any disbursement of second tranche funds may be public information. HHS has noted that certain business/revenue information may be derived from knowing the amount of such disbursement. However, because HHS has not revealed its formula for determining the disbursement of second tranche funding, it is impossible to assess this risk without further HHS guidance.
HHS has issued a User Guide that can help walk each provider through the application process for the second tranche: https://chameleoncloud.io/review/2977-5ea0af98f0fd0/prod
For more information regarding Provider Relief Fund allocations, please contact your regular HLP attorney, or Partners@thehlp.com, or call (212) 734-0128 or (248) 996-8510.