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Additional provider relief funds and changes in definition of lost revenue

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Additional provider relief funds and changes in definition of lost revenue

By: Dean Dorton | December 30, 2020

The latest COVID-19 relief package passed by Congress has provided additional funding for healthcare providers. The package, titled the Consolidated Appropriations Act of 2021 (the Act), also included a new paycheck protection program and many other relief packages and tax changes. This article discusses the key components for provider relief funds (PRF).

COVID-19 | COVID-19 Tax | Healthcare

Congress has added an additional $3 billion to the provider relief fund pool. This is much less than the $35 billion recently proposed but will hopefully provide some relief to those who need it the most. The new legislation also requires the U.S. Department of Health and Human Services (HHS) to distribute at least 85% of unobligated PRF money through an application-based portal to providers based on their 2020 financial losses.

In addition to the new funding, the legislation included a requirement for HHS to define lost revenue as it did in their June FAQs. That definition included any lost revenue and allows hospitals and other providers to “use any reasonable method of estimating” its lost revenues. This change is significant for many providers who were already considering returning much of the provider relief funds they had received. The new legislation will also require HHS to establish a process to return funds to hospitals that surrendered them in response to the September lost revenue definition.

Another key related change for multi-hospital systems in the bill will allow hospitals to transfer PRF grants within a health system.

Hospitals are required to file reports in February 2021 on the PRF grants they spent in 2020. Any unspent funds must be used by June 30, 2021.

Other key provisions of the new bill for hospitals include:

  • A three-year continuation, through 2023, of the delay in scheduled cuts to Medicaid Disproportionate Share Hospital payments
  • A two-year delay in the planned 2021 increase in the required thresholds of value-based payment participation that physicians need to qualify for a Medicare bonus
  • An extension of an earlier suspension of the 2% sequester cut in Medicare payments, with the suspension now continuing from Dec. 31 to March 31, 2021
  • $284 billion for another round of Paycheck Protection Program (PPP) loans to support small business during the pandemic

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