CARES Act emergency fund distribution

Recently, a number of questions have been raised about the interplay between the Emergency Fund distribution that occurred on April 10 and 17 with the second distribution that began on April 24. Specifically, the question was whether there would be a “take-back” of monies when the amount distributed in the first round was greater than the calculated amount set out in the second distribution. The first distribution was based on a provider’s 2019 Fee for Service Medicare claims data. Providers received approximately 6.2% of that amount with an intended total of $30 billion across the whole Medicare program.

The second distribution is based on 2% of the providers “net patient revenue” for 2018. Cost reports and other documentation is being used for that distribution. The Department of Health and Human Services issued a calculation formula based on $2.5 Trillion in overall spending with a fund payment of 2% of that amount for purposes of distributing both the initial $30B and an additional $20B. Since that formula combined the two distributions, the question surfaced as to whether some providers would need to give money back if the first distribution exceeded the amount calculated through the second formula. NAHC data shows that nearly 85% of HHAs and virtually all hospices would potentially be in a take-back position as the proportion of fee for services revenues exceeded 32.25% of the total revenues, the point when the first distribution calculation would be greater than the second distribution calculation. .

After more than a week of confusion and anxiety, NAHC had the opportunity to raise the issue today with HHS Deputy Secretary Eric Hargan and his team. Hargan confirmed that HHS does not intend to take back any of the funds from the first distribution based on the calculation determined under the second formula. Instead, any take-back would be limited to a later reconciliation based on a provider’s use of the money. The fund is available to help offset the costs of dealing with Covid-19 and any resulting loss of revenues.
In our conversation, an example was presented of an HHA with $20 million in overall net patient revenue and $10 million in Medicare fee for service revenue. With the first distribution, that HHA would have received approximately $620,000. With the second formula to distribute the additional $20 billion, the overall distribution would be calculated at $400,000. That means the HHA would not receive any distribution from the second round as it was less than was already issued to the provider. Hargan confirmed that the HHA would not need to return the $220,000 difference. The full $620,000 would be subject though to a later determination as to whether the funds were fully used on Covid-19 costs and lost revenue.
Providers are required to file quarterly reports on such. NAHC’s HHFMA Workgroup has developed a documentation template for securing that data. A webinar presenting the template took place last Thursday with Part 2 scheduled for 2:30PM this Thursday.
Hargan further indicated that the “overpayment “ reference in the attestation portal for the fund is meant to address situations where the provider knows that the fund distribution calculation is in error. For example, if the amount tendered does not conform to the provider’s 2019 fee for service claim revenue or the overall net patient revenue from 2018. It is intended to address errors in those data inputs.
HHS will be issuing an FAQ to clarify the standard applied to the first and second distributions very soon. If they are unable to finalize the FAQ in time to have providers submit an attestation by the 30 day deadline, HHS will extend the deadline.
William A. Dombi, Esq.
National Association for Home Care & Hospice
228 7th St, SE
Washington, DC 20003
202-547-7382 (fax)