HHS ISSUES ACCEPTABLE USES OF HHS CASH
AND RELATED REPORTING REQUIREMENTS
Revised November 11, 2020 (changes in red)
HHS has been clarifying and changing the acceptable uses of HHS Cash and the related reporting requirements. HHS issued its most recent version of these rules, in its Post-Payment Notice of Reporting Requirements (“Notice”), dated
Below are the key points of the Notice applicable to moderate-sized dental practices:
After learning of the staff time required to justify the use of HHS Cash for acceptable uses as I explain below, a few practices have asked me if they can return all but $10,000 to avoid this reporting. The answer is yes! HHS issued a FAQ answering this question dated 10/28/20, saying that a practice must report only when they have retained $10,000 or more..." If you want to use this strategy, I would return enough cash to HHS so that the amount your practice retains is $9,999 (ie, not $10,000). Also, I would keep track the expenses caused by covid-19. I am not aware that HHS has stated they won't audit your practice if you keep less than $10,000 of HHS cash. (HHS has only promised you would not have to report to them on the use of HHS cash.) Knowing the covid-19 cost will help you to separate cost increases from covid v. other cost increases that you might not identify if the covid-19 costs are commingled with the usual supplies and other costs.
Takeaway: If you want to keep HHS Cash, you will not want to miss this deadline, which occurs soon after 2020 ends. You should communicate with your accounting team now to confirm they know the HHS acceptable use rules, and the related reporting requirements described below. Your accounting team should assess whether your accounting system is set up to provide you with patient revenue and operating expenses by quarter. The team should also confirm that the accounting system will identify, record, summarize and store documents supporting Covid-19 expenditures reported, as explained in item 4 below. Also, your accounting team should advise all staff who purchase and record vendor invoices, so they identify expenditures attributable to Covid-19.
Starting on page 1, item 1, the Notice explains HHS’s interpretation of “Expenses Attributable to Coronavirus”. That section of the Notice also explains that your accounting team will need to separately report totals of the expenditures attributable to Coronavirus into two categories:
Pages 3 and 4 of the Notice provides examples of Administrative Expenses, and Healthcare expenses. Remember, do not count expenses for which your practice already received reimbursement. This section also explains additional reporting requirements is your practice cumulatively receives $500,000 or more from HHS.
You should communicate with your accounting team to confirm they are familiar with the new HHS acceptable use of HHS Cash and the related reporting requirements. Your accounting team should confirm that your accounting system will accumulate the unreimbursed expenses attributed to Covid-19.Your accounting team should advise all staff who purchase or record vendor invoices to identify and record expenditures attributable to Covid-19.Your accounting team should consider filing an extra copy of the invoice in an HHS Covid19 Expenditures folder stored on computer via scanning, or in a paper folder. Keep that folder for 3 years from the date you submit your final HHS report in 2021, in case HHS audits your practice. Remember, the motivation for doing this is so your practice can keep the cash it received from HHS.
Our interpretation: Say your practice receives $100,000 from HHS. Your practice identifies and reports that it spent $40,000 on unreimbursed expenditures attributed to Coronavirus during 2020. Therefore, your practice can justify the acceptable use of HHS Cash of up to $60,000 under Lost Revenues definition of acceptable use. If your practice’s final decrease in revenues from patient services collected during 2020 v. 2019 is $40,000, you can justify $40,000 under the Lost Revenues acceptable use - and consider reporting into 2021, see item 6 below. If your practice’s final decrease in revenues from patient services collected during 2020 v. 2019 is $90,000, HHS will cap your acceptable use of HHS Cash from Lost Revenues at $60,000.
HHS has changed the reporting requirements significantly from what was known, if your practice received HHS Cash prior to September 19. Fortunately, HHS’ October 22 Notice made it a little easier for you to determine whether keeping HHS Cash you already received, or applying for more cash, is worth the cost of staff time and stress of the relatively new requirements to justify the use of cash your practice received from HHS. Also, remember the cost of losing some of the cash you receive from HHS when you file your income tax return, as HHS Cash is taxable to your practice. If you are still motivated to keep cash you received from HHS, you should discuss HHS’s revised reporting requirements with your accounting team now, to ensure that they will identify, record, summarize, report and store the required data and documents. The motivation for doing this is so you can keep the cash you received from HHS.
Raising the White Flag
If you previously received cash from HHS, but you now decide you do not want to deal with the new reporting requirements, consider returning all but $9,999. See item 1 above for details. Or, you can reject all the cash within 90 days of first receiving HHS Cash. For details on how to reject and return the cash, see HHS’ Provider Relief Fund General FAQs.
More HHS Cash Available, but Weigh the Benefit and Costs…
HHS recently announced that almost all practices can apply for more cash through November 6 under its Phase 3 General Distribution – even those that received cash from HHS already. See my article linked here for more information about Phase 3 distributions. Before you apply under Phase 3, you should compare the benefit of receiving more cash from HHS, to the additional staff costs and stress to justify the use of the new HHS Cash for the two acceptable uses (items 4,5 and 6 above); and to meet the other reporting requirements listed above. The answer will depend on the amount your practice spends for unreimbursed expenditures attributable to Covid-19 during 2020 (item 4); and on how close you think your practice’s 2020 revenues will compare to 2019 (item 5). Also, consider that you can continue to justify the acceptable use of HHS Cash for January to June 2021 v. 2019, if needed (item 6).
HHS is still developing the requirements of its Provider Relief Fund. HHS continues to clarify and change the requirements often in response to comments from Congress and Stakeholders. Therefore, you should not rely on the contents of this article until you confirm the contents are still valid. Consider seeking the guidance of professional counsel to confirm the accuracy of this article. Please call Jim Blowers at 518-344-6087, or email me at firstname.lastname@example.org, if you have questions.