Provider Relief Fund Audits – The Tip of the Iceberg?

New round of audits coming to providers relative to the PRF program.

The U.S. Department of Health and Human Services (HHS) recently announced an additional round of audits of healthcare providers that received funding from the Provider Relief Fund (PRF). This time, HHS will focus on whether hospitals that received PRF payments have complied with the surprise billing provisions of the PRF terms and conditions. HHS has long promised “significant enforcement” related to the PRF, a promise that is beginning to take effect.

The PRF is a $178 billion fund created by Congress through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, designed to provide financial relief to healthcare providers during the COVID-19 pandemic. HHS subdivided the PRF into various general and targeted distributions, which have been paid to providers in several waves between April 2020 and the present. Each type of distribution came with a detailed set of terms and conditions, to which the provider had to agree (generally in the form of an attestation) in order to keep the payment.

These terms and conditions require the provider to use the funds only for healthcare-related expenses and lost revenue attributable to the pandemic, and to file reports demonstrating compliance with the conditions of the payment. Providers that have not complied with the requirements of the PRF may be subjected to recoupments or other penalties, including liability under the False Claims Act.

Providers that received and retained payments totaling over $10,000 through the PRF are required to file reports justifying their use of the funds. Providers must report information on healthcare-related expenses attributable to the pandemic, lost revenue attributable to the pandemic, other pandemic assistance received, and administrative data. Providers that received more than $500,000 in aggregate payments are required to report some data elements in greater detail, including specific information regarding operations, personnel, supplies, equipment, facilities, and several other categories. Some providers will be required to report significant amounts of financial information in significant detail, which may require time to compile or calculate.

The first of these reports were due Sept. 30, 2021, and providers may be required to file additional reports over the next year, depending on when they received a PRF payment or payments.

Furthermore, most distributions under the PRF required the recipient to agree that, for all care for a presumptive or actual case of COVID-19, “it will not seek to collect from the patient out-of-pocket expenses in an amount greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network recipient.”

HHS’s newly announced audit will review hospital providers’ compliance with this balance billing requirement. HHS has also indicated that it will place additional emphasis on assessing how providers calculated the bills for out-of-network patients that were admitted for COVID-19 treatment.

When the PRF was created, HHS promised significant enforcement action and audits of providers that received funds. HHS also recently retained several outside contractors to perform audits of PRF recipients. As the pandemic recedes, providers that have benefited from the PRF should anticipate increased audit activity. The recently announced audit is likely only the tip of the iceberg.

There are numerous areas of PRF compliance that HHS could audit, in addition to the prohibition on balance billing. Some of the most likely audit areas of focus are eligibility, attestations, and use of funds. The first wave of payments under the PRF consisted of $30 billion that was automatically deposited in providers’ accounts, in amounts based on providers’ 2019 Medicare billing.

Providers did not make requests or applications for this funding. However, simply because a provider received money did not mean they were entitled to keep it; a provider also had to meet the eligibility criteria.

Furthermore, providers were required to either attest to their compliance with the terms and conditions of the PRF payment, including eligibility criteria and restrictions on use of the funds, or return the money to HHS. Providers that took no action were “deemed” to have attested that they were in compliance with the terms and conditions. Some have argued that a “deemed” attestation, where no action was taken by the provider, would be more difficult for the government to enforce; however, this course of action may carry significant risk to the provider.

Lastly, providers that received payments were also required to use the payment only to prevent, prepare for, and respond to the pandemic, and that the payment would reimburse the provider only for healthcare-related expenses or lost revenues attributable to it. This is the most likely area of enforcement for PRF payments, because it was the policy goal of the fund. However, it may also be the most difficult issue for providers, as the guidance relating to use of the PRF payments unfolded and evolved over time, often months after the provider received the funds.

Some other potential areas of focus of future audits may be use of funds by a parent entity, wherein the subsidiary received the funds, and use of PRF funds by a purchaser when the entity that received the PRF payment was sold to or merged with another entity. Each of these situations has its own rules regarding which entity can use the funds, under which circumstances the funds can be used, and which entity is required to file reports with HHS regarding the funds.

At the height of the pandemic, when providers were often forced to close their doors or cancel certain procedures, a PRF payment may have seemed like a lifeline. However, these payments came with many strings attached.

As the pandemic ebbs, the government is shifting from support to enforcement. Providers that received payments under the PRF can likely expect many future audits.

Programming Note: Listen to healthcare attorney Andrew Wachler report this story live on Monitor Mondays, Monday, Feb. 21, 10 Eastern.