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Provider Relief Fund: Changes in Calculation Result in Potential Overpayment

Funding HealthcareThe Provider Relief Fund was established through the Coronavirus Aid, Relief and Economic Security (CARES Act) to support health care providers facing lost revenue and increased expenses relating to COVID-19. Within the Provider Relief Fund, certain amounts are allocated for various types of providers. For example, there are specific allocations to hospitals, rural hospitals, and providers treating uninsured patients for COVID-19. Additionally, $50 billion was allocated for general distribution to providers. Of the $50 billion, the first $30 billion was quickly disbursed to facilities and providers who received Medicare fee-for-service reimbursements in 2019. The remaining $20 billion of the general distribution was distributed beginning on April 24, 2020.

Initially, the Department of Health and Human Services (HHS) distributed the $30 billion based upon the provider’s 2019 Medicare fee-for-service cost report. However, in distributing the $20 billion, HHS used an alternative standard: the provider’s total net revenue for 2018. HHS guidance indicated that the disbursements of the $20 billion were intended to augment each provider’s allocations so that their total payment is proportional to their share of net patient revenue.

As a result of changing the standard to calculate payments, some providers were overpaid initially. Providers with a large percentage of Medicare revenue are the most likely to have been overpaid, as they would receive more under the Medicare fee-for-service calculation. It is critical for these providers to determine if they were overpaid, as HHS has reserved the right to audit Relief Fund recipients and collect any payments that were made in error. Providers who received a distribution are required to sign an attestation and agree to the Terms and Conditions within 30 days of receiving the payment.

HHS recommends providers who have been overpaid or receive an error in payment reject the entire general distribution payment. Providers must then submit additional financial documentation to allow HHS to determine the appropriate payment. HHS has not provided guidance for providers who already accepted general distribution payments made under the Medicare fee-for-service standard. However, HHS has indicated that it may recoup overpayments where the Provider Relief funding exceeds the provider’s lost revenue and increased expenses.

Frequently Asked Questions on the CARES Act Provider Relief Fund general distribution were updated on May 6, 2020 and are available here. Members of Foster Swift’s Health Care group are tracking HHS guidance and available to assist providers in determining and handling a potential overpayment. For more on this communication, contact one of the authors:

While the information in this article is accurate at time of publication, the laws and regulations surrounding COVID-19 are constantly evolving. Please consult your attorney or advisor to make sure you have the most up to date information before taking action.

Categories: Hospice, Hospitals, Medicare

 has particular expertise in health law and she represents providers with emphasis in the areas of physicians, hospice, home care and long term care, including one of the country’s largest long-term care organizations. She has a vast array of experience in teaming with providers in the areas of regulatory compliance and contracts. 

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Best Lawyers® 2021

Congratulations to the attorneys of the Health Care practice group at Foster Swift Collins & Smith, PC for their inclusion in the Best Lawyers in America 2021 edition. Firm-wide, 44 lawyers were listed. Best Lawyers lists are compiled based on an exhaustive peer-review evaluation and as lawyers are not required or allowed to pay a fee to be listed; inclusion in Best Lawyers is considered a singular honor. Health Care practice group members listed in Best Lawyers are as follows:

To see the full list of Foster Swift attorneys listed in Best Lawyers 2021, click here.