AHLA's Speaking of Health Law

How Long Term Care Providers Can Optimize Provider Relief Funds

November 11, 2020 AHLA Podcasts
AHLA's Speaking of Health Law
How Long Term Care Providers Can Optimize Provider Relief Funds
Show Notes Transcript

Clint King and Lori Crocker from Horne LLP talk about how providers can optimize provider relief funds provided under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The speakers discuss what types of funds long term care facilities have received, and what they can be used for. They also give tips on how providers can prepare to comply with reporting requirements and audits. Sponsored by Horne LLP.

To learn more about AHLA and the educational resources available to the health law community, visit americanhealthlaw.org.

Speaker 1:

Support for A H L A and the following message comes from Horn. The Horn healthcare team understands the sweeping changes disrupting healthcare and impacting your practice. We offer proactive guidance and strategies to enhance efficiency, improve patient experience, increase market share, and ultimately position you for greater success. Horn Healthcare serves over 600 clients across 31 states. For more information, visit horn llp.com.

Speaker 2:

Hi, I'm Lori Crocker.

Speaker 3:

And I'm Clint King.

Speaker 2:

And we're both senior managers at Horn Healthcare

Speaker 3:

And we're here to dis to today to answer and ask a few questions, uh, that many long-term care owners and operators, uh, that are gonna, are gonna have related to these, uh, the financial funds received from the provider relief fund, um, that have been distributed from hhs.

Speaker 2:

So Clint and I have been working relentlessly to help our clients optimize these provider relief funds and most importantly be prepared for the scrutiny that they're going to face as a result of accepting to these terms and conditions applied to the funds.

Speaker 3:

Yeah, with the ever-changing, uh, regulatory rules. You know, our goal in this podcast is to share with you what we've learned so that you can help your facility or your client's facility better manage the financial risk. You know, one thing that's come up a lot is how HHS h s funds have been paid and why. Lori, can you explain the big picture?

Speaker 2:

Yeah, that's a great question, Clint. So, back when Covid hit in March, I really don't think any of us thought we would be where we are today, but unfortunately long-term care providers have taken a big hit from Covid and carry the biggest risk with it. The government did quickly realize that providers were going to need help to keep their doors open and PR keep providing that level of care to their patients During this time, you know, the first thing they did was issued a public health emergency declaration, which did put in place a lot of waivers to help providers, but this declaration is still in place now and those waivers are continuing to be in place. But what they also started to do was pay out funds to providers through the Cares Act and the Healthcare Enforcement Act. And HHS is the agency that has been paying these funds. The funds started coming out to providers back in April and they are continuing today. Right now they have a portioned about 175 billion to be paid out. And they're coming out in different ways. It's not just all at once. It's coming out in ways and in different amounts. So there have been numerous different allocations of these funds, including general distributions and targeted distributions, and the main goal that they had was just to get providers money quickly. But there have certainly been a lot of changes as time has gone on with these funds.

Speaker 3:

Thanks Lori. So, so as everyone can tell, a lot has happened. So, uh, so let's get specific. What type of funds have been paid to our long-term care facilities?

Speaker 2:

Right, so that's a great question. So for our long-term care facilities, they could have been eligible and could have received several, several different of these distributions from h h s. So first, let me try to go in chronological order of the dates of when these funds were paid out. So the first one would've been made in about April at the beginning of April and this was called a general distribution. When h h s first started distributing the money, they had two different general distributions. The first one they paid out was around April 10th and the other one was around April 21st. That first one was out of a pool of 30 billion and they distributed these funds to providers based off their 2019 Medicare fee for service payments. And then the second distribution was for 20 billion and they paid this based off providers annual patient revenues. What we kinda later learned is that the original intent of these general distributions was to honestly get providers 2% of their patient revenues. So they continued to pay out this general distribution for the next several months and they con they asked providers to actually submit data to quantify their revenue so they can make sure they got paid the right amount. So if you have any random dates in, uh, may or June that you got, um, a payment that very well could have been a true up of that general distribution. So after this general distribution, the next thing that came up for long-term care providers, um, was the skilled nursing facility targeted distribution. So this distribution was then paid around May 22nd, and it came from a fund of 4.9 billion. So the way they paid out this distribution was any eligible facility, if you had six or more beds were eligible for these funds. And so each facility received a fixed payment of$50,000 plus$2,500 per certified bed. So that's what happened in May. And then the latest distributions that long-term care facilities have received happened in August and are continuing to happen right now. So this distribution is called the nursing home Infection control distribution and it's kind of very much complicated and, and happening in a bunch of different pieces. So this total distribution is actually$5 billion and they're paying it out in two um, separate ways. So the first payment actually came out at the end of August and they paid out 2.5 billion of that 5 billion. So eligible facilities received a fixed amount of$10,000 plus a par bed amount of 1450. And so now the remaining 2 billion is going to be paid out as incentive funds and facilities must meet certain criteria to receive these funds.

Speaker 3:

Wow, that is a lot Laurie. Uh, so can you uh, I guess really quick explain the criteria for this, these incentive payments,

Speaker 2:

Right? Yes, that is a lot and it's kind of hard to wrap your head around it. So the way they're doing these incentive payments, um, is gonna kind of be in five different buckets as well. So once again, this distribution is now getting split into different pieces and different buckets. So now this incentive payment piece, which is gonna be 2 billion of that total 5 billion distribution, will be paid out in five different methods. So they're going to actually look at each month from September through December and they're going to evaluate each month independently. And then they're gonna actually take all four of those months together in the aggregate and evaluate that as a period as well. So those are your five periods of measurement. So if you meet the requirements in each of these periods, you could be eligible for a payment. And so the way they're gonna pay these out are the payments are gonna come about one month after the period they're looking at. So for example, we just finished, um, September's data and they paid that out on November 2nd. So it was roughly right about a month. It took them to pay out money if you met the criteria in September. And so the way you even become eligible for these incentive payments is kind of a two-step process as well. First they're going to look at your facility's rate of infection and compare that to your county's rate of infection. And if your facility has a lower rate of infection, you could be eligible for that part of the equation. And then secondly, they're going to look at mortality rate. And if your covid death rate falls below the nationally established mortality rate, then that also allows you to qualify. But you do have to meet both of these qualifications to get the incentive payment. So that's what's gonna be continued to be paid out through these next few months.

Speaker 3:

Yeah, that's really good Lori. So do, do you have to attest to these funds if you wanna keep the, are the reporting guidelines different for each fund allocated?

Speaker 2:

Yes. So you are required to attest to these funds to keep the money. You are allowed about 90 days to from receipt of the funds to actually attest to them. However, if you do not attest to'em, they are going to just assume you attest to them. Um, so you're kind of stuck in that situation regardless if you attest or not. But by them, even assuming you attest, that means you are agreeing to the terms and conditions associated with these funds. And you know, speaking of these terms and conditions, it was originally stated that these funds were gonna have no strings attached<laugh>. Well, I think we have quickly learned that there are numerous strings attached to these funds. And honestly what makes this so much more difficult for long-term care facilities is that they're gonna kinda have to have different regulations around the different types of funds they received. So for example, if you received a general distribution and a s n targeted distribution, and then also in an infection controlled distribution, there's actually different reporting guidelines to meet the terms and conditions for these different distributions. So you know that the sniff in general distributions have to follow one set of guidelines. And right now the infection controlled distribution will have another set of guidelines that actually have not been announced yet. And you know, Clint, I think I'm gonna end there because that's a good transition to another set of questions I think providers have. So Clint, you've been kind of intricately working through the details of all this reporting guidance, so it's only relevant that I ask you about it. So let me start with this question. What is the current guidance on reporting for HHS funds?

Speaker 3:

Yeah, that's a good question. Um, yeah, I'm gonna go back and I'm gonna go back to the September 19th. Well, if you go back to August, they actually said they were gonna have some go, some reporting guidance come out in August and August passed with no guidance. And then we had the September 19th guidance that was about six pages that came out related to the HHS reporting. And then they amended that guidance with October 22nd guidance, tweaked a few things, uh, lost revenue we could get in a little later that changed. And then, uh, about 10 days later or so, they issued some November 2nd guidance and that also changed the six pages. But all, all together, it's, it's been a just sort of an evolving document that relates to h h s reporting. Um, and kind of as you mentioned before, uh, the nursing home infection control distribution is not, does not fall under this, uh, reporting guidance, but the general distributions and the skilled nursing home facilities targeted distribution does fall under this, this guidance. So right now, as we know it, the h h s will have a portal that's gonna open up January 15th and it's gonna be open through February 15th. So you have roughly about a month to get, uh, really four big pieces of data, um, put into the, to the h h S portal. I'll kind of go over those briefly. First, you're gonna have some demographic information that you're go, you're gonna have to upload related to your facility. Uh, the second big thing you're gonna have to input is your expenses related to COVID 19. This is for 2020 only. Uh, and this is based on calendar year 20, regardless of your fiscal year end. And then the third item that's gonna be, uh, required to be input into the portal is gonna be lost revenues. And that kinda looks like this. And they want you to input your net patient service revenue, uh, by financial class by quarter for 2019 calendar and 2020 calendar. So that's a lot of information there related to loss revenues. And then they're gonna want you to input your expenses also for those same time periods of time, uh, by quarter for calendar year 19 and calendar year 20. So the way I've looked at this, they're gonna really get a good picture of where you stand financially from, uh, looking at 19 compared to 20. And then another piece of the finance of related to loss revenue is they want you to also put in any other assistance you've received. So that could be, um, any money you received for COVID through the state, uh, your state that's maybe given out some money, they, uh, FEMA or maybe the P P P loan. So all that information's gonna be put in in, uh, go into the lost revenue, uh, section of the portal. And then the last section of that portal relates to some non-financial data. They're gonna wanna know some personnel metrics, uh, patient metrics and also some facility metrics around, you know, uh, bid and staff bids and those type of things.

Speaker 2:

Wow. Yeah, that, that is a lot of information and you know, it's crazy that you're really only gonna have 30 days from the date that portal opens to get your data submitted. So with knowing that, you know, what is the best way to actually prepare for this guidance?

Speaker 3:

Yeah, it is a pretty short timeframe. I'll be curious to see if they, they hold to that 30 days, but, so right now we're gonna, we're gonna work off of that. Um, so the first thing that the providers really need to be doing is tracking the fund receipts, the dates they received it, which distribution it was associated with. Cause all this is gonna be very important for the, for the, uh, for the portal. And then next you're gonna be really need to look into how to track those covid expenses, cuz those are a big piece. It's, we don't wanna come, uh, wait till December 31st and have to go back these last, uh, you know, nine or 10 months or so and try to find all those covid expenses. So I'll be tracking those, uh, currently. And then also just one thing we've seen is the way they want this information broken down by calendar year, uh, 19 and 20 and by quarter is just go ahead and start putting together your 19 financials on a monthly basis and then also rolling right into your 2020 financials on a monthly basis. So those can be easily analyzed for loss revenue and easily input into the, um, into the portal. And then also keeping track of those other sources that they won't import input as well. So have those handy, uh, P P P or money of your feet received from the state for related to covid.

Speaker 2:

Yeah, that's some great advice. And honestly, January and February is gonna be here before we know it. So there's really not much time left to get prepared for this. So now is definitely the time to do it. So I heard you mention the loss revenue part of this calculation and we have gotten a lot of questions around that and I think it has changed several times during all of this time. So can you explain again exactly how that will work?

Speaker 3:

Right, so the loss revenue is what HHS is allowing you to keep related to these distributions that's gonna help offset the loss revenue you've had. So as we mentioned those dates of this, uh, that came out September 19th, October 22nd and November 2nd, each time this was changing, it was, it was mainly related to the loss revenue calculation. So I won't go back to what it was at NI at September 19th and October 22nd, but right now as it currently stands, um, the loss revenue is gonna be calculated based on your net patient service revenue year over year change from calendar year 19 to calendar year 20. So, you know, and one of the other things that we learned on this, um, November 2nd guidance is you're not only gonna have to take into account the, uh, that year over year change, uh, from net patient service revenue from 19 to 20, you're also gonna have to take in those other assistance received. So, so for instance, maybe you had a negative change year over year from 19 to 20 of 10 million net patient service revenue decreased due to covid, um, but then you received 2 million from the state or a$2 million, um, SBA a loan P p P loan when that, that's gonna reduce that 2 million is gonna reduce that 10 million change down to 8 million. Mm-hmm. So you would have 8 million would be eligible to be applied to your h H s funds, uh, for the lost revenue uh, component.

Speaker 2:

Wow. Yeah, that's definitely a lot to process and um, thank you for covering that information. And you know, the other part of this is that we're seeing a lot of facilities worried about finding this covid related expense. And you know, our advice at least so far is to, you know, make sure you capture all these expenses right now and document everything like you said earlier. You know, waiting down the road to try to capture all that information is gonna be a lot more headache for you than, you know, starting the process now. And also, Clint, you know, another question I hear a lot of is what's gonna happen and if I can't use all these funds I have received. And honestly what we know right now is that they are going to allow you a chance to pay back these funds. So that is great news. Um, whatever you don't use by June 30th, 2021, they are going to allow some sort of process for providers to pay back these funds. We just don't know the actual mechanics of how that's going to work, but they have at least said that we can pay back these funds if you have not been able to use them appropriately.

Speaker 3:

Yeah, that's a good point. Thanks for adding that Lori. Um, so what about future funds? Do you anticipate additional funds to be dispersed for long-term care facilities?

Speaker 2:

Yeah, absolutely. I do. You know, first of all, these incentive payments that we just talked about are going to continue to be paid out over the next few months for facilities who qualify for that. However, if you remember back what we talked about, there is still a lot of dollars left to be distributed from that original 175 billion. And since long-term care facilities have taken such a big hit with covid, I would truly anticipate that future distributions would come for these facilities. And you know, we've kind of talked a lot about nursing facilities, but I also wanna point out that the phase three general distribution application is actually open right now and it closes on November 6th. But this is going to allow for any entity type of a long-term care, um, provider to be eligible for funds as well. So if you haven't received any funds yet but you applied for this distribution, then you know that money is still yet to be paid out and it will come at some time as well. So that's good news for you if you applied. But then I'll also anticipate that there will be additional distributions down the road for long-term care providers as they are kind of on the front lines with this. But just keep in mind that if you receive any additional funds, you are still gonna be, um, subject to these reporting guidance that we just discussed in detail. So just keep that in mind as you go through these next few months.

Speaker 3:

Yeah, Lori, so everything we've talked about, you know, leads us in my mind to one topic and that is, you know, scrutiny of these funds.

Speaker 2:

Oh my goodness, exactly. Yes. So, you know, that's honestly a big, big issue is the scrutiny. And so if you're kind of referring to, to these impending audits that we know are going to come for these funds, can you kind of explain how that's going to work? What is this single audit and what might actually trigger facilities to have to do one?

Speaker 3:

Yeah, sure. So, you know, in addition to the H H S reporting, you're also more than likely gonna be subject to the single audit. So real brief briefly about the single audit, you know, it's, it, it's for non-federal entities that received federal funds. So these HHS funds, they would be qualified as federal funds and looking at a non-federal entity, you know, those could be a governmental, uh, long-term care facility or not-for-profit, uh, long-term care facility. But, you know, I don't wanna leave out the, um, for-profit, uh, long-term care facilities cuz those did not get, HHS did not leave, uh, leave you guys out. Um, they are also gonna be required now they have the option, they can have a single audit or they can have what's called a financial related audit, uh, that's specifically related to these HHS awards. So, so everybody's gonna get caught up in this, uh, one way or another. Um, you know, and so looking at, looking at the single audit, it's done in conjunction with your financial statement audit, uh, typically by the auditors that actually do your financial statement audit. So they'll do the, these kind of in conjunction, um, and the, the auditors mainly gonna be auditing the schedule of federal awards are what we known as the sifa. And so all the expenditures that you've incurred during your fiscal year will go on the c a and the auditor will provide an opinion on whether the entity complied with requirements of federal awards in accordance with those regulations. So that's what they're gonna be auditing those com your compliance with those h h s funds. Um, and in looking real quick, last thing on what will trigger you to have this audit is if during your fiscal year you've expended more than$750,000 of these funds, you know, and that, that, that, that relates to me, I look at that as that's specific to covid expenses that we've mentioned and if the loss revenue that's gonna fall into that, uh, calculation as well.

Speaker 2:

Right? So that 750,000 is kind of like the main number you gotta kind of look at to know if you're gonna have to do this.

Speaker 3:

Right.

Speaker 2:

Okay, great. So that's kind of straightforward for us and you know, so is there kind of an easy answer or for what is actually needed to complete this audit?

Speaker 3:

Yeah, I mean the one, the, the one thing I'll mention is it's gonna be kind of difficult is what we've mentioned previously in the H h s reporting that's on the calendar year basis, regardless of your fiscal year in, so for six 30 s or nine 30 s or off calendar year, um, entities, you know, that those are gonna, those are gonna have a little more problem tracking some of this. But for the most part, what we've talked about in the H H S reporting, you know, this is gonna just go right into your a 1 33 audit as well. So what you're getting ready to prepare for the H H s reporting, it prepares you really well, uh, and positions you really well to ha go ahead and have that single audit as well. I mean, you're gonna, they're gonna be looking a little more in depth auditing wise as far as looking at your internal controls. Did you follow your purchasing guidelines as it relates to these covid expenses? Uh, did your internal controls change due to covid working from home scenarios, those type of things. But for the most part, this h H s reporting is gonna get you gonna get you mostly there, uh, getting ready for this single audits.

Speaker 2:

Wow, great. Thank you for that information. So another question I hear a lot of are, you know, what are the deadlines for this? Do we actually have any guidance or know anything for, um, deadlines around the single audits?

Speaker 3:

Yeah, for, for governmental and not-for-profit entities. Those, those specifically, those single audits, they're ba they're gonna be back to your, your individual fiscal year end. Those are due nine months after your fiscal end right now. Um, so you could see where if you're a June 30 fiscal year or nine 30, um, those are gonna be due nine months. So for June 30 you'd be March 31st, 2021, having that single audit due. And, you know, we have received no extensions as of as of today related to, um, that nine month extension. Now look now shifting over to the forfeit uh, facilities, it looks to me, looks the guidance we have now, it is, it's still being developed by the A A I C P A and H H S, but it looks like they might stick to the, for-profits might might have to just stick to that calendar year regardless of their fiscal year, but most single most for-profits are calendar year, so it shouldn't be an issue. So, and then obviously they're still working on the, the deadline, but I would go with right now, that nine month, give you nine months to get through that single audit or financial related audit for for-profit entities.

Speaker 2:

Yeah. And as you can see, there's so many dates here to kinda keep up with and track and to make sure you're following all the guidance and getting everything done on time. So that's just another thing added to providers right now, it's just making sure you're keeping up with that and tracking it and knowing when exactly when everything is due. Right. So, and you know, in speaking for that, you know, how can a facility start preparing or how can they start preparing for these audits and why is it so important to get ahead, you know, going off of all these deadlines we just talked about,

Speaker 3:

Right? Yeah, I mean, everything we've talked about I think would get you there for preparedness, but why is it so important? I mean, you gotta keep in mind if you're not used to having these single audits done, which a lot of our facilities aren't, um, you know, the, your financial statements and your schedule of federal awards, they're gonna be made public, uh, to everyone out there once they get su submitted, uh, with the f with the Federal Audit Clearinghouse, that nine month deadline we talked about, well, that, that night, what happens at that nine month deadline is these financials, um, are are uploaded to the Federal Audit Clearinghouse and they're gonna become public knowledge. So, um, you know, that's one reason we wanna go ahead and start preparing for this. You know, you could, you're gonna have, so any, anything, anything you have related to significant deficiencies, material weaknesses that maybe you've had in the past related to segregation of duties, that that type of stuff will become public now with these, um, these single audits. So, you know, just to make everyone aware that that's a, that's gonna be a big, a big change that, uh, they're gonna have to be aware of.

Speaker 2:

Yeah. Wow. That's some really great information, Clint. And, you know, all of this stuff that we've talked about today is honestly the guidance that as of today and, um, as we know and have, we've seen it could very easily change at a moment's notice. Um, so, you know, that's part of what we do day in and day out is keeping up with all this information and, um, sorting through it so we can best, um, provide guidance for long-term care providers. So Clint, it's been really great sharing what we know about h h s funds, you know, these reporting guidelines, the impending audit audits. You know, we, we certainly think long-term care providers have been at the, the front lines of this, and they have a lot to go through and a lot to report back on on this. And so we hope we f you found this information useful for you and we just wanna thank all of our listeners for joining us. This is Lori Crocker.

Speaker 3:

And I'm Clint King,

Speaker 2:

And we're from Horn Healthcare.