Suppliers have unanswered questions forward of COVID-19 grant reporting deadline

For some healthcare suppliers, assembly subsequent week’s deadline for reporting on their federal COVID-19 grant spending is shaping as much as be a mad scramble.

Accountants serving to suppliers prepare for the Sept. 30 deadline to report on the primary tranche of Supplier Reduction Fund spending say even those that’ve been ready for weeks have official questions on how one can transfer ahead. Congress permitted $178 billion to assist suppliers climate the unprecedented disaster, however many within the healthcare business say the Well being and Human Providers Division’s steering on how one can account for that cash has been complicated and unclear.

For essentially the most half, these which are “completely unprepared” are typically smaller and do not view themselves as sufficiently big to must report back to the federal government, mentioned Anna Stevens, partner-in-charge for healthcare on the accounting agency Weaver. Suppliers that spent greater than $10,000 in grant cash should report that to HHS, and those who spent greater than $750,000 will likely be topic to audits.

“I actually get emails each day that say: ‘What are we imagined to do? What reporting module? What are you speaking about?'” Stevens mentioned.

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The Sept. 30 deadline, the primary for reporting Supplier Reduction Fund grants, covers funds obtained between April 10, 2020, and June 30, 2020. The deadline to spend that cash was June 30, 2021.

The American Hospital Affiliation continues to hunt extra time for its members to make use of their grants.

In a letter despatched to appearing Well being Sources and Providers Administration Administrator Diana Espinosa Friday, the commerce group requested the company prolong the June 30, 2021, deadline to spend cash obtained between April 10, 2020 by June 30, 2020. Effectively over half of the grant cash went out earlier than June 30, 2020, a lot of it to hospitals in high-impact areas serving susceptible populations, AHA Govt Vice President Stacey Hughes wrote.

HHS tacked on a 60-day grace interval to the Sept. 30 reporting deadline, however many suppliers have indicated they do not plan to make use of that, hoping as a substitute to get it executed and out of thoughts.

The Medical Heart Well being System in Odessa, Texas, is amongst those who do not plan to make the most of the grace interval, mentioned Grant Trollope, the corporate’s assistant chief monetary officer. The Medical Heart Well being System contains a 402-bed hospital and doctor practices.

“We do exactly wish to get it behind us and transfer on to the subsequent chapter,” Trollope mentioned.

A possible downside tax consultants have recognized with utilizing the grace interval is it technically doesn’t adjust to the Workplace of Administration and Finances’s compliance directions for auditing the funds. That is complicated as a result of auditors look to the OMB compliance directions that require them to carry out audits, Stevens mentioned. Nevertheless, the businesses are more likely to align their requirements, she mentioned.

Maybe an excellent greater space of confusion is HHS’ current announcement of a fourth distribution section for Supplier Reduction Fund grants. That remaining pool consists of $25.5 billion, and is supposed to cowl misplaced income and better spending between July 1, 2020, and March 31, 2021.

That point window consists of the interval throughout which suppliers had been additionally spending cash they will report within the first section of distributions, which had for use by June 30, 2021. The query many suppliers are asking is whether or not they need to save a few of these bills and misplaced revenues for his or her fourth-phase purposes, as a substitute of reporting them for his or her first-phase grants by Sept. 30, mentioned Rick Kes, the accounting firm RSM’s senior analyst for healthcare.

The phase-one reporting portal requires suppliers to checklist COVID-19 bills that their aid grants didn’t cowl. One other query is whether or not suppliers who do not wish to put within the effort to establish these bills will likely be caught as soon as section 4 comes round, Kes mentioned.

“That is the complicated half,” Kes mentioned. “There are items right here that relate to one another however we’re unsure how dependent they’re on one another.”

The phase-four purposes are more likely to come out simply days earlier than the Sept. 30 deadline to report section one, so suppliers will not have a lot time to resolve how one can proceed, Kes mentioned.

“Most shoppers that I discuss to have all their information within the portal,” Kes mentioned. “They’re simply form of ready to hit submit and making an attempt to determine: Ought to I do this, or ought to I wait and work out extra in regards to the phase-four utility?”

Suppliers are also unsure about what they will and can’t depend as incremental bills associated to COVID-19 for the aim of accepting the grant cash.

That is notably true with regards to payroll. For instance, an worker on the entrance of a hospital screening folks’s temperatures would clearly depend as a result of that individual wouldn’t have been there earlier than the pandemic, Stevens mentioned. What’s much less clear can be a heart specialist who stopped treating her common sufferers and as a substitute completely noticed COVID-19 sufferers. Hospitals have generally redeployed medical specialists to look after COVID-19 sufferers all through the disaster.

The principle differentiator is whether or not that supplier would have been there whatever the presence of COVID-19 sufferers. If the reply is sure, it isn’t an incremental value. Nevertheless, if the hospital paid them extra time or bonus pay to deal with COVID-19 sufferers, these bills are included, Stevens mentioned.

One other murky space is telehealth. One in every of Stevens’ shoppers wished to make use of grants on authorized bills associated to telehealth. However the supplier had used telehealth earlier than the pandemic, making it was unclear whether or not the prices had been associated to COVID-19, she mentioned. Finally, that supplier was capable of present that these outlays had been linked to bringing on physicians who solely carried out COVID-19 telehealth visits, she mentioned.

HHS amended its steering a number of occasions on how suppliers ought to calculate misplaced income for the aim of demonstrating how the aid funds had been spent.

The ultimate steering ended up being favorable to suppliers. That is as a result of quarters the place they noticed monetary good points weren’t netted in opposition to the quarters the place they misplaced cash, mentioned Aparna Venkateswaran, a senior supervisor with Moss Adams For instance, if, over a six-quarter interval, a supplier skilled three quarters with $1 million of good points every and three quarters with $1 million in losses every, that supplier would get to report $3 million in misplaced income, whatever the good points, she mentioned.

That is welcome information for healthcare entities that had been involved about with the ability to proceed utilizing their grant cash at the same time as their funds enhance. Returning sufferers and continued authorities assist pushed some well being techniques’ working margins previous 10% within the second quarter of 2021.

However there’s nonetheless quite a bit that is unclear about how a robust 2021 monetary efficiency will have an effect on a suppliers’ potential to report bills and misplaced income for PRF grants, Venkateswaran mentioned. “It’s definitely a wild card on how that is going to look,” she mentioned.

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