HHS will soon begin clawing back pandemic relief funds from providers who failed to comply with the agency's reporting requirements—however, several medical groups argue that providers should be given more time to comply since many were unaware of the reporting deadline.

Our take: 10 health policy topics—including Covid response—to watch in 2022

HHS to claw back millions in pandemic relief from providers

As part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Congress allocated $178 billion for the Provider Relief Fund (PRF), which is meant to assist health care providers with financial losses and increased expenses due to the Covid-19 pandemic. Now, HHS is planning to collect as much as $100 million from the first round of PRF payments from providers who did not comply with reporting requirements.

The CFO’s guide to navigating federal funding sources of Covid-19 relief

According to Bloomberg Law, providers who received more than $10,000 in PRF funds were required to report how the funds were spent by Sept. 30, 2021, although it was followed by a 60-day grace period before enforcement. On March 10, the Health Resources and Services Administration (HRSA) sent out notices to noncompliant facilities, giving them 30 days to return the funds. If providers do not return the funds, HRSA will initiate recovery of any unreported money, and these noncompliant providers will be excluded from any future PRF payments.

Claire Ernst, director of government affairs at the Medical Group Management Association (MGMA), said that around 10,000 providers who received PRF funds are being asked to return their payments, which range between $30,000 and $250,000, by April 10.

"It's not a great time to have to recoup these funds," Ernst said, noting that hospital and medical groups are currently lobbying lawmakers to distribute more pandemic relief funds and avoid Medicare reimbursement cuts. Having to return the money now "could be completely detrimental to a practice and its ability to keep [its] doors open," she added.

Industry groups request more time

The American Medical Association (AMA), MGMA, and 30 other medical groups have asked HRSA to give providers more time to report their PRF funds before the government takes the money back, arguing that many were not aware of the reporting deadline, Modern Healthcare reports.

During the first round of PRF funding, HRSA distributed more than $42 billion in aid, which was sent to providers through their Medicare provider numbers. However, the guidelines for reporting were not fully developed until after the first round of payments had already been sent—meaning that many providers, particularly those who received smaller sums, may have been unaware of any terms and conditions for the funds.

"They wanted to get [the PRF funds] out fast," said Joseph Geraci, a partner at Husch Blackwell. "[T]he government basically pushed all this money out and then came up with the rules after they pushed the money out."

According to Modern Healthcare, the original terms of the PRF funding said recipients who received more than $150,000 were required to report how their funds were spent, but later documents released said providers who received at least $10,000 were required to report. Providers have also expressed confusion about what information should be included in the reporting documents.

In addition, staffing shortages at health care organizations, particularly of workers who were in charge of the PRF funds and communications with HRSA, may have contributed to reporting delays.

"It's not just the health-care providers themselves who are retiring and leaving medicine, given the pressures and stresses of Covid," said Brian Lee, a partner at Alston & Bird, noting that C-suite executives are also leaving in greater numbers amid pandemic pressures. "You may have a CFO who was originally on top of all this stuff retire or leave, and along with it, all of this institutional knowledge that an individual has developed over the course of these last two years."

Currently, the medical groups have requested HRSA reopen the reporting period for at least 60 days to allow providers more time to comply with the requirements. They have also asked HRSA to use multiple methods of communication, including telephone, mail, and fax, to inform providers about PRF reporting in the future.

"As we are very connected to our members, we would like to work with HRSA on best ways to identify and reach the remaining practices that have not reported to bring them into compliance," the groups wrote in a letter to HRSA administrator Carole Johnson. "We stand ready to work together with HRSA on getting physician practices to report on Provider Relief Funding so they can retain the PRF funds they so desperately needed to stay afloat during the COVID-19 pandemic." (Reed, Bloomberg Law, 3/30; D'Ambrosio, MedPage Today, 4/1; Goldman, Modern Healthcare, 3/31; Landi, Fierce Healthcare, 4/3)