Articles HHS Issues Revised Provider Relief Fund Reporting Requirements — Fraud Investigations Loom for Nursing Homes and Other Health Care Providers By J. David Morrissy, Robert W. Ray & Robert Guttmann | June 17, 2021 The Provider Relief Fund and its Ever-Evolving Restrictions and Requirements The Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2.2 trillion economic stimulus bill, was signed into law on March 27, 2020 with the aim of mitigating the impact of COVID-19 on Americans by supporting healthcare-related expenses or lost revenue directly related to the pandemic. Part of the relief authorized by the CARES Act is the Provider Relief Fund (PRF), initially $100 billion (and now $178 billion), to be distributed to hospitals and other healthcare providers on the front lines of the coronavirus response. In April of 2020, funds from the PRF began appearing in providers’ accounts without any prompting from the recipients. The funds were designated as payments (and not loans), but recipients were instructed that if they failed to return the money to HHS within 30 days, they would be bound by the “Terms and Conditions” of the distribution. Although the PRF distributions were a welcome injection of capital into a stressed industry, retention of the funds and adherence to the Terms and Condition has become an unexpected minefield for providers. For example, there are currently more than a dozen published Terms and Conditions documents that place restrictions and requirements on the retention and use of the distributed money – not only on the recipients, but also subrecipients and contractors. Additionally, HHS has continually revised the Terms and Conditions and published guidance (including FAQs on the PRF website), often without leaving any record of prior iterations of the publications that the providers previously relied on. These ever-changing regulations and requirements have caused difficulty for providers who seek to rely on them when determining whether to return the funds, how to spend them, whether to seek further disbursements, and how to comply with reporting obligations. PRF’s Most Recent Revisions to Reporting Requirements and Guidance As recently as June 11, 2021, HHS again issued revised reporting requirements and timelines for recipients of PRF payments. Health Resources and Services Administration (HRSA) Acting Administrator, Diana Espinosa, stated that the “updated requirements reflect our focus on giving providers equitable amounts of time for use of these funds, maintaining effective safeguards for taxpayer dollars, and incorporating feedback from providers requesting more flexibility and clarity about PRF reporting.” Key takeaways from the latest revision are: The reporting requirements are now applicable to recipients of the Skilled Nursing Facility and Nursing Home Infection Control Distribution;The deadline to use the funds will now be staggered and determined by the date the payment was received. Instead of requiring that all revised funds be used by June 30, 2021, funds are now available for expenditure for at least one year and up to a maximum of 18 months depending on the date of receipt;Providers are required to report for each Payment Received Period in which they received payments totaling at least $10,000;The time to complete reporting has been extended from 30 to 90 days;The PRF Reporting Portal will accept submitted information beginning July 1, 2021. (The publication of the revised requirements is here, and registration for the PRF reporting portal is accessible here.) In addition to the new reporting requirements relating to general PRF distributions, HHS has also recently published updated guidance allowing parent entities to report on behalf of their subsidiaries (in somewhat limited circumstances), detailing subsidiary information that must be reported, and including information on how providers that received “Targeted Distributions,” such as the Skilled Nursing Facility Targeted distribution and the Nursing Home Infection Control distribution, are to report on those funds. Investigations, and Prosecutions Loom Although the recently published guidance and updated requirements are generally viewed as encouraging developments that provide more flexibility and clarity than was previously available, it is also widely understood that the economic response to COVID-19 will lead to increasing governmental investigative scrutiny for the foreseeable future. Specifically, the Biden administration has indicated a focus on tackling pandemic related fraud, and the House Select Subcommittee on the Coronavirus Crisis appears poised to ramp up investigations into recipients of PRF disbursements. HHS Auditing and Enforcement Additionally, HHS was clear from the outset of the PRF program that it maintains broad auditing and enforcement power relating to PRF disbursements. Built into one of the first revisions to the PRF Terms and Conditions was an acknowledgment by providers that non-compliance with Terms or Conditions was grounds for the recoupment of any PRF payments and that the deliberate omission, misrepresentation, or falsification of information supplied by the participant is punishable by criminal, civil, and administrative penalties. As such, healthcare facility owners and operators are justifiably concerned about becoming the targets of investigations, and potentially prosecutions, relating to the retention and use of PRF payments. Best Practices to Mitigate Risk Relating to PRF Related Investigations In an effort to prepare for reporting deadlines and avoid potential liability related to PRF disbursements, providers would be well advised to employ proactive measures with the assistance of counsel experienced in responding to governmental subpoenas and investigations. Preliminarily, PRF participants should: Set up a system to ensure the diligent maintenance and review of records relating to eligibility for and expenditure of PRF distributions; Retain copies of the current Terms and Conditions at the time each PRF related decision is made;Preserve all published guidance relied upon in PRF related decision making; Note any internal analysis interpreting guidance or underlying PRF decision making;Ensure awareness of, and ability to comply with, any applicable reporting requirement; and Devise and implement a specific plan related to each of the foregoing steps. Taking steps such as these will maximize preparedness for efficient PRF reporting and compliance, and will strengthen providers’ ability to confidently respond to governmental audits, avoid fraud allegations, and, if necessary, defend against them. Further, in the event of a governmental audit, having demonstrable procedures in place specific to PRF compliance will create goodwill and positive optics for the provider. In sum, reputational and legal risks concerning pandemic related financial fraud can be mitigated with proper planning and preparation. J. David Morrissy is recognized throughout the country for his skillful navigation of complex commercial transactions, powerful litigation strategies, and insightful management of regulatory compliance matters. Mr. Morrissy has earned a reputation as a trusted counselor and legal and business resource for corporations and their principals, including nursing home owners and operators. For questions regarding this article, please contact David at firstname.lastname@example.org Robert W. Ray is a prominent litigator and former federal prosecutor, Independent Counsel for the Whitewater investigation, and counsel to former President Trump during his first Senate impeachment trial. Mr. Ray is a respected courtroom veteran who aggressively advocates his clients’ interests in white collar criminal defense matters, corporate governance and compliance issues, internal investigations, and general litigation, including civil RICO and commercial fraud. Robert Guttmann assists business owners and executives develop and implement cost-effective solutions to current and potential legal issues. Additionally, as a litigator, Robert frequently represents both Debtors and Creditors in Bankruptcy and in State Courts. He also has extensive experience helping clients achieve optimal results in their interactions with Federal and State authorities.