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 Aid Fund spending say even those that’ve been ready for weeks have legit questions on the right way to transfer ahead. Congress accredited $178 billion to assist suppliers climate the unprecedented disaster, however many within the healthcare business say the Well being and Human Providers Division’s steerage on the right way to account for that cash has been complicated and unclear.

For probably the most half, these which can be “solely unprepared” are usually 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 can be topic to audits.

“I actually get emails each day that say: ‘What are we presupposed 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 Aid 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 Assets and Providers Administration Administrator Diana Espinosa Friday, the commerce group requested the company lengthen 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 weak 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 an alternative to get it executed and out of thoughts.

The Medical Middle Well being System in Odessa, Texas, is amongst those who do not plan to reap the benefits of the grace interval, mentioned Grant Trollope, the corporate’s assistant chief monetary officer. The Medical Middle 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 following 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 companies are more likely to align their requirements, she mentioned.

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

That point window contains the interval throughout which suppliers have been additionally spending cash they will report within the first part 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 an alternative 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 record 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 can be caught as soon as part 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 undecided 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 part one, so suppliers will not have a lot time to resolve the right way to proceed, Kes mentioned.

“Most shoppers that I speak to have all their knowledge within the portal,” Kes mentioned. “They’re simply type 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 concerning the phase-four utility?”

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

That is notably true on the subject of payroll. For instance, an worker on the entrance of a hospital screening folks’s temperatures would clearly rely as a result of that particular person 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 an alternative solely noticed COVID-19 sufferers. Hospitals have generally redeployed medical specialists to take care of COVID-19 sufferers all through the disaster.

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

One other murky space is telehealth. Considered one 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 have been associated to COVID-19, she mentioned. In the end, that supplier was in a position to present that these outlays have been linked to bringing on physicians who solely performed COVID-19 telehealth visits, she mentioned.

HHS amended its steerage a couple of occasions on how suppliers ought to calculate misplaced income for the aim of demonstrating how the aid funds have been spent.

The ultimate steerage 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 have 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 programs’ working margins previous 10% within the second quarter of 2021.

However there’s nonetheless lots that is unclear about how a powerful 2021 monetary efficiency will have an effect on a suppliers’ means 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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