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WSC Brief: Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act Sec. 30611. Provider Relief Fund – Expenses and Lost Revenue Reimbursement

May 13, 2020 5:17 pm

Summary

On May 12, House Democrats unveiled the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, the latest round of legislation to provide Americans with economic relief from the COVID-19 pandemic. The bill includes an additional $100 billion for the Provider Relief Fund, adding to the $100 billion and $75 billion previously provided by the CARES Act (P. L. 116-136) and the Paycheck Protection Program and Health Care Enhancement Act (P. L. 116-139), respectively. Unlike the earlier appropriations, which gave broad discretion to HHS on how the funds were to be allocated, the new funding included in this legislation would be used to reimburse providers for expenses and lost revenue based on a statutory formula.

Overview

Not later than 7 days after the enactment of the HEROES Act, the HHS Secretary, acting through the HRSA Administrator, would be required to establish a program that would reimburse, through grants or other mechanisms, eligible health care providers for eligible expenses or lost revenues occurring during calendar quarters beginning on or after January 1, 2020.

The Secretary would be required to review applications and make awards of reimbursements on a quarterly basis; and award the reimbursements for a quarter not later than 14 calendar days after the close of the quarter. The Secretary would be required to award the reimbursements under the new program for the quarter beginning January 1, 2020 not later than 14 calendar days after the date of the bill’s enactment.

Calculation

The amount of reimbursement to an eligible health provider shall equal:

  1. The sum of:
    1. 100 percent of the eligible expenses of the provider during the quarter; and
    1. 60 percent of lost revenues of the provider during the quarter; less
  2. Any funds that are:
    1. Received by the provider during the quarter pursuant to the first 4 stimulus bills; and
    1. Not required to be repaid.

Reimbursement = (100% of eligible expenses+ 60% of lost revenue) stimulus payments

If the amount that an eligible provider has received under the first 4 stimulus bills exceeds the sum of 100 percent of the provider’s eligible expenses and 60 percent of the lost revenue for the quarter, the amount of the difference shall be applied in making the calculation over each subsequent quarter for which the provider seeks reimbursement under the program.

If a provider’s lost revenue for the quarter does not exceed an amount that equals 10 percent of the net patient revenue of the provider for the corresponding quarter in 2019, the lost revenue will be rounded down to zero.

Definitions

Eligible Expenses

Expenses eligible for reimbursement under the new program include:

  • Building or construction of temporary structures;
  • Leasing of properties;
  • Medical supplies and equipment including personal protective equipment;
  • In vitro diagnostic tests, serological tests, or testing supplies;
  • Increased workforce and trainings;
  • Emergency operation centers;
  • Construction or retrofitting of facilities;
  • Mobile testing units; Surge capacity;
  • Retention of workforce; and
  • Such other items and services as the Secretary determines to be appropriate, in consultation with relevant stakeholders.

Lost Revenue

The lost revenues of an eligible health care provider for the quarter is equal to:

  1. Net patient revenue of the provider for the corresponding quarter in 2019 minus net patient revenue of the provider for such quarter; less
  2. The savings of the provider during the calendar quarter involved attributable to foregone wages, payroll taxes, and benefits of personnel who were furloughed or laid off by the provider during that quarter.

Lost Revenue = (NPR for 2019 quarter NPR for 2020 quarter) savings due to lost revenue

Net Patient Revenue

For the purposes of determining lost revenue, the term “net patient revenue” means the sum of:

  1. 200 percent of the total amount of Medicaid reimbursement received by the provider during the quarter;
  2. 125 percent of the total amount of Medicare reimbursement received by the provider during the quarter; and
  3. 100 percent of the total amount of other reimbursement (e.g., private insurance; TRICARE; etc.) received by the provider during the quarter.

Net Patient Revenue = (Medicaid x 2.0) + (Medicare x 1.25) + (other reimbursement x 1.0)

Insufficient Funds for a Quarter

If there are insufficient funds made available to reimburse all eligible health care providers for all eligible expenses and lost revenues for a quarter, the Secretary shall:

  1. Prioritize reimbursement of eligible expenses; and
  2. Using the entirety of the remaining funds, uniformly reduce the percentage of lost revenues otherwise applicable under the program to the extent necessary to reimburse a portion of the lost revenues of all eligible health care providers applying for reimbursement.

Provider Application

A health care provider seeking reimbursement under the new program would be required to submit to HHS an application that:

  1. Provides documentation demonstrating that the health care provider is an eligible health care provider;
  2. Includes a valid tax identification number of the health care provider;
  3. Attests to the eligible expenses and lost revenues of the health care provider occurring during the calendar quarter;
  4. Includes an itemized listing of each such eligible expense, including expenses incurred in providing uncompensated care;
  5. Attests to whether the amount of lost revenue of an eligible health care provider for a calendar quarter exceeds an amount that equals 10 percent of the net patient revenue of the provider for the corresponding quarter in 2019;
  6. Includes projections of the eligible expenses and lost revenues of the health care provider, for the calendar quarter that immediately follows the calendar for which reimbursement is sought; and
  7. Indicates the dollar amounts for the calendar quarter included in all of the calculations and definitions described above.

Limitations

  • A health care provider may not receive reimbursement under the new program for expenses or losses for which the eligible provider is reimbursed from other sources.
  • Reimbursement for eligible expenses and lost revenues may not include compensation or benefits – including salary, bonuses, awards of stock, or other financial benefits – for an officer or employee whose total compensation exceeded $3 million in CY 2019.
  • Any provider that accepts reimbursement under the new program may not balance bill any confirmed or presumptive COVID-19 patient for medically necessary items or services during the Public Health Emergency period.

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