The Department of Health and Human Services (HHS) has been distributing $175 billion to “eligible healthcare providers” on the front lines of the coronavirus response in various phases, but that money comes with many obligations. Failure to comply with all the requirements can result in substantial liability.

Accepting Coronavirus Aid, Relief, and Economic Security (CARES) Act funds but not following through on the related requirements can lead to False Claims Act charges, says Heather Alleva, JD, an attorney with Buchanan Ingersoll & Rooney in Philadelphia.

“A False Claims Act allegation can stem from any material misstatement or omission that relates to CARES Act funding. That can mean something was submitted to the government in an application for funding, improperly using the funds, and submitting false statements about how the funds are used,” Alleva explains. “All of those could open you up to False Claims Act liability, so it’s really important to be documenting things and making sure what you are doing is in compliance with the law. The penalties can be really severe.”

The CARES Act provides funds to eligible healthcare providers “that provide diagnoses, testing, or care for individuals with possible or actual cases of COVID-19.” The funds come in the form of “targeted distributions” and “general distributions,” Alleva explains.

Targeted distributions are available for providers in hard-hit areas, rural providers, and providers requesting reimbursement for uninsured people, Alleva says. General distributions are for other healthcare providers affected by the pandemic.

All recipients of CARES Act distributions must sign an attestation within 90 days of receipt of funds, which includes attesting that the recipient provides, or provided after Jan. 31, 2020, diagnoses, tests, or care for individuals with possible or actual cases of COVID-19.

The recipient also must attest that it is not terminated by or excluded from federal healthcare payer programs, and the funds will only be used to prevent, prepare for, or respond to COVID-19 and will only reimburse the recipient for “healthcare-related expenses or lost revenues that are attributable to coronavirus.”

The attestation also says the recipient will not use funds to reimburse expenses or losses that have been reimbursed from other sources or that other sources must reimburse, such as the Federal Emergency Management Agency.

Recipients also must submit required reports and adhere to restrictions (e.g., not using the funds for political purposes).

Definition of COVID-19 Supplies

Alleva notes the CARES Act definition of “healthcare-related expenses attributable to coronavirus” is a broad term that may cover a range of items and services purchased to prevent, prepare for, and respond to COVID-19. That may include:

  • supplies used to provide care for possible or actual COVID-19 patients;
  • equipment used to provide care for possible or actual COVID-19 patients;
  • workforce training;
  • creating and staffing emergency operation centers;
  • reporting COVID-19 test results to federal, state, or local governments;
  • creating extra capacity by building temporary structures for COVID-19 care, or caring for COVID-19 patients in a separate area;
  • acquiring additional resources, including staffing, facilities, equipment, and supplies;
  • technology to expand or preserve care delivery. (More information is available at: https://www.hhs.gov/coronavirus/cares-act-provider-relief-fund/for-providers/index.html.)

The CARES Act definition of “lost revenues attributable to coronavirus” can include any revenue that a healthcare provider lost due to COVID-19, such as fewer outpatient visits, canceled elective procedures, or increased uncompensated care.

Provider Relief Fund payments can cover any cost that prevents, prepares for, or responds to COVID-19 that lost revenue would have covered, Alleva says. HHS encourages use of funds to cover costs of capacity, such as employee or contractor payroll, employee health insurance, rent/mortgage, equipment leases, and EHR licensing fees.

Providers receiving more than $150,000 must submit quarterly reports to HHS outlining the amount of funds received, the amount of funds expended or obligated for each project or activity, and detailed lists of projects for which funds were expended or obligated.

Healthcare organizations are subject to False Claims Act liability in several situations, Alleva says. Those situations can include receipt of improper payment or overpayment of which the provider was aware but did not return to HHS, funds expended for improper purposes and not returned, knowingly attesting to terms and conditions with which provider cannot comply, and/or accepting payments the provider knows or should know cannot be spent in accordance with the terms and conditions.

Healthcare organizations must proceed carefully when deciding whether to accept or reject a higher-than-expected payment, Alleva says. The government will propose an amount of funding based on the information provided by the healthcare organization, but it is up to the organization to decide whether to accept that amount of funding.

“You have the opportunity to accept or reject the funds,” Alleva says. “The onus is on the provider entity to make sure that the funding they receive from HHS is something they can use in accordance with the terms and conditions. That’s when you want to document and make a very thorough analysis of how you can conform to those requirements.”

Alleva points out that healthcare organizations have received different amounts of funding in the three phases of CARES Act allocations. Receiving more or less in the latest round of funding is not necessarily a problem.

“The phases of funding were based on different methodologies and different funding, so it’s not necessarily a red flag that you received a very different amount than you received in other phases of funding,” she says. “However, you have to consider the terms and conditions related to that funding and make sure you can attest to them honestly.”

There is no HHS guidance instructing providers on disclosing overpayments identified after funds are accepted, Alleva notes. HHS guidance only addresses identification of overpayments before acceptance and requires rejection of the full payment.

Alleva suggests these best practices for compliance with CARES Act requirements:

  • Enhance the compliance program to account for COVID-19 considerations;
  • Maintain clear, organized, and accessible books and records;
  • Create an oversight committee or other internal mechanism to ensure compliance with reporting deadlines and other requirements;
  • Implement funding utilization measures, like maintaining segregated bank accounts and separate general ledger accounts for CARES Act funds;
  • Follow Title VI civil rights considerations.

“The deadline for expenditure of the funds is June 30, 2021. If you don’t use the funds by then, you will have to refund the funds to HHS, but they have not provided guidance yet as to how to do that,” Alleva says. “I suspect they will offer guidance on that soon or extend the deadline.” n

SOURCE

  • Heather Alleva, JD, Buchanan Ingersoll & Rooney, Philadelphia. Phone: (215) 665-5315. Email: heather.alleva@bipc.com.