Providers win deadline extension for use of CARES funds, but it may cause some confusion

After receiving push back from providers, the Department of Health and Human Services has agreed to extend some of the deadlines imposed on spending and reporting the use of relief funds hospitals received during the Covid-19 pandemic. Though this is a largely positive move, there are some cons, including the fact that the extension does not apply to all providers.

That’s according to Michael P. Strazzella, head of federal government relations at law firm Buchanan, Ingersoll and Rooney.

The provider relief funds, distributed under the Coronavirus Aid, Relief, and Economic Security Act, were a lifeline for hospitals and other providers during a pandemic that decimated their financial health, he said in a phone interview. But initially, HHS had said that hospitals have to expend the funds they received by June 30 of this year and file a report detailing that use by July 31.

Now, providers who received funds in the latter half of 2020 — between July 1 and Dec. 31 —have until the end of this year to use the funds and until March 2022 to complete the reporting requirements. But the initial deadlines stand for providers who received their funds between April 10 and June 30, 2020.

Several industry groups, including the American Hospital Association, were urging HHS Secretary Xavier Becerra to extend those deadlines. Following the announcement, they made their approval known. And healthcare experts closely following the developments agree that this is a win for providers.

“The extended deadlines for use and reporting give providers additional time to expend the [provider relief funds] that may have been received in later ‘tranches’ or rollouts…and keeps with the original spirit and intent of the June 30, 2021, deadline,” said Morgan Lewis healthcare partner Gregory Etzel, in an email. “It effectively confirms that providers have between 12 and 18 months to expend the [money] they receive, depending on the date they receive the funds.”

Further, the reporting window has been extended from one month to three, which will help providers ensure they are properly documenting the costs, Etzel said.

Not only that, but the updated reporting timeline also allows providers to remain focused on responding to the pandemic, including the current vaccine rollouts, said Peter Urbanowicz, managing director and co-head of Alvarez & Marsal’s Healthcare Industry Group, in an email.

“As the Covid-19 vaccine rollouts continue, one would expect there to be less and less of a need for governmental support, but as long as organizations are still having to ‘prevent, prepare, and respond to Covid-19’ they should have the opportunity to expend and justify the use of [the provider relief fund] dollars received,” he said.

But the deadline extension is not without its downsides.

One is that not all providers will be able to take advantage of the extension as those who received funds in the first half of the year still have to use them up by June 30.

“That’s probably the one place I would have liked to have seen that deadline moved back by a few months,” Buchanan, Ingersoll and Rooney’s Strazzella said.

In addition, because there are two different deadlines for spending and reporting on funds received last year, it may create additional work as organizations will have to go back and split documentation on expenses and lost revenue based on the dates the payments were received, Urbanowicz said.

This may ultimately lead to confusion, making “careful documentation of the ‘life cycle’ of such funds…key to timely and appropriate reporting,” Etzel said.

Photo: simarik, Getty Images

 


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