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Compliance Risks of Keeping Medicare Provider Relief Funds

This Bulletin is brought to you by AHLA’s Health Care Liability and Litigation Practice Group.
  • April 23, 2020
  • Rebekah N. Plowman , Arnall Golden Gregory LLP
  • Kara G. Silverman , Arnall Golden Gregory LLP

The Department of Health and Human Services (HHS) released April 10, 2020, the first $30 billion portion of the $100 billion stimulus fund intended to provide financial relief to health care providers during the COVID-19 crisis. Rather than requiring eligible providers to submit applications to obtain financial assistance, HHS immediately delivered funds electronically via the Automated Clearing House account information on file for Medicare providers and suppliers that received reimbursements from the Centers for Medicare & Medicaid Services (CMS) in 2019. For most providers, the deadline to decide whether to sign the attestation and keep the funds, or reject the terms and conditions and return the money to HHS, is rapidly approaching. In making this decision, providers must be wary of the risks associated with keeping the money.

While these disbursements come as a relief to many providers being pushed to the financial limits during the pandemic, providers should carefully consider whether they meet the threshold requirements to be entitled to the funds in the first place and whether they can maintain strict compliance with the terms and conditions associated with retaining the funds to ward off potential enforcement liability down the road. In addition, documentation will be critical in demonstrating compliance and responding to government inquiries. Accepting funds without meeting the required terms and conditions could result in recoupment of some or all of the payments and give rise to potential future liability under the False Claims Act (FCA).

Diligent efforts to document compliance cannot be overstated in light of the breadth and speed with which guidance is being published. HHS recently announced that “[t]his quick dispersal of funds will provide relief to both providers in areas heavily impacted by the COVID-19 pandemic and those providers who are struggling to keep their doors open due to healthy patients delaying care and cancelled elective services. . . . If you ceased operation as a result of the COVID-19 pandemic, you are still eligible to receive funds so long as you provided diagnoses, testing, or care for individuals with possible or actual cases of COVID-19. Care does not have to be specific to treating COVID-19. HHS broadly views every patient as a possible case of COVID-19.”

CMS has confirmed that the funds are grants, not loans, and will not need to be repaid, so long as certain terms and conditions are satisfied. Within 30 days of receiving the payment, providers must sign an attestation (via an electronic portal) confirming receipt of the funds and agreeing to the following terms and conditions:

  • The health care provider receiving the relief funds certifies that it billed Medicare in 2019; currently provides diagnoses, testing, or care for individuals with possible or actual cases of COVID-19; is not currently terminated from participation in Medicare; is not currently excluded from participation in Medicare, Medicaid, and other federal health care programs; and does not currently have revoked Medicare billing privileges.
  • The recipient certifies that the payment will only be used to prevent, prepare for, and respond to coronavirus, and shall reimburse the recipient only for health care related expenses or lost revenues that are attributable to coronavirus.
  • The recipient certifies that it will not use the payment to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse.
  • The recipient shall submit reports as the Secretary determines are needed to ensure compliance with conditions that are imposed, and such reports shall be in such form, with such content, as specified by the Secretary in future program instructions directed to all recipients.
  • Not later than 10 days after the end of each calendar quarter, any recipient that is an entity receiving more than $150,000 total in funds under the Coronavirus Aid, Relief, and Economics Security Act (P.L. 116-136), the Coronavirus Preparedness and Response Supplemental Appropriations Act (P.L. 116-123), the Families First Coronavirus Response Act (P.L. 116-127), or any other Act primarily making appropriations for the coronavirus response and related activities, shall submit a report to the Secretary and the Pandemic Response Accountability Committee. This report shall contain:
    • the total amount of funds received from HHS under one of the foregoing enumerated Acts; the amount of funds received that were expended or obligated for reach project or activity;
    • a detailed list of all projects or activities for which large covered funds were expended or obligated, including: the name and description of the project or activity, and the estimated number of jobs created or retained by the project or activity, where applicable; and
    • detailed information on any level of subcontracts or subgrants awarded by the covered recipient or its subcontractors or subgrantees, to include the data elements required to comply with the Federal Funding Accountability and Transparency Act of 2006 allowing aggregate reporting on awards below $50,000 or to individuals, as prescribed by the Director of the Office of Management and Budget.
  • The recipient shall maintain appropriate records and cost documentation including, as applicable, documentation required by 45 C.F.R. § 75.302 – Financial management and 45 C.F.R. §§ 75.361 through 75.365 – Record Retention and Access, and other information required by future program instructions to substantiate the reimbursement of costs under this award. The recipient shall promptly submit copies of such records and cost documentation upon the request of the Secretary, and recipient agrees to fully cooperate in all audits the Secretary, Inspector General, or Pandemic Response Accountability Committee conducts to ensure compliance with these Terms and Conditions.
  • The Secretary has concluded that the COVID-19 public health emergency has caused many health care providers to have capacity constraints. As a result, patients that would ordinarily be able to choose to receive all care from in-network health care providers may no longer be able to receive such care in-network. Accordingly, for all care for a possible or actual case of COVID-19, recipient certifies that it will not seek to collect from the patient out-of-pocket expenses in an amount greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network recipient.

Providers should be aware of the risks associated with retaining these payments and take steps to assure they not only meet the criteria, but that they maintain appropriate documentation. As an initial matter, the funds are subject to Office of Inspector General (OIG) audits, in addition to the reporting and recordkeeping requirements outlined above. Specifically, under the CARES Act, OIG is obligated to perform both interim and final audits of the disbursed funds and report to the Senate and House Committees on Appropriations over the next three years. Thus, providers retaining these funds must be prepared to respond to OIG audits, likely focusing on whether the funds were utilized for an approved purpose and if the provider sought improper balance billing from patients.

Providers must also be wary of potential FCA liability. The FCA not only penalizes those who knowingly present or cause to be presented a false claim for payment to the government, but also imposes liability on anyone who knowingly avoids or conceals an obligation to return money to the government, known as a “reverse false claim.” Both traditional and reverse FCA liability are subject to treble damages. Under the CARES Act, the government could pursue a reverse FCA action if a provider retains the disbursed relief funds, but fails to comply with the outlined terms and conditions and/or attestation requirements.

Providers should tread carefully when deciding whether to retain these relief funds and assure that documentation is maintained in order to defend OIG audits, or worse, FCA investigations. As a threshold matter, providers must ensure that they are entitled to the funds by way of providing diagnoses, testing, or care for individuals with possible or actual cases of COVID-19. Once satisfied, providers must ensure that they have the capacity to comply with the reporting requirements and can maintain strict control over the use of the funds. If a provider receives the payment and does not wish to comply with any of the terms and conditions, the provider must contact HHS within 30 days of receipt of payment and remit full payment back to the agency.

With the clock ticking for the initial round of providers to decide whether to keep the funds, other providers may soon be in a similar position. The Trump administration is working to determine how to employ the remaining $70 billion of the stimulus fund. HHS has stated that the next round of distributions will be aimed at helping providers in the areas hardest hit areas by the COVID-19 outbreak, rural providers, providers of services with lower shares of Medicare reimbursement or who predominantly serve the Medicaid population, and providers requesting reimbursement for the treatment of uninsured Americans. With the next wave of funds, providers must be on high alert to the strings attached to these funds which may pose compliance risks down the road.