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Doctors Asked to Repay $100 Million in Covid Aid Absent Reports

March 30, 2022, 7:07 PM

The Department of Health and Human Services is clawing back as much as $100 million in pandemic assistance from health-care providers who didn’t comply with the agency’s reporting requirements.

Physician practices and clinics that received notices from HHS say they didn’t know there were strings attached to the money. Initial tranches of Covid-19 funds were deposited in some providers’ accounts without them asking for it.

Reminder emails about reporting requirements went to some facilities’ spam folders or to staffers who initially accepted the money but ended up leaving their jobs, according to the Medical Group Management Association, which represents health-care practices and providers.

The HHS’s Health Resources and Services Administration sent notices to non-compliant facilities on March 10, giving them 30 days to return the funds.

“If you do not return the funds, HRSA will initiate the recovery of all funds not reported on” during the first reporting period. Those providers will also be excluded from future payments, HRSA said, according to a sample letter obtained by Bloomberg Law. HRSA confirmed that the letters went out.

Roughly 10,000 recipients of the Provider Relief Fund are being asked to return anywhere from $30,000 to $250,000 by April 10, said Claire Ernst, MGMA’s director of goverment affairs. Meanwhile, they’re dealing with “everything from the highest inflation that we have seen in 40 years and potential variants down the line,” Ernst said.

Having to return so much money at this moment “could be completely detrimental to a practice and its ability to keep it’s doors open,” she said.

The Provider Relief Fund, supported by HRSA, provides up to $178 billion in relief funds for health-care providers that lost revenue and expenses due to the Covid-19 pandemic. The money was not meant to be repaid, the agency said.

“The current Post-Payment Notice of Reporting Requirements was released on June 11, 2021, and broadly disseminated to providers and PRF stakeholders in advance of and during the reporting periods,” HRSA’s office of communications said.

The funding was authorized through the CARES Act (Public Law 116–136), a cross-sector 2020 Covid-19 relief measure, “in record time” to support providers amid lock-downs and bans on elective procedures that reduced cash flow, said Joseph Geraci, a partner at Husch Blackwell. “They wanted to get it out fast,” Geraci said, so “the government basically pushed all this money out and then came up with the rules after they pushed the money out.”

The clawback comes as both the agency and the health-care industry are recovering losses after the physical and financial toll of the Covid-19 pandemic. Continued access to antivirals, Covid-19 vaccines, and testing programs for the uninsured are now dependent on lawmakers responding to the White House’s pleas that it needs more funding. Senate lawmakers are attempting to find a way to provide another $15 billion in aid, as Republicans insist on offsets for all or most of that money.

Hospital and medical groups are also pushing lawmakers to avoid Medicare reimbursement cuts and distribute more relief money to account for reduced revenue, higher staffing costs, and more Covid-19-related expenses.

“It’s not a great time to have to recoup these funds,” Ernst said.

Strings Attached

The Covid-19 fund has been distributed in several waves, and the imminent clawbacks are for providers that received money first. In that initial distribution, HRSA sent facilities money using their Medicare provider number, so the funds “just appeared” in their accounts, Geraci said.

That left many providers unaware that there were strings attached to the money, particularly those who received smaller lumps of cash, Geraci said.

Funding recipients had to agree to HRSA’s terms and conditions, which said that they would need to “submit reports as the Secretary determines are needed to ensure compliance with conditions that are imposed on this Payment.” If recipients received more than $10,000, they were required to report how the funds were spent by Sept. 30, 2021.

Facilities could still get the money without signing off on the terms and conditions, since the HHS said it deemed them to have accepted the terms if they kept it.

The HHS requires reporting because it’s being audited by watchdogs like the Office of Inspector General. “They don’t want to be in a situation where they give out a bunch of money and it’s being used to buy Lamborghinis,” Geraci said.

“The legislation that authorizes the PRF requires that funds be used for COVID-related revenue loss and expenses. Providers must report on how they used their funds to demonstrate they complied with the law and the terms and conditions of their payment,” HRSA said in a statement for Bloomberg Law. That requirement “has been in place since the beginning of the program.”

But the quick distribution of money in the first round also meant that guidelines on reporting weren’t initially clear. “One reason that people were confused is because it didn’t specifically say what the reporting requirement was when they accepted the money in the first place,” Ernst said.

While the Provider Relief Fund has been a “lifeline” for medical providers, the strings attached to it have changed often, Ernst said. Even though some revisions have increased flexibility for providers, they’re still complex and taxing to keep track of.

HRSA reminded providers of the reporting requirement through email, mail, “outreach to national organizations, and social media,” the agency said.

Health-care facility staffers have been spread thin dealing with increasingly demanding Covid-19 variants and compliance issues related to other pandemic aid programs. High staff turnover rates mean that many facilities may have missed the memo, said Brian Lee, a partner at Alston & Bird.

“It’s not just the health-care providers themselves who are retiring and leaving medicine, given the pressures and stresses of Covid,” Lee said. The same phenomenon is happening in the C-suite, since workers have had to expand the scope of their normal job descriptions. “You may have a CFO who was originally on top of all this stuff retire or leave, and along with it, all of this institutional knowledge that an individual has developed over the course of these last two years.”

If the person who accepted the terms and conditions is no longer working at a facility, “by no sort of nefarious motive, folks just miss the deadline,” Lee said.

Because so many providers were unknowingly non-compliant, MGMA wants the program to “re-open the reporting portal for at least 60 days,” Ernst said. HRSA already pushed the reporting deadline back once for providers who received funding in the first wave, and it gave them a 60-day grace period to come into compliance before beginning to enforce the deadline.

“I am hopeful that they’ll be flexible, mostly because this is primarily a reporting period one problem,” Ernst said.

Whether HRSA can enforce rules it made up after providers received their money “will be an interesting legal question,” Geraci said. But since the providers who have to return the money probably received less than they’d pay in legal fees, “I don’t know who’s going to want to die on that hill fighting,” Geraci said.

To contact the reporter on this story: Allie Reed in Washington at areed@bloombergindustry.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com; Brent Bierman at bbierman@bloomberglaw.com

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