HHS Updates Provider Relief Fund FAQ with Cost-Based Reimbursement Impact

​The United States Department of Health and Human Services (HHS) has released additional guidance on the use of provider relief funds (PRF). The guidance clarifies restrictions on hospitals that receive Medicaid disproportionate share hospital (DSH) payments; providers may not use PRF payments to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse. For example, if a hospital has received Medicaid DSH payments for the uncompensated costs of furnishing inpatient and/or outpatient hospital services to Medicaid beneficiaries and to individuals with no source of third party coverage for the services, these expenses would be considered reimbursed by the Medicaid program and would not be eligible to be covered by money received from a General or Targeted Distribution payment.

The guidance also clarifies that staff time and director-level resources are an allowable cost attributable to coronavirus so long as it was not reimbursed or obligated to be reimbursed by other sources. If the personnel salaries are reimbursed by any other source of funding they cannot be also reimbursed by the Provider Relief Fund. In addition, no one individual may be allocated as greater than one full-time equivalent (FTE) across all sources of funding. All costs must be tangible expenses (not opportunity costs) and must be supported by documentation.

HHS also clarified the application of PRF funds to cost-based reimbursement. Provider Relief Fund payments cannot be used to cover costs that are reimbursed from other sources or that other sources are obligated to reimburse. Therefore, if Medicare or Medicaid makes a payment to a provider based on the provider’s cost, such payment generally is considered to fully reimburse the provider and no money from the PRF would be available.However, in cases where a ceiling is applied to the cost reimbursement and the reimbursed amount by Medicare or Medicaid does not fully cover the actual cost due to unanticipated increases in providing care attributable to coronavirus, those incremental costs that were not reimbursed are eligible for reimbursement under the Provider Relief Fund. South Dakota Medicaid applies a cost ceiling to nursing facility payments.

The full list of PRF frequently asked questions is available on the HHS website.