Health Care Alert: HHS Announces Phase III of CARES Act Funding

On October 1, 2020, the Department of Health & Human Services (HHS) announced another $20 billion in Provider Relief Funds (PRF) through the CARES Act in what is now Phase III. This additional round of funding is available to most health care providers, including physicians, dentists, assisted living and behavioral health providers, to name a few. Additionally, those providers who have previously received PRF are also eligible.

With this round of funding, HHS has highlighted behavioral health providers and acknowledged an increase in demand for those services as Americans respond to the pandemic’s effects. Additionally, HHS has indicated that there are still providers who are struggling with revenue losses either because of lower-than-normal patient volumes or who are experiencing higher-than-normal volumes and need financial support for their organizations. The goal in this round is to ensure that any eligible provider has received a minimum of approximately 2% of their patient revenue through the CARES Act. If there are additional funds available after the application window has closed, additional funds beyond a provider’s 2% may be distributed.

This Phase III funding is another application-based process. Providers wishing to apply for these funds must do so on the HHS CARES Act provider portal. Providers will need to validate their tax identification numbers prior to application. Certain organizations’ tax identification numbers may not be readily available to HHS and as such, HHS has contracted with a third party to validate such entities and their eligibility to receive government funding. Also similar to the Phase II application process, applicants must provide supporting evidence of their financial situation including operating revenues and operating expenses from patient care. These definitions and their calculations are specified in the instructions.

The application window is now open until November 6, 2020. HHS is encouraging providers to apply early so they can allocate the $20 billion and expedite any remainder once all eligible applicants have been assured an approximate 2% of patient revenue. Providers that receive Phase III funding must attest to terms and conditions similar to those in previous phases. These include certain limitations on the use of the funds.

At this juncture, some providers should consider whether they should apply in this round even if they meet eligibility criteria. The use of the funds is limited to certain expenses, and some providers have already indicated that their business has nearly returned to pre-pandemic volumes and so they are questioning their need to take on additional financial support. For this and other reasons, we recommend closely analyzing your financial position and discussing the decision to apply with your accountant and legal counsel. Our team of health care attorneys at Brouse would be happy to work with you on this issue.