HHS Provider Relief Fund Update

1. HHS PROVIDER RELIEF FUND UPDATE
Presenters:
Aaron Cohen, JD, MPhil | Principal, Healthcare Co-Practice Leader
Michael Criscione, CPA | Partner, Healthcare Co-Practice Leader
Amber Aubin, CPA, MBA | Director, Healthcare Practice
Kate Broderick, MBA, MSIS | Manager, Healthcare Practice
into
October 13, 2020
Future.
Reimagined.

2. 2
Agenda
Important Deadlines:
• General Distribution – Phase 3 – November 6
Provider Relief Fund Reporting Update
Tracking & Management Considerations Update
Audit, Tax and Other Financial Considerations
Phase 3 – General Distribution Information
Medicare Accelerated and Advance Payment Update

3. 3
What is the Provider Relief Fund?
The Provider Relief Fund was created through the CARES Act to provide much-needed financial assistance to
healthcare providers in order to support them in responding to the COVID-19 public health emergency.
Provider Relief Fund payments were to be used to help providers prevent, prepare for, or respond to coronavirus.
The payments were intended to reimburse providers for healthcare-related expenses and lost revenue attributable
to coronavirus.
Since these funds were distributed, guidance on the use of these funds has been extremely fluid and often
ambiguous. On September 19, HHS issued new guidance on reporting that has answered some questions while
raising others.

4. 4
Provider Relief Fund Timeline
Timeline
March 27, 2020 CARES Act signed into law
April 10, 2020 Phase 1 – General Distribution | Initial Tranche Distributed
April 24, 2020 Phase 1 – General Distribution | Secondary Tranche Announced
May 2020 Targeted Distributions: Rural Providers, High-Impact Hospitals, Skilled Nursing Facilities, and IHS Programs Announced
June 9, 2020 Phase 2 – General Distribution Expanded & Targeted Distribution to Safety Net hospitals Announced
July 10, 2020 Additional Targeted Distribution to Safety Net Hospitals and Rural Providers Distributed
July 17, 2020 Second Targeted Distribution to High-Impact Hospitals Distributed
August 14, 2020 Targeted Distribution to certain Children’s Hospitals Announced
August 27, 2020 Targeted Distribution to Nursing Homes for testing, staffing, and PPE Distributed
September 1, 2020 Phase 2 – General Distribution for Assisted Living Facilities Announced
September 3, 2020 Targeted Distribution – Incentive Payments to Nursing Homes, based on performance Announced
October 1, 2020 Phase 3 – General Distribution Funding Announced
Recipients, who are defined as TINs (Tax Identification Numbers) who received a Provider Relief Fund payment, will need
to understand the nuances of what is currently understood and what remains unclear about the use and management of
these funds. At this point, recipients include most healthcare providers, including hospitals, physicians, post-acute and
long-term care, dental care, key suppliers, and others.

5. 5
Reporting Requirements

6. 6
Introduction to Reporting Requirements
Who is required to adhere to reporting requirements?
Any recipient who received one or more payments exceeding $10,000 in aggregate from the Provider
Relief Fund General Distribution
What do I have to report on?
By February 15, recipients who are required to report must report on their use of their Provider Relief
Fund payments through December 31, 2020.
Where do I have to submit my reporting?
HHS will be posting an on-line portal through which providers will submit the requisite information.
This portal is scheduled to open on January 15, 2021.
Do I have to expend all of my PRF payments in 2020?
No. Providers may use PRF funds through June 30, 2021. Providers who use funds in 2021 will need to
complete a second report by July 31, 2021 on their use of the funds in that year.
January 15, 2021 Reporting portal opens
February 15, 2021
Reporting on 2020 use of Provider Relief Fund monies due.
Note: if all funds are expended in 2020, this report is the only report required.
July 31, 2021
Reporting on 2021 use of Provider Relief Fund monies for January 1 – June 30, 2021 due.
Note: this second and final report only applies if funds were not fully expended in 2020.
Note: Reporting requirements differ for the Nursing Home Infection Control and the Rural Health Clinic Testing Distributions.
Note: Parent organization may report on behalf of their subsidiaries for General Distribution funds; subsidiaries that received
Targeted Distribution must report on those funds separately

7. 7
Financial Reporting Elements
Expenses
Eligible expenses must be actual expenses incurred
over and above what has been reimbursed by other
sources.
Period: CY2020
For entities that received under $500k, expenses
can be reported in two categories:
• General and Administrative expenses (G&A)
• Healthcare-related expenses
For entities that received over $500k, expenses
must be reported with greater granularity:
• G&A, including: mortgage & rent; insurance;
personnel; fringe benefits; lease payments;
utilities and operations; and other G&A
• Healthcare-related expenses, including:
supplies; equipment; information technology;
facilities; and other healthcare-related expenses
Lost Revenue
Lost revenue will now be calculated as lost net
operating income.
Period: CY2019 and CY2020
• Total patient care revenue, net of uncollectible
patient service revenue (bad debt)
• Revenue from Patient Care Payor Mix
• Other Assistance Received, including: PPP loans;
FEMA CARES Act funding; CARES Act testing
funding; local, state, and tribal government
assistance; business insurance; and other
assistance
• Expenses (as outlined under “Expenses”) for
CY2019 and CY2020
Per the Terms & Conditions, PRF payments can be used for healthcare-related expenses and lost revenue attributable to
coronavirus. While HHS has evolved the definition of these categories, which we will discuss in greater depth later in the
presentation, HHS has stated in its most recent Notice that expense and lost revenue reporting will consist of the
following elements:

8. 8
Documentation Recommendations
Category Types of Substantiating Documents Purpose
Provider Relief Fund
Summary
• Bank statements identifying each award in the entity’s account
• Documentation of qualification for each distribution received
• Tax returns for 2017, 2018, and 2019
• Proof of patient care provided as of January 31, 2020
Recipients will need to be able to report the amount of money received from HHS in
addition to identifying it its accounts all of the federal awards received and expended.
Additionally, we recommend providers maintain documentation of its qualification for each
Provider Relief Fund distribution received (e.g., documentation of COVID-19 admissions for
the High-Impact Area Hospital distribution)
Other Funding &
Reimbursement Sources
• Documentation of other funding awards and the fund usage
Providers will need to provide information on amounts received from sources such as the
PPP, FEMA, and Business Insurance.
Loss of Revenue
Documentation
• 2019 Financial Statements (audited, if possible)
• 2019 Tax Return
• 2019 Volume Metrics
• 2020 Internal Financial Statements
• 2020 Bad Debt estimation
• 2020 Volume Metrics
It appears that providers will need to be able to substantiate that their lost revenue and/or
increased healthcare-related expenses attributable to coronavirus met or exceeded the
amount of Provider Relief funding they received.
Additionally, providers need to ensure their bad debt estimations are accurate, as revenue
will be considered net of bad debt.
G&A and Healthcare-related
Expenses Documentation
• Receipt-level detail for all extraordinary expenses attributable to
COVID-19 (i.e., healthcare-related clinical and non-clinical expenses
that would not have been incurred without COVID-19)
• Receipt-level detail for all increased ordinary healthcare-related
expenses (e.g., PPE purchased at higher-than-normal costs;
increased volumes of PPE purchased)
• 2019 and 2020 line-item budget for healthcare-related expenses
This detail will be required both to substantiate that the Provider Relief funds received were
less than lost revenue/increased healthcare-related expenses incurred as well as to
substantiate the use of the funds to cover any of these costs. Furthermore, the terms and
conditions specify that providers will need to be prepared to provide a comparison of
expenditures to budget amounts.
Written Controls
• Written procedures to implement internal controls, in compliance
with Title 45, Section 75.303
• Written procedures for determining the allowability of costs
Providers will need to provide evidence of proper internal controls for the management of
federal funds.
While HHS has not yet provided specific guidance on the documents they will be looking to collect in the reporting
process, we recommend starting to pull together the following documentation in preparation:

9. 9
Updated Additional Reporting Elements
Basic Information
Reporting Entity
Entity (TIN level) that received PRF Payments. TINs with subsidiary TINs that received General Distribution payments
may report on the use of General Distribution payments; subsidiary TINs that received Targeted Distribution payments
must control and report on those distributions separately.
Tax Identification Number (TIN) Reporting entity’s TIN
National Provider Identifier (NPI) [optional] Providers may include their NPI
Fiscal Year-End Date Month in which the recipient reports its fiscal year-end results
Federal Tax Classification Designated business type associated with the Reporting Entity’s primary TIN used for filing taxes.
Non-Financial Information
Personnel Metrics (by quarter)
Total personnel by labor category (full time, part time, contract, other); total rehires; total new hires; total personnel
separations by labor category
Patient Metrics (by quarter)
Total number of patient visits (in-person or telehealth); total number of patients admitted; total number of resident
patients
Facility Metrics (by quarter) Total available staffed beds for medical/surgical, critical, and other beds
Changes In Ownership
Reporting entities that acquired or divested of related subsidiaries must indicate the change in ownership, whether the
related TIN was acquired or divested, providing the following: date of acquisition/divestiture; TIN(s) included; Percent
of ownership for acquisition/divestiture; controlling interest (y/n)
In addition to financial information, HHS has clarified reporting entities must also provide the following information:

10. 10
Fund Use and Tracking

11. 11
Evolving Understanding of
Provider Relief Fund Use
This previous guidance made clear that these funds are to be used to prevent, prepare for, and respond to coronavirus and
could only reimburse providers for healthcare-related expenses and lost revenues attributable to coronavirus.*
*Note: Some Targeted Distributions have different requirements
Since these funds were distributed, guidance regarding the acceptable use of Provider Relief Funds has come from the Terms &
Conditions, Frequently Asked Questions (FAQs) and Notices issued by HHS.
An HHS Notice issued on September 19, however, fundamentally altered key definitions from previous guidance, such as the
definition of lost revenue, as well as the methodology for using funds.

12. 12
Previous PRF Payment Use Guidance
Any revenue that a provider lost due to coronavirus is eligible, including losses
associated with lower visit volume, cancelled elective procedures, or increased
uncompensated care.
Providers can use Provider Relief Fund payments to cover any cost that lost revenue
otherwise would have covered, so long as that cost prevents, prepares for, or
responds to coronavirus and it is not reimbursed (or obligated to be reimbursed) by
another source.
These costs DO NOT need to be specific to providing care for possible or actual
coronavirus patients, however, the lost revenue covered by the Provider Relief Fund
must have been lost due to coronavirus.
HHS is encouraging providers to use these funds to respond to the public health
emergency by maintaining healthcare delivery capacity. Eligible uses include:
• Employee or contractor payroll
• Employee health insurance
• Rent or mortgage payments
• Equipment lease payments
• Electronic health record licensing fees
Previous Guidance:
Lost Revenue Attributable to Coronavirus
Healthcare-related expenses include a range of items and services purchased to prevent,
prepare for, or respond to coronavirus.
Providers can use these funds to cover eligible costs attributable to coronavirus that were
incurred prior to the date the provider received the Provider Relief Fund payment. HHS
notes, however, that it is unlikely that any eligible costs would have been incurred prior to
January 1, 2020.
Eligible costs include:
• Supplies used to provide healthcare services to possible or actual COVID-19 patients
• Equipment used to provide healthcare services for possible or actual COVID-19
patients
• Workforce training
• Developing and staffing emergency operations centers
• Reporting COVID-19 test results to federal, state, or local governments
• Building or constructing temporary structures to expand capacity for COVID-19
patient care or provide healthcare services to non-COVID-19 patients in a separate
area from where COVID-19 patients are being treated
• Acquiring additional resources, including facilities, equipment, supplies, healthcare
practices, staffing, and technology to expand or preserve care delivery
Previous Guidance:
Healthcare-Related Expenses Attributable to Coronavirus
Note: HHS views any patient as a possible coronavirus patient
Previously, HHS issued the following guidance on the eligible uses of funds under the lost revenue provision and the
healthcare-related expense provision, as well as the estimation of lost revenue.

13. 13
September 19 Updated Payment Use Notice
Step 1: Healthcare-related expenses
Providers should first allocate their PRF funds to healthcare-related
expenses attributable to coronavirus that another source has not
reimbursed and is not obligated to reimburse
Step 2: Lost Revenues attributable to coronavirus
PRF payments not fully expended on healthcare-related expenses
attributable to coronavirus are then applied to lost revenues.
Expenses may be incurred:
• Treating confirmed or suspected cases of coronavirus
• Preparing for possible or actual cases of coronavirus
• Maintaining healthcare delivery capacity
Eligible expenses include:
• General and administrative expenses
• Healthcare-related operating expenses
Lost revenues are represented as a negative change in year-over-year
net patient operating income, net of healthcare-related expenses
allocated to PRF payments in Step 1.
Recipients may apply PRF payments toward lost revenue, up to the
amount of their 2019 net gain from healthcare-related sources. If
recipients had a loss in 2019 from patient care, they may apply PRF
amounts to lost revenues up to breakeven in 2020
In its new guidance, HHS has changed the
methodology for allocating PRF payments:
recipients must first allocate payments to
healthcare-related expenses. Recipients
may then calculate lost revenues
according to a new formula.
Previous guidance did not require any
specific ordering of payment use.

14. 14
Key Changes In Guidance:
Overall Use of Provider Relief Funds
Prior Guidance New Guidance Considerations
Methodology
• No specific guidance on the
ordering of the uses for PRF
payments between healthcare-
related expenses and lost revenue
• PRF payments not fully expended on
healthcare-related expenses attributable
to coronavirus are then applied to lost
revenues
This new methodology could fundamentally
alter how some providers have been
considering using their PRF payments,
particularly providers who significantly
reduced their expense base (due to closures
and furloughs/layoffs, for example) but lost
significant amounts of revenue

15. 15
Key Changes in Guidance:
Healthcare-related Expenses
Prior Guidance New Guidance Considerations
Purpose
• Prevent, prepare for, and respond to
coronavirus
• Expenses attributable to coronavirus may be
incurred both in treating confirmed or suspected
cases of coronavirus, preparing for possible or
actual coronavirus cases, maintaining healthcare
delivery capacity, etc.
In previous guidance, HHS had only specifically
acknowledge that payments used to cover lost
revenues could be used to maintain healthcare
delivery capacity. This use seems to have been
expanded to healthcare-related expenses as well
Use of Funds
• Increased healthcare related expenses
attributable to coronavirus
• Expenses covered by the PRF must be
those that were not reimbursed from
another source and that other sources
were not obligated to reimburse
• Providers may use PRF payments for expenses
attributable to coronavirus, net of other
reimbursed sources, including payments from
insurance/patients and amounts received from
other federal, state, or local sources.
• These should be actual expenses incurred over
and above what has been reimbursed by other
sources.
While it has always been clear that expenses could
not be “double counted” – i.e., the same expense
could not be covered by multiple funding sources—it
now seems that funding sources include patient and
insurance payments. This shift in language could
indicate that only expenses that cannot be covered
by any reimbursement source are eligible to be
covered by PRF payments.
Eligible
Expenses
• Allowable expenses included healthcare-
related expenses attributable to
coronavirus, such as additional PPE,
workforce training, and building
temporary structures
• Expenses attributable to coronavirus may be
incurred in both direct patient care overhead
activities related to treatment of confirmed or
suspected cases of coronavirus, preparing for
possible or actual coronavirus cases, maintaining
healthcare delivery capacity which includes
operating and maintaining facilities, etc.
The new guidance expands the list of eligible
expenses to include most G&A expenses as well as
providing further detail on eligible healthcare-related
expenses, such as hazard pay. Because HHS has
clarified that “maintaining healthcare delivery
capacity” is a way to respond to coronavirus, it
appears that many expenses may be eligible.

16. 16
Key Changes in Guidance:
Lost Revenue Attributable to Coronavirus
Prior Guidance New Guidance Considerations
Definition
• Any revenue that a provider lost due to
coronavirus
• Revenue may have been lost due to lower
visit volume, cancelled elective procedures,
or increased uncompensated care
• Lost revenue is defined as a negative change in
year-over-year net patient operating income, net
of healthcare-related expenses the recipient
attributes to the PRF
This change is a massive shift in how HHS is viewing
lost revenues. This change has the potential to
significantly limit the amount of PRF payments
providers can use, particularly if providers recover
through Q3 and Q4 2020, as net operating income
will be calculated on an annual basis.
Calculation
• Lost revenue may be calculated by any
reasonable method, including a year-over-
year comparison or a comparison to budget
• Eligible revenue is defined as all revenue from
patient-care, net of allowance for doubtful
accounts
• Expenses included in the calculation include the
majority of G&A and healthcare-related
expenses
• Providers may claim lost revenue up to 2019 net
gain from healthcare-related sources
Because this calculation will be done net of
expenses already covered by PRF payments as well
as expenses covered by other sources, it is possible
that, on a net operating income basis, recipients
may not be far off from 2019 performance.
Additionally, because Total Revenue is taken net of
bad debt, recipients should revisit their bad debt
calculations in light of potential collectability issues
related to COVID-19 and related economic issues.
Eligible Uses
• Providers could use PRF payments to cover
any cost lost revenue otherwise would have
covered, so long as the cost prevents,
prepares for, or responds to coronavirus and
is not reimbursed/obligated to be reimbursed
by other sources
• HHS encouraged providers to respond to
coronavirus by maintaining healthcare
delivery capacity
• While HHS has redefined the lost revenue
calculation, they provided no additional guidance
on how these funds may be used
Absent any additional guidance on how PRF
payments used to cover lost revenue may be
deployed, it is likely previous guidance still holds

17. 17
Practical Example of Fund Use
Practice A is a for-profit physician practice that received $1 million in Provider Relief Fund payments.
Lost Revenue
2019 Patient Care Revenue $50 million
2019 Operating Expenses $40 million
2019 Net Operating Income $10 million
2020 Patient Care Revenue (through 12/31) $40 million
2020 Operating Expenses $45 million
2020 Net Operating Income ($5 million)
Healthcare-Related Expenses
2020 Eligible G&A Expenses $500,000
2020 Eligible Healthcare-related Expenses
Attributable to Coronavirus
$250,000
Total Expenses $750,000
Potential Fund Use
• Practice A is able to use $750,000 to
cover expenses attributable to
coronavirus, over and above what has
been reimbursed by other sources.
• Practice A may then be able to attribute
the remaining $250,000 to lost revenue

18. 18
Key Issues Outstanding
It is unclear if expenses need to be net of all reimbursement, including insurance and patient payments. If it is the
case that reimbursement includes patient and insurance payment, it could mean only recipients that have expenses
that exceed total reimbursement would be eligible to use PRF payments to cover expenses, though they likely
would be eligible to use the funds to cover lost revenue, if a loss exists.
Because recipients are limited to claiming lost operating income up to 2019 levels (or break even if there was a loss
in 2019) and because there does not appear to be a revenue recalculation methodology (as there was for the
General Distribution applications), recipients who made significant acquisitions may be limited in how much lost
revenue they can claim despite their expanded operations in 2020.
Previously, guidance indicated that HHS encouraged the use of funds to cover lost revenue so that providers could
respond to the public health emergency by maintaining healthcare delivery capacity. It now appears that recipients
can use PRF payments for any healthcare-related expense that preserves healthcare delivery capacity. This
expansion could mean that most expenses are permissible, however, it is unclear what this means in practice.
Based on the guidance issued to-date, it appears the HHS will be calculating lost operating income on an annual
basis, meaning that it is possible that recipients that experience a recovery in Q3 and Q4 of 2020 may not be able to
claim lost revenue on an annual basis, despite significant losses in Q2.
Based on the new guidance, it is possible that some providers may need to repay some of their payments. HHS has
not, however, clarified how it will communicate its determination of required repayment or the terms of such a
repayment.
With this September 19 notice, HHS offered no guidance regarding the interplay with targeted distributions that
have specific restriction on how funds can be used, such as nursing homes, and the General Distribution.
Netting of Reimbursement
Against Expenses
Lost Operating Income
Period
Maintaining Healthcare
Delivery Capacity
Operating Income from
New Business
Targeted Allocations
Fund Repayment Process

19. 19
Recommendations
Continue to carefully track COVID-related expenses
Revisit bad debt calculations in light of potential collectability issues
related to COVID
Maintain records of all other funding received from the state, local, and
federal governments and how those funds have been used
Discuss the timing of reporting with your tax/accounting professional in
order to prepare for overlap with year-end and tax work
Continue to monitor guidance from HHS

20. 20
Audit, Tax and Other Financial Considerations

21. 21
Audit Requirements for
Payments over $750K
On July 22, HHS issued updated guidance regarding the audit requirements for the Provider Relief Fund (“PRF”). This guidance clarifies that
these funds will be subject to single audit rules under Uniform Guidance. This requirement will apply to both non-profit and for-profit
organizations. Below, please find the guidance issued by HHS.
Are Provider Relief Fund payments subject to Single Audit requirements under the UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND
AUDIT REQUIREMENTS FOR HHS AWARDS (45 CFR Part 75)? (Added 7/22/2020)
Yes. PRF General and Targeted Distribution payments and Uninsured Testing and Treatment reimbursement payments are required to be included in
determining if a recipient organization, other than commercial (for profit) organizations, is required to have an audit in accordance with 45 CFR Part 75,
Subpart F. Audit reports must be submitted to the Federal Audit Clearinghouse electronically.
Can my organization get an extension to the submission deadline for our upcoming Single Audit? (Added 7/22/2020)
Yes. The Office of Management and Budget (“OMB”) has provided certain flexibilities due to the COVID-19 pandemic, including the extension of time to
submit audit reports. Please see the OMB website for more details. Organizations with questions about their ability to obtain extensions should email
HRSA’s Division of Financial Integrity at SARFollowup@hrsa.gov.

22. 22
Audit Requirements for
Payments over $750K (continued)
Are commercial organizations that receive PRF payments required to have a Single Audit in conformance with the requirements under 45 CFR 75 Subpart
F? (Added 7/22/2020)
Commercial organizations that receive $750,000 or more in annual federal awards have two options: 1) a financial audit conducted in accordance with
Generally Accepted Government Auditing Standards (45 CFR 75.216) or 2) a Single Audit in conformance with the requirements under 45 CFR 75 Subpart F.
PRF payments are required to be included in determining if a recipient that is a commercial (for profit) organizations is required to have an audit in
accordance with 45 CFR §75.501 (i.e., reported annual total federal funds received equal to or above $750,000). Audit reports of commercial entities are to
be submitted directly to the U.S. Department of Health and Human Services, Audit Resolution Division at AuditResolution@hhs.gov.
Are Provider Relief Fund payments to commercial (for-profit) organizations subject to Single Audit in conformance with the requirements under 45 CFR
75 Subpart F? (Modified 7/30/2020)
Commercial organizations that receive $750,000 or more in annual awards have two options under 45 CFR 75.216(d) and 75.501(i): 1) a financial related
audit of the award or awards conducted in accordance with Government Auditing Standards; or 2) an audit in conformance with the requirements of 45
CFR 75 Subpart F.
PRF general and Targeted Distribution payments (CFDA 93.498) and Uninsured Testing and Treatment reimbursement payments (CFDA 93.461) must be
included in determining whether an audit in accordance in accordance with 45 CFR Subpart F is required (i.e., annual total awards received are $750,000 or
more).

23. 23
Governmental Audit Quality Center
(GAQC) Update
On July 23rd, GAQC issued Alert No. 411 which included non-authoritative guidance summary updates regarding the audit requirements for
Provider Relief Funds. Key takeaways from this alert are below:
• HHS has recently informed the GAQC that for-profit entities that expend $750,000 or more of these funds during the
entity's fiscal year will be subject to an audit.
• Program 93.498 Provider Relief Fund audit guidance are expected to be included in OMB’s expected Fall addendum to
the 2020 Compliance Supplement (Still not released)
• Program 21.019 Coronavirus Relief Fund (“CRF”)
• Audit guidance is also expected to be included in OMB’s expected Fall addendum to the 2020 Compliance
Supplement (Still not released)
• As a reminder CRF funds were directly provided to states and certain larger local governments, and many of the
direct recipients have already or will be passing down some of the CRF proceeds to other non-federal entities
that did not receive the funding directly. So, even if you did not receive CRF funds directly, the funds will still be
counted as part of the federal awards expended

24. 24
Governmental Audit Quality Center
(GAQC) Update (continued)
On October 5th, GAQC issued Alert No. 416 which included non-authoritative guidance summary updates regarding the audit requirements
for Provider Relief Funds. Key takeaways from this alert are below:
• GAQC has provided draft sections of the supplement addendum for comment, which included the PRF and CRF
programs and provided a comment letter to the OMB which raised concerns regarding issues with the program
supplements.
• The GAQC is closely working with HHS and the OMB to clarify some of the requirements for the program (such as how
lost revenue is calculated and reported on the SEFA)
• GAQC also strongly encouraged the OMB to consider reestablishing audit submission deadline extensions for June 30,
2020 year ends
• There is currently no estimated issuance date for the compliance supplement addendum, but at the earliest it is
believed to be released late October to mid-November

25. 25
Single Audit vs Program Audit
• A 2 Code of Federal Regulations (“CFR”) Part 200 audit is required if your organization expends more than $750,000 in
federal funds during your fiscal year or if the federal contract requires a single audit. Therefore, it is important to
review the contract to determine if there is an audit requirement, regardless of how much federal funding was
received
• If the grantee or subrecipient expends federal awards under only one federal program and when the conditions of the
federal award do not require a financial statement audit of the auditee a program-specific audit is allowed
• If the grantee or subrecipient expends federal awards under more than one federal program or the conditions of the
grant require a financial statement audit, a single audit is required
• A single audit is an audit that includes both an entity's financial statements and its federal awards (from all applicable
federal programs)
• If a grantee or subrecipient expends less than $750,000 a year in federal awards, it is exempt from the audit
requirements for that year; however, records must be available for review or audit by appropriate officials of the
federal agency, pass-through entity and the Government Accountability Office
Note: While guidance from the GAQC as well as standard single audit rules indicate that organizations are only subject to single audit if they
expend more than $750k in a year, the FAQs issued by HHS indicate that commercial organizations that receive $750k in federal funds are
subject to single audit. To date, no definitive guidance has been released on this issue.

26. 26
Consolidated/Combined Entities
Per Section 200.514(a): “The single audit must cover the entire operations of the auditee, or, at the option of the
auditee, such audit must include a series of audits that cover departments, agencies, and other organizational units that
expended or otherwise administered Federal awards during such audit period, provided that each such audit must
encompass the financial statements and schedule of expenditures of Federal awards for each such department, agency,
and other organizational unit, which must be considered to be a non-Federal entity. The financial statements and
schedule of expenditures of Federal awards must be for the same audit period.”
• Consider which entity received the federal funding. More likely than not, that is the entity that will need the single or
program audit.
• If the Parent organizations (“PO”) received the funding then the PO would need the audit
• If the combined/consolidated entities (“CE”) received the funding, and the CE has it’s own tax ID number and
separate audited financial statements, then there are options as to who would need the audit
• The CE could have its own separate single audit and the PO would exclude the CE’s program in their audit
opinion and refer to the CE’s single audit OR
• The PO could include it within their single audit and report all tax-ids covered by the single audit within
their data collection form
• If the CE does not have its own tax ID number, then must be included in the PO’s single audit

27. 27
Auditee Responsibilities
1. Procure or otherwise arrange for the audit required in accordance with 2 CFR section 200.509 Auditor selection, and
ensure it is properly performed and submitted when due in accordance with 2 CFR Section 200.512 Report
submission.
 In requesting proposals for audit services, the objectives and scope of the audit must be made clear and the non-Federal entity
must request a copy of the audit organization's peer review report, which the auditor is required to provide under Generally
Accepted Government Auditing Standards (“GAGAS”).
 Factors to be considered in evaluating each proposal for audit services include the responsiveness to the request for proposal,
relevant experience, availability of staff with professional qualifications and technical abilities, and the results of peer and
external quality control reviews
 An auditor who prepares the indirect cost proposal or cost allocation plan may not also be selected to perform the audit
required by this part when the indirect costs recovered by the auditee during the prior year exceeded $1 million. This
restriction applies to the base year used in the preparation of the indirect cost proposal or cost allocation plan and any
subsequent years in which the resulting indirect cost agreement or cost allocation plan is used to recover costs.

28. 28
Auditee Responsibilities (continued)
2. Prepare appropriate financial statements, including the Schedule of Expenditures of Federal Awards in accordance
with 2 CFR section 200.510 Financial statements.
3. Promptly follow up and take corrective action on audit findings, including preparation of a summary schedule of prior
audit findings and a corrective action plan in accordance with 2 CFR section 200.511 Audit findings follow-up,
paragraph (b) and section 200.511 Audit findings follow-up, paragraph (c), respectively.
4. Provide the auditor with access to personnel, accounts, books, records, supporting documentation, and other
information as needed for the auditor to perform the audit required by this part.

29. 29
Accounting Considerations
Provider Relief Funds – Accounting for amounts received under General and Targeted distributions
• Not for Profits follow 958-605 Not-for-Profit Entities Contributions
• As the provider must meet conditions imposed by the government to be entitled to receive or keep the funds, the grant is
conditional and recognition of revenue will be deferred until the condition is met
• Therefore, grant income would be accounted for as a refundable advance until the conditions have been met (qualifying
expenses have been incurred and/or revenues lost)
• Unless the company has a simultaneous release policy, when the grant conditions are met, the income would be recognized as
grant income with donor restriction and then released as the funds are spent for their intended purpose
• With a simultaneous release policy, once the grant conditions are met, the grant can be recognized as income without donor
restrictions
• For-profits follow IAS 20 Accounting for Government Grants and Disclosures of Government Assistance
• As there is no specific US GAAP on accounting for government grants for business entities, businesses can utilize other guidance
that is similar
• This standard allows for grant revenue recognition when there is reasonable assurance/probable that there will be compliance
with conditions and receipt of the grant

30. 30
Tax & Other Financial Considerations
PRF Funds generally should be claimed as revenue in the year received and kept
If a recipient is required to return some of the PRF payment in 2021, it should
be possible to take a deduction in such later year
Recipients should be working with their tax professionals to complete a tax
forecast as soon as possible
Recipients should also evaluate the impact of PRF funds in relationship to
debt covenants—ratios, distributions, etc.

31. 31
Phase 3 – Provider Relief Fund
General Distribution

32. 32
Phase 3 – Financial Details
• Phase 3 General Distribution = $20 billion
• Phase 3 General Distribution supports providers who have been most significantly impacted by COVID-19, as
measured by changes in their revenues and expenses from patient care
• Providers that did not previously receive approximately 2% of annual revenues from patient care should
receive a Phase 3 distribution
• Providers who have received the equivalent of approximately 2% of annual revenues from patient care from
the General Distribution may receive an additional add-on payment, though this additional payment is not
guaranteed
• Payments received in prior PRF distributions will be considered when calculating a provider's Phase 3
payment, as well as changes to providers’ revenue and expenses
• All PRF distributions will be paid to the Filing or Organizational TIN, and not directly to subsidiary TINs
• Providers receiving >$100,000 must sign up for Optum Pay in order to support program integrity

33. 33
Application Process and Eligibility
1. The application period opened Monday, October 5 (portal – similar to previous funding applications) and will
close Friday, November 6. HHS has indicated, however, that providers should do their best to apply early.
2. Payments will be determined after all applications have been received and tabulated
3. HHS has expanded eligibility to include behavioral health providers, some of whom may not have been
eligible previously
4. HHS is also including providers who began their practice between January 1, 2020 and March 31, 2020 as
well as providers who have received previous distributions from the Provider Relief Funds (“PRF”)
5. The distribution methodology states that HHS intends to distribute funds as follows:
a. Applicants who have not yet received the equivalent of 2% of patient revenue will receive a payment
that, when combined with any previous payments, equals 2% of patient care revenue
b. With any remaining balance in the $20B budget, HHS A will calculate “equitable” add-on payments
based on the following considerations
i. Change in operating revenues from patient care
ii. Change in operating expenses from patient care
iii. Payments already received from the PRF

34. 34
Application Process and Eligibility (continued)
Providers who have already received the equivalent of 2% of patient care revenue are not guaranteed to receive
additional payment and, if they do receive an additional payment, there is no guarantee as to the amount to
which they would be entitled.
Application submission: In terms of submitting the application itself, the individual who has handled submitting
previous applications for additional funding and attesting to PRF funds will likely need to complete this
application as well. HHS will still be using UHC to distribute the funds, so we expect the Phase 3 portal to be tied
to your existing OptumID login.

35. 35
Application Process and Eligibility (continued)
Information for the application:
• Basic company information
• Revenues – “Operating Revenue from Patient Care” – 2019 and 2020 – Q1 and Q2
• Operating Revenues from patient care means revenues that represent amounts received for the delivery
of health care services directly to patients. Operating revenues from patient care includes revenues for
patient services delivered and pharmacy revenue derived through the 340B program. This amount should
exclude non-patient care revenue such as insurance, retail, or real estate revenues (exception for nursing
and assisted living facilities’ real estate revenue where resident fees are allowable); pharmacy revenues
(exception when derived through the 340B program); grants or tuition; contractual adjustments from all
third party payors; charity care adjustments; bad debt; any gains and/or losses on investments, and any
prior Provider Relief Funds received.
• Expenses – “Operating Expenses from Patient Care” – 2019 and 2020 Q1 and Q2
• Operating expenses from patient care” means the operating expenses incurred as part of the delivery of
care, including salaries, benefits, medical supplies, contracted and/or employed physicians, and interest
and depreciation on building and equipment used in the provision of patient care. Operating expenses
should exclude any non-operating expense such as costs incurred on any rental property (exception for
nursing and assisted living facilities’ real estate costs where resident costs are allowable), contributions
made, and gains and/or losses on investments.

36. 36
Application Process and Eligibility (continued)
Information for the application (continued):
• Supporting documents to upload
• Federal tax return
• 2019 and 2020 – Q1 And Q2 operating revenue and expenses. HHS has noted that internally prepared financials
statements would be sufficient to meet this requirement
• Banking information
Recipients must attest to Terms & Conditions within 90 days of payment – similar to previous funding
• To be eligible, provider must have provided diagnosis, testing, or care for actual or possible COVID-19 patients on or
after January 31, 2020
• Payment will be used to prevent, prepare for, and respond to coronavirus, and reimburse healthcare-related expenses
or lost revenues attributable to coronavirus
• Payment will not be used for expenses or losses that have been or will be reimbursed from other sources
• Recipient consents to public disclosure of payment
If a recipient wishes to return the payment, they must login to the attestation portal to reject the Terms & Conditions.
After submitting that rejection, they have 15 calendar days to return the funds to HHS.
*Note: HHS broadly views every patient as a possible case of COVID-19 for purposes of eligibility

37. 37
Medicare Accelerated and Advance Payments

38. 38
Important Note: New FAQ from HHS
On Thursday, October 8, CMS issued an MLN email alert indicating the providers could use their
Provider Relief Fund payments to repay their Medicare Accelerated and Advance Payments.
HHS clarified on October 9 that the repayment of Medicare Accelerated and Advance Payments
is NOT an eligible use of PRF payments.

39. 39
Changes in Regulations
Previous Terms Updated Terms
Recoupment
Commencement
Recoupment was to 120 days after the receipt of the
Medicare advance Payments
Recoupment begins 1 year after the receipt of the Medicare
Advance Payments
Recoupment Timeline
Hospitals had up to 1 year from the date of payment to
complete repayment; all other Medicare Part A and Part B
providers had 210 days from the date of payment
All Part A and Part B providers that received Medicare Advance
Payments have 29 months from the date of receipt of the
Medicare Advance Payments to complete repayment
Claims Reduction during
Recoupment Period
CMS would have reduced providers’ Medicare claims for
services provided during the recoupment period by up to
100% (3 months for non-hospital providers and 8 months
for hospital providers)
CMS will reduce current Medicare claims by up to 25% for the
first 11 months of the recoupment period and by up to 50% for
the succeeding 6 months
Interest Rate
Any balance outstanding at the end of the recoupment
period must be paid in full or be subject to a 9.5% interest
rate
Any balance outstanding at the end of the recoupment period
must be paid in full or be subject to a 4% interest rate
As part of the government spending bill passed on September 30, Congress has beneficially adjusted the repayment rules for Medicare
Accelerated and Advance Payment (“Medicare Advance Payments”) distributed to certain healthcare providers earlier this year. Below,
please find the highlights of these legislative changes:

40. 40
Non-hospital Provider Timeline
Year 1 11 Months 6 Months
No payments due for 12 months after payment Medicare claims reduced by 25%
Medicare claims
reduced by 50%
Recoupment Period Ends
Providers repay any
outstanding balance or face
4% interest rate
120 days 90 Days
No payments
due for 120 days
after payment
Medicare
claims reduced
by 100%
Recoupment Period Ends
Providers repay any
outstanding balance or face
~9.5% interest rate
Repayment due 210 days
from payment
Repayment due 29 months
from payment
Updated Timeline
Previous Timeline
Recoupment period
Grace period before recoupment
Outstanding Balance Due

41. 41
Hospital Provider Timeline
Year 1 11 Months 6 Months
No payments due for 12 months after payment Medicare claims reduced by 25%
Medicare claims
reduced by 50%
Recoupment Period Ends
Providers repay any
outstanding balance or face
4% interest rate
120 days 245 days
No payments
due for 120 days
after payment
Medicare claims reduced by 100%
Recoupment Period Ends
Providers repay any
outstanding balance or face
~9.5% interest rate
Repayment due 365 days
from payment
Repayment due 29 months
from payment
Updated Timeline
Previous Timeline
Recoupment period
Grace period before recoupment
Outstanding Balance Due

42. 42
Key Considerations & Practical Takeaways
• Tracking Recoupment: As providers prepare for 2021, they should be sure to identify the exact date of their Medicare Advance Payment in 2020
and should be prepared to monitor their Medicare payments around that date in 2021 to watch for the commencement of the recoupment
process. Providers should also consider how they will monitor recoupment through their accounting and billing systems. We recommend working
with key vendors as well as accounting professionals to ensure that recoupment is properly tracked. The delay in the recoupment process will give
providers time to make any necessary changes to billing or accounting systems in order to properly track recoupment.
• Budgeting and Cash Forecasting: Providers should make sure to reflect anticipated recoupment amounts in their budgets for 2021. In particular,
providers should pay close attention to their cash flow forecast to account for the impact of the recoupment to their business. Additionally,
providers need to understand whether CMS will be able to recoup the full amount of the Medicare advance Payments over the one-year
recoupment period at the rate of 25% claims reduction for the first 11 months of the recoupment period and 50% for the subsequent 6 months,
based on the practice’s current Medicare volumes and service mix. Estimating the Medicare Advance Payment recoupment through claims
reduction will allow providers to anticipate whether they will need to make a direct payment at the end of the period or face a 4% interest rate on
the outstanding balance.
• Other Budgeting Considerations: As providers are factoring Medicare Advance Payment recoupment into their budgets, they should also consider
other funding provisions from COVID-related legislation, such as the Provider Relief Fund and the PPP, as well as pending changes in
reimbursements, such as the return of the Medicare sequester.
• Direct Payment: If providers have the cash on hand and wish to avoid the recoupment process and eliminate the liability on their balance sheets,
they have the option of making a direct payment to CMS to cover the amount of the advance at any point. Providers interested in this option
should reach out to their MAC to discuss the appropriate process.
• Accounting Treatment: Advance payments in substance represent working capital financing that must be repaid. Payments should be recorded as
a contract liability under revenue standard 606 as the payment is received. Once the recoupment period begins the contract liability would be
reduced by the amount of revenue recognized for claims submitted for services provided

43. COVID -19 UPDATE
FOR MORE INFORMATION:
Kate Broderick, MBA, MSIS
Manager
kbroderick@citrincooperman.com
419.367.6334
Michael Criscione, CPA
Partner, Healthcare Co-Practice Leader
mcriscione@citrincooperman.com
401.421.4800
Aaron Cohen
Principal, Healthcare Co-Practice Leader
acohen@citrincooperman.com
301.654.9000
Amber Aubin, CPA, MBA
Director
aaubin@citrincooperman.com
401.421.4800

44. 44
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