In this webinar, we discussed the complex web of audit and reporting considerations that organizations who received COVID-19 related federal assistance must consider as they approach year-end planning and look forward to 2021.

1. YOU’VE RECEIVED COVID-19 RELATED
FEDERAL ASSISTANCE – NOW WHAT?
into
December 9, 2020
Future.
Reimagined.

2. 2Objectives
1. Uncertainty surrounding current government guidance on the appropriate use of Provider
Relief Funds
2. Overview of reporting requirements
3. Potential audit implications
4. People, internal controls, and processes
Director
Amber Aubin, CPA
Manager
Kate Broderick, MBA, MSIS
Director
Lauren Florio, CPA

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.

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 FacilitiesAnnounced
September 3, 2020 Targeted Distribution – Incentive Payments to Nursing Homes, based on performance Announced
October 1, 2020 Phase 3 – General Distribution Funding Announced
November 6, 2020 Phase 3 – General Distribution Deadline
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
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
ProviderRelief Fund General Distribution
What do I have to reporton?
By February 15, recipients who are required to reportmust reporton their use of their
ProviderRelief Fund payments through December31, 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 openon January 15, 2021.
Do I have to expend allof 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 reportby July 31, 2021 on their use of the funds in that year.
January 15, 2021 Reporting portal opens
February 15, 2021
Reporting on 2020 useof Provider Relief Fund monies due.
Note: if all fundsare expended in 2020, thisreportis the only reportrequired.
July 31, 2021
Reporting on 2021 useof Provider Relief Fund monies for January 1 – June 30, 2021 due.
Note: this second and final reportonly appliesif fundswere notfully expended in 2020.
Note: Reportingrequirements differfor the Nursing Home InfectionControland the Rural Health Clinic Testing
Distributions.
Note: Parentorganizationmayreporton behalfof their subsidiariesfor GeneralDistribution funds;subsidiariesthat
receivedTargetedDistribution mustreporton those funds separately

6. 6
Updated Payment Use Methodology
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 confirmedor suspectedcases 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
Recipients may apply PRF payments toward lost revenue, up to
the amount of the differencebetweentheir 2019 and 2020 actual
patient care revenue.
Funds claimed for lost revenue may then be used to cover
expenses lostrevenue otherwise would have covered,such as
rent, employee payroll, equipmentleases,etc.
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.

7. 7
Calculating Healthcare Related Expenses
While the guidance around calculating eligible healthcare related expenses has been convoluted, based on FAQ guidance
this fall, HHS has appeared to strengthen its view of eligible healthcare related expenses as being limited to expenses
incremental to COVID-19.
HealthcareRelated Expenses Other HealthcareRelated Expenses Generaland Administrative
Expenses
Typesof
Expenses
• Supplies, such as PPE, cleaning supplies, or
supplies for patient screening
• Equipment, such as HVAC system updates or
ventilators
• Information Technology, such as software or
systems to preserve care delivery, telehealth
infrastructure, increased bandwidth, or
teleworking capabilities
• Facilities, such as lease or purchase of
permanent or temporary structures or
modifications to existing structures
In addition to healthcare-related expenses, HHS
created an “other” category to capture “any other
actual expenses…that were paid to prevent,
prepare for, or respond to coronavirus”
• Mortgage/rent
• Insurance premiums, such as property,
malpractice, business insurance, or other
insurance
• Personnel, such as workforce training, staffing,
temporary payroll, overhead employees, or
security personnel
• Fringe benefits, such as supplementing
employee salary
• Equipment/software lease payments
• Utilities
• Other
Key
Guidance
Language
• PRF permits reimbursement of marginal
increased expenses related to coronavirus
• PRF payments may be applied to remaining
costs, after netting the other funds received
or anticipated to offset expenses.
Providers must still calculate the incremental
change due to coronavirus and make
“reasonable assumptions” as to amounts of
revenue and other assistance that applies to
each expense.
• Again, PRF permits reimbursement for
incremental G&A expenses incurred that
were attributable to coronavirus
• Providers must then estimate the portion of
those expenses that were not covered
through operational revenues, other direct
assistance, donations, or other sources

8. 8
Healthcare Related Expenses: Key Issues
Identifying all expenses attributable to
coronavirus
Given the scope of eligible expenses, it is critical for providers to carefully review 2020 expenses versus 2019 to ensure no expense is
missed. Expenses considered should include not only supplies like PPE, but also expenses like new telephonic systems that allowed non-
clinical staff to work from home.
Calculating incremental increases due
to coronavirus
On top of identifying all of the possible expenses, providers must calculate the incremental increase due to coronavirus. In calculating this,
providers must bear a few key things in mind:
1. Providers will need to isolate increases due to inflation and other perennial economic drivers from increases due to coronavirus
2. Incremental increases due to coronavirus may be multifactorial: increases in amounts purchased, changes in the mix of items
purchased, and/or surge pricing
3. Providers do have some discretion relating to expenses like labor; because HHS is allowing PRF payments to be used to cover
expenses like hazard pay, providers may consider offering this kind of fringe benefit, though it is likely that any discretionary
expenses should be at fair market value.
Determining amount of healthcare-
related expenses remaining after
netting other funds
received/anticipated to offset expenses
Based on the examples provided by HHS, it appears providers will need to identify whether they received any incremental revenue from
payors due to COVID. For example, if a payor offered an increase of $5 per visit to account for increased costs associated with
coronavirus, this incremental revenue would need to be netted against expenses. Additionally, providers will need to carefully incorporate
the impact of special assistance programs like the PPP into their calculations of netted expenses to ensure there is no double counting.
One consideration here is the impact of the suspension of the Medicare sequester. HHS has not issued any guidance as to whether the
2% sequester relief must be used to offset expenses before PRF payments can be used. Because the CARES Act merely suspends the
sequester from May 1-December 31, 2020 and then extends it from the end of 2029 to the end of 2030, it may not be viewed as
incremental revenue.
Determining “reasonable
assumptions” for calculating amounts
of revenue and other assistance that
apply to Other healthcare expenses
and G&A expenses
The methodology for determining the amount of G&A and “other” expenses seems to be the most ambiguous. Based on HHS guidance,
providers must make an assumption as to the portion of the incremental expense that are not covered by operational revenue orother
assistance. HHS does not, however, provide recommendations for how providers might arrive at these assumptions.
Correctlyaccounting for capital
expenses
HHS is allowing providers to fully expense capital equipment purchased to prevent, prepare for, or respond to coronavirus. These types of
purchases may include ventilators, structures or modifications to structures, updates to HVAC, etc.
Because HHS is looking at lost revenue on a calendar year basis and many providers had strong quarters following the
initial lockdown in Q2, maximizing use of PRF payments on healthcare-related expenses will be critical to using the full
amount of funds available.

9. 9
Calculating Lost Revenue
HHS is going to be looking for lost revenue to be calculated on an annual basis, comparing calendar year 2019 to calendar
year 2020. As such, providers who performed well in Q1 and then recovered well in Q3 and Q4 may find that their annual
revenue shortfall versus 2019 is lower than it would have been if HHS focused revenue losses on Q2.
Revenue Components Guidance Considerationsand Issues
Operational Revenue
Lost revenues are calculated by comparing calendar year 2019 net
patient service revenue. Providers may claim up to the difference
between 2019 and 2020 revenue.
• Revenue is being calculated net of bad debt, so
providers should consider any collectability issues that
may arise due to the economic downturn
• HHS has not addressed how revenues from essential
services like parking or dietary should be treated
Other Assistance
Other assistance includes FEMA aid, PPP loans, business insurance,
assistance from local/state governments, among other sources. This
assistance is reported as operating revenue and used in the calculation
of year-over-year change in patient care related revenue.
• For many providers, PPP loans could significantly
impact their lost revenue calculation
• HHS has not clarified whether PPP loans that are not
forgiven would still be considered revenue
Interest on PRF Payments
If funds were held in an interest-bearing account, interest would be
reported as “Other Assistance.” If the entity expended the PRF payment
in full, the interest earned on such payment may be retained and applied
toward reportable use of funds.
• Providers need to carefully track interest received, as
HHS is requiring providers who return any funds to
return the interest earned as well
• If providers return funds that were held in a non-
interest bearing account are not, however, required to
provide any such interest payments to HHS
Third Party Settlements
PRF recipients will exclude from reporting of net patient revenue
payments received or payments made to third parties relating to care not
provided in 2019 or 2020.
• Providers will need to carefully track the date of
service related to any third party settlements made or
revenue received to ensure proper accounting of lost
revenue

10. 10
Other Considerations
Increases in Fixed Costs: HHS has not addressed whether the increase in fixed costs on a per-unit basis attributable to
volume drops due to coronavirus will be considered eligible expenses
Balance Billing: For providers who actively treat presumptive or actual COVID-19 patients, it is critical to remember that
the terms and conditions of PRF payments prohibit balance billing these patients
2021 Planning: At present, providers have until June 30, 2021 to fully expend their PRF payments. HHS has clarified that
these funds can be used to support the distribution of vaccines (e.g., purchasing refrigeration equipment, setting up
temporary locations, hiring temporary staff, etc.). It does not appear, however, that HHS would permit allocation of PRF
payments back to 2020 if, after the February 15, 2021 reporting deadline, providers discover that there were additional
permissible losses/expenses in 2020.

11. 11
Recording of Provider Relief Funds
Type of entity
For Profit
Apply the guidance under
IAS 20, Accounting for
Government Grants and
Disclosure of Government
Assistance
If conditions are not
met on the grant,
record a refundable
advance
If conditions are
probable they
will be met on
the grant, record
grant revenue
Not for Profit
Apply the guidance under
ASC 958-605, Not-for-Profit
Entities - Revenue
Recognition
If conditions are
not met on the
grant, record a
refundable
advance
If conditions are
met, record
grant revenue

12. 12
Audit Requirements for Government
Funds
Have you expended more
than $750,000 in federal
funding?
Yes
How many CFDAs have you
expended funds under?
1 CFDA = Program Audit 2 CFDAs = Single Audit
No
Only current reporting
requirements are the HHS
reporting portal
Potential program audit
could be required

13. 13
GAQC Update
On November 5th, GAQC issued Alert No. 417 which included non-authoritative guidance summary updates regarding the
audit requirements for Provider Relief Funds. Key takeaways from this alert are below:
• On October 22, 2020, HHS issued revised, General and Targeted Distribution Post-Payment Notice of Reporting
Requirements, which changed the requirements from those released on September 19, 2020
– Revised reporting requirements allow healthcare providers to apply PRF awards to lost revenues based on year-
over-year patient care revenues comparison (after applying the PRF awards to healthcare related expenditures
attributable to COVID-19)
• On October 28, 2020, HHS updated its PRF Frequently Asked Questions which resulted in the addition of numerous new
questions. Of particular interest are new questions in the Audit and Reporting section that discuss how an entity would
calculate the “expenses attributable to coronavirus not reimbursed by other sources.”
• On November 2, 2020, HHS issued a clarification to the October 22, 2020, document referred to above in which HHS
states that healthcare related expenses are no longer netted against the patient care lost revenue amount in Step 2 on
page 1 of the reporting requirements announcements from October 22nd

14. 14
People, Internal Controls, and Processes
Cash
Receipts
Purchasing
Accounts
Payable
HR and
wages
Tracking
Communication

15. 15
Tracking

16. 16
Takeaways
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

17. 17For More Information
Director
401.421.4800
aaubin@citrincooperman.com
Amber Aubin, CPA
Manager
419.367.6334
kbroderick@citrincooperman.com
Kate Broderick, MBA, MSIS
Director
401.421.4800
lflorio@citrincooperman.com
Lauren Florio, CPA