More than two years into the COVID-19 pandemic, federal regulators are examining the ways health care providers spent the Provider Relief Fund dollars they received.
The CARES Act, enacted on March 27, 2020, earmarked $175 billion for the Provider Relief Fund (PRF), designed to replace revenue that thousands of health care providers lost due to the pandemic. The pandemic is not over, but with two years of PRF data under their belts, regulators have become watchful for potential misuse of those dollars, including fraud.
Hospices have grown increasingly concerned about how their expenses will be assessed, particularly because the program’s byzantine reporting requirements have evolved over time, leading to some degree of confusion as to the proper use of these funds.
Among the top concerns is the possibility that providers may have to return some of the funds they received, according to Susan Ponder-Stansel, president and CEO of Florida-based hospice, home health, and palliative care provider Alivia Care.
“We were, and still are, very concerned about the reporting and use of the funding,” Ponder-Stansel told Hospice News in an email. “The rules for its use and how to report it changed multiple times since we received funding. In every communication, the government emphasized the fact that they were going to audit the use of the funds and could claw all or part of the money back if they didn’t agree that our reporting and record-keeping comported with their ever-changing guidelines. Once you take the money, you can’t control how any audit or enforcement activities may go.”
Where did hospice PRF money go
The U.S. Health Resources and Services Administration (HRSA), a subagency of the U.S. Department of Health & Human Services (HHS), issued guidelines for allowable PRF expenses.
Examples included purchasing personal protective equipment (PPE) and other medical supplies, information technology investments to allow for increased telehealth utilization, and costs of expanding facility capacity. Other costs that fall under the PRF umbrella included those tied to personnel, employee benefits and a few other operational costs, HRSA indicated.
HHS previously told Hospice News that it did not track PRF disbursements by provider type, and therefore could not give the dollar amount that went to hospices in particular.
In the most recent change to the program’s rules, HRSA in June revised reporting requirements for PRF payments. The agency extended the length of time in which providers were required to report how they spent those dollars.
Much of the hospice PRF money went to offset the soaring costs for care delivery, such as fuel and PPE prices, wage hikes and inflation. Increased paid sick leave and heavy reliance on contract nurses have also threatened hospices ability to keep their heads above water.
“An area of expense that has continued to this day is the challenge with staffing, particularly with nursing,” Maryland-based Hospice of the Chesapeake CEO Mike Brady told Hospice News in an email. “Prior to the pandemic, we may have been paying $72 an hour for a registered nurse. But at its height and through the omicron surge, that rate for us added up to $135 an hour. We still see inflated rates today, but they are not as bad as what they once were.”
PRF dollars kept Alivia Care from having to lay off staff when its patient census fell during COVID. The funds also helped the provider absorb rising labor costs and ensure competitive wages for current and prospective employees, according to Ponder-Stansel. This issue is expected to continue plaguing hospices as labor costs keep climbing, she added.
“Keeping care at the bedside strong will require more of our dollars to go into salaries that are showing no signs of slowing down,” said Ponder-Stansel. “All the things that prompted the need for this extra financial support are ready to follow us into 2023. We all just kicked the can down the road.”
While some expenses were more clear-cut in nature, others were more nuanced. This has caused confusion in hospices’ attempts to untangle the PRF program’s rules.
Questions have been raised about what specifically counts as “lost revenue” due to COVID-19 and what expenses are “allowable.”
For example, some questioned whether financial losses resulting from reduced philanthropic donations and other fundraising activities would be considered lost revenue under PRF parameters. Federal agencies later clarified that those losses can indeed be offset by PRF. But rules for offsetting some other types of lost revenue or increased expenses remain murky, according to some providers.
At first glance, PRF funds were “understood to be there to help with the revenue losses we experienced because of the business disruptions due to COVID,” according to Ponder-Stansel. The spending guidelines have since appeared to shift more toward “additional expenses incurred during the pandemic,” with little clarity for hospice providers as to what falls into this bucket, she added.
Forthcoming government audits could shed some light on areas of PRF spending that could draw attention from regulators.
Government to track down potential PRF fraud
Inevitably, hospices and other providers will face audits of how they spent these funds.
“That messaging has been strong and consistent throughout this process,” Ponder-Stansel said. “Even though the messaging on what the money can be used for, and how to prove you used it properly, continued to change after the funds were deposited into our bank account.”
PRF recipients “must support all expenses with adequate documentation” and maintain records to substantiate the utilization of these funds, according to HRSA.
The U.S. Government Accountability Office (GAO) earlier this year reported that several federal regulatory agencies had “significant shortcomings” in their application and internal financial and fraud risk controls related to these programs. As a result of “weaknesses” in federal agencies’ internal fraud risk management, billions of dollars are at risk for improper payments, including fraud, according to the GAO.
In April, the U.S. Department of Justice (DOJ) brought criminal charges against 21 defendants in nine districts across the country for their alleged participation in health care fraud schemes tied to PRF payments.
Defendants were charged with submitting more than $149 million in false COVID-19-related claims. Federal prosecutors also accused some defendants of theft from federally-funded pandemic assistance programs. The DOJ has since seized upwards of $8 million that the agency alleges providers misused.
“The Department of Justice’s Health Care Fraud Unit and our partners are dedicated to rooting out schemes that have exploited the pandemic,” said Assistant Attorney General Kenneth Polite, Jr. of the DOJ’s Criminal Division, in an announcement.
The department will be using “all available tools” in its repertoire to hold medical professionals, executives and others accountable as enforcement action continues to unfold, said Polite.
In response to inquiries from Hospice News on audit activity, the U.S. Centers for Medicare & Medicaid Services (CMS) recommended contacting their parent agency, HHS. HHS did not respond before the publishing deadline.
Documentation key to compliance
Hospices are among the health care providers that the HHS Office of Inspector General (OIG) may scrutinize in general and targeted probes into PRF distributions.
The OIG reported that “certain provider types” heavily impacted by COVID-19 would be included, such as skilled nursing providers and those serving rural areas. Though hospices weren’t specifically named, some will likely be audited.
The OIG stated that it would pull data from a statistical sample of providers who received “general and targeted distributions,” with an objective to determine whether PRF payments were spent in compliance with federal requirements and terms and conditions for reporting and spending these funds.
Diligent record-keeping of PRF expenditures will be crucial to proving a hospice’s compliance as auditing activity ensues, according to both Ponder-Stansel and Brady.
Hospice of the Chesapeake has annually audited its own PRF spending practices in its efforts to ensure compliance. This “strong legwork” was done throughout the pandemic, as the organization looked ahead at potential regulatory scrutiny down the road, according to Brady.
“As far as documentation and any concerns, we have worked very closely with a few attorneys to get educated on what we should be documenting (and how),” Brady said. “Internally, we set up a team to collect data and documentation on what funds had been spent on to be sure we could adequately support any expense that came into question. We also had our audit team review what we had done to make sure they were comfortable with what we were claiming and what our documentation looked like.”
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