Post-PHE Hospice Regulation: Understanding PPP, PRF Reporting Rules

Hospices have mounting concerns around the potential regulatory impacts that could come with the end of the COVID-19 public health emergency (PHE) on May 11.

Among the regulatory hotspots is rising scrutiny of how providers used funds from the Paycheck Protection Program (PPP) and Provider Relief Funds (PRF).

Roughly $175 billion in PRF funds were earmarked in the CARES Act, enacted on March 27, 2020, designed to replace revenue that health care providers lost due to the pandemic. The federal government also authorized almost $350 billion in forgivable loans to small businesses through the PPP program. Congress later added another $321 billion.


This is the first of a four-part series by Hospice News that will examine what hospices need to know about the changing regulatory conditions.

Hospices have a leg up on compliance if they have instilled solid documentation practices and record keeping when it comes to how they spent these funds, according to Judi Lund Person, vice president of regulatory and compliance at the National Hospice and Palliative Care Organization (NHPCO).

“What we’ve heard from providers is that if they kept good records during the public health emergency about what they were using these funds for, then reporting and auditing doesn’t seem to be too laborious,” Lund Person told Hospice News. “It’s all connected to whether you did a good job when you were in the middle of it all and getting the money – that’s the bigger thing.”


Providers who received PPP and PRF payments were required to maintain records to substantiate that they were used appropriately.

It’s all connected to whether you did a good job when you were in the middle of it all and getting the money – that’s the bigger thing.

– Judi Lund Person, NHPCO

Allowable PRF expenses included any pandemic-related costs tied to providing health care services and support in a medical, home or community-based setting that were otherwise not reimbursable, according to Health Resources & Services Administration (HRSA) requirements.

The various applicable costs include general and administrative operating expenses such as mortgage or rent payments, utilities, personnel costs like wages and benefits.

Some of these expenses were covered through the PPP program, such as payroll costs, business-related mortgage interest payments, rents and utilities. Providers could apply for PPP loan forgiveness within 10 months of receiving the funds, and after they applied all of the proceeds to eligible expenses, according to the U.S. Small Business Administration (SBA) requirements.

Parameters around how health care providers could spend these funds were “pretty broad,” which allowed the dollars to be allocated towards financial areas of greatest need, Lund Person continued.

Sustaining the workforce was one of the most significant of these areas, she said. The pandemic relief funds helped some hospices to cover things such as sign-on and retention bonuses and expanded employee benefit packages — keys to attracting and keeping clinicians during the pressures of COVID-19, Lund Person added.

Documentation will be a large part of how hospices demonstrate PRF and PPP compliance and prepare for the quickly changing regulatory terrain, according to Mollie Gurian, vice president of home based and HCBS policy at LeadingAge, an association of nonprofit aging services providers.

“The important part of documentation is not just what the PRF dollars were spent on, but also why they qualify as a COVID-related expense,” Gurian told Hospice News in an email. “Congress is applying pressure on agencies that administer COVID-19 relief programs to account for how the money was spent.”

Federal regulators such as the SBA, HRSA and the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) have moved forward on audits that closely examine the ways that providers spent PRF and PPP dollars.

The OIG began rolling out the initial phase of PRF fund audits for hospices last year. A sample of 30 hospice providers from various regions nationwide were included in that round. This closely followed a September OIG report indicating that the federal government’s oversight of the program needed improvement.

A challenge for providers is that federal agencies had not yet set hard and fast rules at the time the PRF funds were initially distributed, other than they were intended to cover expenses and revenue lost in preparing and responding to the outbreak, Gurian stated.

Congress is applying pressure on agencies that administer COVID-19 relief programs to account for how the money was spent.

— Mollie Gurian, LeadingAge

PPP loans have been subject to review at any time, though those who borrowed less than $2 million were not required to report how they utilized those dollars. Those receiving more than that amount were automatically audited by the SBA.

The SBA sought documentation related to an organization’s financial performance during the PPP loans period, such as cash flow, revenue and any growth initiatives the funds supported. Failure to provide that information could result in repayment or denial of loan forgiveness.

Large amounts of these pandemic relief funds spent in any one particular area could attract auditors’ attention, according to Lund Person. This can sometimes result in the provider having to return some or all of these funds in addition to other potential repercussions, she said.

“If we’re thinking about what would be a red flag, it would be if you spent huge sums of money on one particular thing, maybe something like salaries for retention or salaries for recruiting new employees and that sort of thing,” she said. “That would probably be the place where the red flags are the biggest.”

Any PRF recipients identified as reporting inaccurate information to the HHS will be “subject to payment recovery and other legal action,” according to HRSA audit requirements.

Individuals suspected of using the funds fraudulently face serious legal consequences that can include criminal charges.

Case in point, the U.S. Justice Department last year indicted two workers from San Gabriel Hospice & Palliative Care who allegedly submitted fraudulent PPP loan applications on behalf of the California-based organization. The individuals were also accused of misusing an estimated $91,483 in COVID-19 relief funds. If convicted, the pair faced prison sentences.

Hospice providers should pay “enormous attention” to required reporting deadline periods, which are based on when they received the funds, according to Lund Person.

Hospice providers can refer to HRSA guidelines to get a better understanding of where their required reporting time frames fall, she stated. The fifth and final reporting period will hit this summer, with reports due between July 1 and Sept. 30 for those who received payouts from January 1 through June 30 of last year.

Documentation is the bottom line when it comes to compliance, according to Gurian.

“Regardless of whether it is PPP or PRF, providers should make sure to have all their documentation in order, along with their rationale for claiming a COVID-19-related expense or lost revenue,” she said. “As HRSA PRF audits have begun, we’ve heard that auditors are focused on ensuring every penny is accounted for. As a result, these audits are much more detailed than others.”

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