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$20B in additional funds released to providers as part of CARES Act

Apr 28, 2020

The Department of Health and Human Services (HHS) has opened up another $20 billion in funds to help hospitals and healthcare providers deal with the financial impacts of treating COVID-19 patients.

The new funding round was opened on April 25 and is intended to compensate providers without regard to payer mix and to provide assistance based on March and April 2020 lost revenues.

HHS announced several funding opportunities from the $100 billion CARES Act Provider Relief Fund, including a $50 billion funding opportunity referred to as a “General Distribution.” That was broken into two tranches: the first, completed April 24, was distributed to providers based on 2019 Medicare revenues the second is the additional $30 billion, which was made available earlier this week.

Both rounds of funding are subject to Terms and Conditions and which we recommend careful review of prior to accepting either through retention of the funds for at least 30 days or attestation. The Terms and Conditions for the first round and for this second round are substantially the same except that the second round Terms and Conditions requires submission of general revenue data for 2018 and consent to public disclosure of the payments received from the Fund which may allow others to estimate specific financial information of a provider.

Only providers who received a payment under the first $30 billion bucket (direct deposit to an account or by check) are eligible to apply for this second round of funding. United Health Group (”UHG”) has stated that a third application will be posted for those providers who did not receive funding from the first round and can demonstrate eligibility. UHG was not able to provide an estimated date and HHS has not provided any information. In addition, HHS has provided for Targeted Distributions for treatment of uninsured, hospitals in high-impact areas (via email invitation with a link to the portal), rural health clinics and hospitals, Indian Health Service facilities and separate funding for providers that are primarily Medicaid based.       

If you received funding through the first $30 billion General Distribution and have not already applied for funds under round two, here are the steps and what you need to know.      

First, if you have not already done so, you need to attest to the distribution from the $30 billion funds.  While the Terms and Conditions state that if you retain the funds for at least 30 days without returning the funds you are deemed to have accepted the Terms and Condition, you may not proceed with the application for the second round of funding without completing this step. 

You will need:

  • TIN/EIN for each entity,
  • the amount of the first distribution (NOT PPP loan) 
  • Payment transaction numbers and bank accounts that received the payments

You will be asked to attest to the Terms and Conditions applicable to the distribution from the $30 billion fund and certain other statements.

Second, the portal for the $20 Billion second distribution, has several steps and documentation requirements.  It is helpful to have all of the information assembled prior to beginning the application. 

You will be required to complete a separate application for each TIN that has received funds and will need:

  • TIN of the entities that received the first HHS payment (not the PPP loan)
  • Federal tax return(s) for 2018 (or most recently filed tax return) of each TIN recipient of the first round of funds
  • Amount of the HHS payment(s) received
  • Payment transaction numbers
  • Bank accounts numbers to receive the payment
  • “Gross receipts or sales” or “program service revenue” as submitted on the most recent federal tax return(s)
  • Estimated lost revenue for March and April

HHS has stated in the General Distribution FAQ that “Lost revenue can be estimated by comparing year-over-year revenue, or by comparing budgeted revenue to actual revenue. For April 2020, an estimate of the total monthly loss based on data from the first few weeks in April or by extrapolation from March data is acceptable.”

The FAQ also clarifies some questions regarding which TIN and tax returns should be used. All Tax Id Numbers associated with the tax return should be included and identified in the application for those that file a consolidated return.  If a subsidiary files a separate tax return, it must submit an application separately.

Attestation to certain statements is required, including that you have ownership of the bank accounts and that none of the accounts are used for personal, family or household purposes.

HHS has said that they are processing batches every Wednesday at 12 noon EST  and intends to disburse payments within 10 days of submission.

Also, the amount of your payments will be publicly disclosed by HHS. HHS has said that no other information is disclosed, but it is possible more specific financial information may be derived from this public information.

Third, after you receive the funding from both distributions, it is very important you maintain documentation of uses of the funds. The funds may be used “to prevent, prepare for, and respond to coronavirus, and . . . reimburse the Recipient only for health care related expenses or lost revenues that are attributable to coronavirus.” You may be subject to an HHS audit of the uses of the funds. If the total amount received by a TIN is more than $150,000, then it is subject to quarterly reporting requirements. 

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