HHS released three new FAQs regarding the CARES Act. The new FAQs walk back the limitation to depreciation expense for those specific capital expenditures listed below. For purposes of lost revenue calculations, HHS also clarified that revenue from patient care should not include any payments received from, or any payments made to, third parties that relate to care not provided in 2019 or 2020. The three new FAQs are listed below:

Will the Provider Relief Fund limit qualifying expenses for capital equipment purchases to 1.5 years of depreciation, or can providers fully expense capital equipment purchases? (Added 11/18/2020)

Expenses for capital equipment and inventory may be fully expensed only in cases where the purchase was directly related to prevent, prepare for, and/or respond to the coronavirus. Examples of these types of equipment and inventory expenses include:

    • Ventilators, computerized tomography scanners, and other intensive care unit (ICU) related equipment put into immediate use or held in inventory;
    • Masks, face shields, gloves, gowns;
    • Biohazard suits;
    • General personal protective equipment; and
    • Disinfectant supplies.

Can providers include the entire cost of capital facilities projects as eligible expenses, or will eligible expenses be limited to the depreciation expense for the period? (Added 11/18/2020)

Expenses for capital facilities may be fully expensed only in cases where the purchase was directly related to preventing, preparing for, and/or responding to the coronavirus. Examples of these types of facilities projects include:

    • Upgrading a heating, ventilation, and air conditioning (HVAC) system to support negative pressure units;
    • Retrofitting a COVID-19 unit;
    • Enhancing or reconfiguring ICU capabilities;
    • Leasing or purchasing a temporary structure to screen and/or treat patients; and
    • Leasing a permanent facility to increase hospital or nursing home capacity.

Providers may have significant fluctuations in year-over-year net patient revenues due to settlements or payments made to third parties relating to care delivered outside the reporting period (2019-2020). Should Provider Relief Fund recipients exclude from the reporting of net patient revenue payments received for care payments not provided in 2019 or 2020? (Added 11/18/2020)

Provider Relief Fund recipients shall exclude from the reporting of net patient revenue payments received or made to third parties relating to care not provided in 2019 or 2020.

The full list of HHS CARES Act Provider Relief Fund FAQs can be found here.

Advis is available to assist you and your organization in navigating these Provider Relief Funds. Please contact a member of our COVID task force with questions or for more information.

Published: November 25, 2020