The federal government has sent tens of billions of dollars to health systems and providers across the country, a lifeline for many struggling with financial losses tied to the unprecedented pandemic.
But even as hospital groups plead for more to be doled out faster, some are returning the funds, citing the administration burden and confusion over how to use the money correctly, health compliance lawyers told Healthcare Dive.
Health system clients are concerned about a slew of issues, including whether they received the right amount of funding, how to disperse it among their other entities and how to properly use it.
"For a large, complex organization, it's been a little bit tricky," Jacquelyn Bombard, director of federal relations for Providence, told Healthcare Dive. The nonprofit system operates 51 hospitals, clinics and a health plan.
Of the five experts Healthcare Dive consulted, four said they had some provider clients opting to return the funds due to either a fear or unwillingness to accept the terms and conditions or worries over potential risks that come with accepting the money.
"The lack of certainty has been a big pain point," Mara McDermott, vice president of McDermott+Consulting told Healthcare Dive.
Federal regulators have been clear that there will be stepped up oversight of how these funds are ultimately used. So not only do systems have to make sure they received the precise amount of funding based on the formulas prescribed by HHS, they also have to be agree to all the strings attached. These include reporting requirements and not balance billing patients.
If a system balance bills someone or applies funds to an item it shouldn't have, fine print says the action will be considered fraud, Michael Abrams, co-founder and partner at Numerof & Associates, told Healthcare Dive. If a provider commits fraud, they risk being kicked from Medicare and Medicaid.
"That's what makes it so scary," Abrams said.
"The lack of certainty has been a big pain point."
Mara McDermott
Vice president, McDermott+Consulting
Health systems are craving some finality, and a signal that they can rely on the guidance that they were given when they agreed to accepting the funds. There's some fear the goal posts will move, opening them up to more risk, McDermott said.
"It's a really hard situation and I also tend to really feel for physician practices in particular who need this money," McDermott said.
'A headache and a nightmare'
Rapid consolidation in the industry over the years is one of the complicating factors. Plus, this relief program is a first of a kind for hospitals and many are trying to navigate in real time while directing their systems through major upheaval.
"Why is this a headache and nightmare? Let's start with the fact that we are all making this up as we go along. I don't mean that to be disrespectful, and I don't mean that to be rude, but this is unprecedented and we are trying to figure how do we go about doing this," Mark Silberman, chair of Benesch's healthcare practice, told Healthcare Dive.
"The government's intention was unquestionably positive, but the practical application left some areas of confusion," he added.
In response to the pandemic, the federal government earmarked $175 billion in two pieces of legislation to funnel to hospitals and providers as many had to all but shut down their non-essential operations to curb the spread of the disease and to conserve needed resources and equipment.
The assumption might be that each hospital received a check, or deposit, for an amount designed to help keep them afloat as the pandemic sent patient volumes plunging.
However, the funding wasn't neatly distributed in that way. The federal government dispersed the Coronavirus Aid, Relief, and Economic Security (CARES) Act to individual employer identification numbers, and it's not uncommon for one large health system to have multiple tax IDs, especially if it has gone through a number of mergers.
But every organization underneath that ID may not be entitled to those funds due to the formulas laid out by HHS.
For example, the first tranche of money was delivered based on Medicare fee-for-service revenue, so organizations then had to calculate the portion of such revenue for each entity.
"It just adds a little bit more administrative burden and complexity on our end," Bombard of Providence said.
Further complicating matters, the funding formulas HHS used are based off of data from prior years. It's possible a merger has happened since then and the organization is now much different.
"The industry is not static," Timothy Fry, an attorney with McGuireWoods, told Healthcare Dive.
In some instances after a merger, it's possible the selling entity received the relief funds, which has been raising all types of questions, Fry said.
"Should that go back to the government? Should that go to the buyer? How can they certify terms and conditions?" he asked.
McDermott provided an example: A previously independent physician received relief funds based on 2018 net patient service revenue. But since then, he has joined a larger organization, and will likely send back the funds because there is too much risk in accepting them now that he is at a new place of business.
HHS has tried to provide guidance as these issues come up. However, as new direction comes out, it's hard to know when the final expectations or rules are in place.
Compliance lawyers are advising clients to diligently document the decision-making process and to include what information was available at the time, "otherwise your decision will be judged with the benefit of hindsight," Silberman said.
Ultimately, health systems and providers will be audited over how they choose to spend these funds and need robust accounting in place. They should also have a strategy for the funds and how that fits into their overall plans for dealing with COVID-19, Chad Brooker, associate principal at Avalere, told Healthcare Dive.
To aid in that process, some systems have parked the money in a separate account so it's not co-mingled with funds spent on ordinary expenses. The idea is that way when relief funds leave the account, it's likely for a deliberate purpose.
"Documentation is by far and away the No. 1 thing providers need to be doing adequately if they're going to keep these funds," Brooker said.
Despite these individual challenges, the American Hospital Association asked HHS this week to speed up doling out $50 billion of the congressional funding.
