Questions Remain on How Providers Should Account for Provider Relief Fund Money– March 15, 2021 by Tina Dzik

The Department of Health and Human Services (HHS) has distributed $178 billion to hospitals and healthcare providers on the front lines of the COVID-19 pandemic, thanks to the Provider Relief Fund established by the CARES Act back in March 2020. Throughout the crisis, cash was sent to various nonfederal agencies, both commercial and not-for-profit organizations, without applications. The nonfederal entity was required to either agree to the terms and conditions or return the funds.

As monies were released fast and furiously, there are many questions from recipients, practitioners and standard setters alike regarding how to properly report the use of these funds, and how to ensure overall compliance with laws and regulations governing the Provider Relief Fund program.

What Type of Audit Will Be Needed for Recipients of Provider Relief Funds?

Not-for-profit organizations that receive HHS awards of $750,000 or more will be subject to a single audit. Commercial organizations that receive HHS awards of $750,000 or more are also subject to an audit, but they have a couple options. They can have a:

  • Single audit performed or a program-specific audit performed in accordance with 45 CFR 75 F, but a commercial organization would not be eligible for a program-specific audit if it receives funds under multiple federal programs; or
  • Financial-related audit of all HHS awards in accordance with Government Auditing Standards (GAGAS). 

Commercial organizations will likely prefer the financial-related audit in accordance with GAGAS; however, we are waiting on further audit guidance from HHS regarding this option. 

How Do You Report Provider Relief Funds on Your Financial Statements?

We don’t have all the information quite yet, but we do know some things for sure. Provider Relief Fund expenditures and lost revenue will not be included in Schedule of Federal Expenditures SEFAs until December 31, 2020, year-ends or later. This approach will link the SEFA reporting for Provider Relief Fund to the amounts to be reported directly to HHS at calendar year-end and again at June 30, 2021. Recipients will report their use of Provider Relief Fund payments via their normal method of accounting (cash or accrual) by submitting the following information:

  1. Healthcare related expenses attributable to COVID-19 that another source has not reimbursed and is not obligated to reimburse, which includes general and administrative and/or other healthcare related expenses.
  2. Provider Relief Fund payment amounts not fully expended on healthcare related expenses attributable to COVID-19 and applied to patient care lost revenues as defined by HHS.

If recipients do not use Provider Relief Fund monies in full by the end of calendar year 2020, they will have an additional six months in which to use the remaining amounts towards expenses attributable to COVID-19, but not reimbursed by other sources, and/or lost revenue as defined by HHS.

Do Paycheck Protection Program (PPP) funds reduce the lost revenues reimbursable under the Provider Relief Fund program? This is still an open question HHS has yet to answer.

As the purpose of the Provider Relief Fund is to provide relief to healthcare providers, nonprofit organizations will record these funds as a nonexchange transaction and as a conditional contribution under ASC 958 on their financial statements. Although ASC 958 does not apply to for-profit entities, they may analogize to ASC 958 due to absence of guidance in GAAP on how commercial organizations should record these transactions. IAS 20 may also be deemed an acceptable method of accounting for a commercial organization. If an organization records the Provider Relief Fund monies under ASC 958, it must determine if the conditions have been substantially met prior to recognizing the funds as revenue.

How to Know If Your Expenses Qualify Under the Provider Relief Fund Terms

Most organizations agreed to the terms and conditions upon receiving Provider Relief Fund monies, not knowing what those terms and conditions really meant, as there was no guidance at the time. Organizations are now going back and reviewing costs to determine if they qualify and to perform lost revenue calculations.

The way the rules are written, organizations first calculate the use of Provider Relief Fund monies by calculating qualifying expenses not reimbursed from other sources, then looking to lost revenues. If your organization is finding it does not have enough costs and lost revenue to fully recognize the funds received, refer to the latest guidance by HHS to ensure you’ve properly captured all unreimbursed qualifying costs.

There is also more than one option when calculating lost revenue. An organization may calculate it using the difference between 2019 and 2020 actual patient revenue, 2020 budgeted and 2020 actual patient revenue, or an alternative method if you can provide sufficient support. HHS has yet to open its portal to accept Provider Relief Fund report submissions due to the open questions that remain surrounding proper reporting of these funds. Once the portal is open, we believe that many of the unanswered questions will be addressed.


New COVID-19 programs are introducing challenges to the normal process of determining when expenditures should be reported on the SEFA, and the Provider Relief Fund program is no exception.  Cash being received well before award/terms and conditions are agreed to, the new concept of lost revenue, and the ability to choose which costs are charged to a particular award is at a level we have not encountered before. The good news is that even HHS does not have all the answers and more guidance is forthcoming. Work with your advisors to help you meet the HHS reporting and compliance requirements as new information is released.

Contact Tina Dzik at tdzik@cohencpa.com, Kathy Walsh at kwalsh@cohencpa.com or a member of your service team to discuss this topic further.


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Cohen & Company is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law.