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April 01, 2020 04:29 PM

Tracking COVID-19 hospital expenses important for federal funding

Rachel Cohrs
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    Modern Healthcare Illustration / Getty Images

    COVID-19 relief funding for hospitals will be coming through several government sources, so experts recommend that hospitals immediately begin tracking all their expenses and lost revenue.

    Hospitals could be eligible for funds through the Federal Emergency Management Agency, several funding streams set up by Congress in the Coronavirus Aid, Relief, and Economic Security Act, state grants and HHS programs. Each of the funding sources can be used for different purposes, have different requirements and are likely to be audited later.

    As hospital administrators are already dealing with a mounting crisis, Robert Reeves, a partner at Ernst & Young, recommends that hospitals identify a team to document expenses and lost revenue, identify funding sources, prioritize funding applications, and ensure documentation is in place so funds aren't clawed back later for being improperly used.

    "We really recommend clients after any disaster take a really holistic, enterprise-wide approach to financial recovery," Reeves told providers on Monday.

    Facilities that accurately track COVID-19 surge capacity expenses, staffing costs and policies that led to the cancellation or delay of elective procedures will be better able to back up their funding requests, RSM US healthcare partner Rick Kes said.

    "If an organization has more sophistication in defining their costs and lost revenue, they will have a better answer if and when the government calls years from now. We are telling clients to take that part really seriously," Kes said.

    Timeliness is especially important for a $100 billion fund Congress set aside for providers in the CARES Act. Providers would be eligible for reimbursement for both costs and lost revenue due to COVID-19 and the funds will be doled out on a rolling basis. HHS hasn't released full details about how the funds will be released, but Manatt Health managing director Brenda Pawlak said the application period will likely be "fast and furious" as acute-care hospitals, critical access hospitals, community health centers, long-term care facilities, inpatient rehabilitation facilities, ambulatory surgery centers, behavioral health providers and others could be eligible for assistance.

    "Everybody will need to apply quickly, and they need to be prepared and willing to do that," Pawlak said.

    Hospitals are already jockeying to ensure they get most of the funds, and quickly. The American Hospital Association told HHS Tuesday that they want every hospital across the country to directly and immediately get $25,000 per hospital bed, with additional payments for hospitals in COVID-19 hotspots. The baseline funding request alone would cost $23 billion, the group estimated.

    The Federation of American Hospitals on Wednesday asked HHS to ensure a "substantial majority" of the funds are allocated to hospitals.

    Background materials on the CARES Act released by Senate Democrats said that if providers received reimbursement for the same expenses from two sources, the CARES Act provider grant funds would have to be repaid.

    Providers may also be eligible for corporate loans with strings attached including restrictions on executive pay and small-business loans if they have fewer than 500 employees. These loans stem from the CARES Act.

    FEMA grant processes will vary state-by-state as not all states have declared emergencies, and funds cannot be used for lost revenue. Only not-for-profit institutions would be eligible.

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