Thursday, July 23, 2020

HHS FAQ Updates on Auditing and Funds Transfers

Today, the Department of Human Health Services (HHS) added FAQs further defining which funds may be moved among TINs and lines of care as well as providing preliminary information on Provider Relief Fund audits. Important FAQs are shown below.  


Provider Re-Allocation of Funds.  In these two FAQs, HHS indicates that funds from a General Distribution (e.g., Tranches 1 and 2) may be transferred from a parent organization. This FAQ builds upon prior guidance allowing for transfers. However, in the second FAQ, HHS clarifies that Targeted Distributions, such as the SNF Distribution, may not be transferred.   

Can a parent organization allocate Provider Relief Fund General Distribution to subsidiaries that do not report income under their parent’s employee identification number (EIN)? (Added 7/22/2020) 

Yes. The Terms and Conditions place restrictions on how the funds can be used. In particular, the parent organization will be required to substantiate that these funds were used for increased healthcare-related expenses or lost revenue attributable to COVID-19, and that those expenses or losses were not reimbursed from other sources and other sources were not obligated to reimburse them. 

Can a parent organization with a direct ownership relationship with a subsidiary that received a Provider Relief Fund Targeted Distribution payment control and allocate that Targeted Distribution payment among other subsidiaries that were not themselves eligible and did not receive a Targeted Distribution (i.e., Skilled Nursing Facility, Safety Net Hospital, Rural, Tribal, High Impact Area) payment? (Added 7/22/2020) 

No. The parent entity may not transfer a Provider Relief Fund Targeted Distribution payment from the recipient subsidiary to a subsidiary that did not receive the payment. Control and use of the funds must remain with the entity that received the Targeted Distribution payment. The purpose of Targeted Distribution payments is to support the specific financial needs of the payment recipient. 


Auditing.  In addition to the preliminary information on reporting released earlier this week, today, HHS indicates that Provider Relief Fund payments will be subject to the Office of Management and Budget (OMB) Single Audit process. Single Audit, Subpart F of the OMB Uniform Guidance, is a rigorous, organization-wide audit or examination of an entity that expends $750,000 or more of federal assistance. The Single Audit's objective is to provide assurance that federal funds are used appropriately.   

The Single Audit concept likely is unfamiliar to many AHCA/NCAL members. AHCA/NCAL is developing educational materials and resources to support the membership.   
 
Are Provider Relief Fund payments subject to Single Audit requirements under the UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR HHS AWARDS (45 CFR Part 75)? (Added 7/22/2020) 

Yes. Provider Relief Fund General and Targeted Distribution payments and Uninsured Testing and Treatment reimbursement payments are required to be included in determining if a recipient organization, other than commercial (for profit) organizations, is required to have an audit in accordance with 45 CFR Part 75, Subpart F (i.e., reported annual total federal fund expenditures equal to or above $750,000). Audit reports must be submitted to the Federal Audit Clearinghouse electronically at https://harvester.census.gov/facides/Account/Login.aspx

Are commercial organizations that receive Provider Relief Fund payments required to have a Single Audit in conformance with the requirements under 45 CFR 75 Subpart F? (Added 7/22/2020) 

Commercial organizations that receive $750,000 or more in annual federal awards have two options:  
  1. A financial audit conducted in accordance with Generally Accepted Government Auditing Standards (45 CFR 75.216); or  
  2. A Single Audit in conformance with the requirements under 45 CFR 75 Subpart F.  
Provider Relief Fund payments must be included in determining if a recipient that is a commercial (for profit) organization is required to have an audit in accordance with 45 CFR §75.501 (i.e., reported annual total federal funds received equal to or above $750,000). Audit reports of commercial entities are to be submitted directly to the U.S. Department of Health and Human Services, Audit Resolution Division at AuditResolution@hhs.gov

Can my organization get an extension to the submission deadline for our upcoming Single Audit? (Added 7/22/2020) 

Yes. OMB has provided certain flexibilities due to the COVID-19 pandemic, including the extension of time to submit audit reports. Please see the OMB website for more details. Organizations with questions about their ability to obtain extensions should email HRSA’s Division of Financial Integrity at SARFollowup@hrsa.gov

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