OIG Continues to Audit PRF Recipients

A recent report by the Department of Health and Human Services (HHS) Office of Inspector General (OIG) may signal even more scrutiny of healthcare providers who received funds from the Provider Relief Fund (PRF). As we have long predicted, while the PRF was intended as a financial lifeline for the country’s healthcare providers during the height of the COVID-19 pandemic, as the pandemic has cooled, it has become a minefield of compliance issues for healthcare providers and fertile ground for government auditors to demand repayments.

The PRF is a $178 billion fund created by Congress through the CARES Act to provide financial relief to healthcare providers during the COVID-19 pandemic. HHS subdivided the PRF into various general and targeted distributions and assigned the Health Resources and Services Administration (HRSA) to administer the PRF. These distributions were paid to providers in several waves between April 2020 and the present. While this infusion of cash was likely a welcome relief at the time, it came with strings attached. Some of these strings included restrictions on which providers were eligible to receive funds, restrictions on how providers could use the funds, and requirements to report on the use of the funds.

The recent OIG investigation looked at PRF payments made to 150 providers during the PRF Phase 2 General Distributions. The Phase 2 General Distributions required providers to apply for payments and submit documentation. HRSA reviewed these applications and calculated the payment amount to make to provider, mostly based on the provider’s patient care revenue as documented in the application. OIG asserted that, for 17 of the 150 providers it reviewed, HRSA had miscalculated amounts due and had overpaid the providers. OIG recommended that HRSA demand these providers return these funds and that HRSA review all other Phase 2 General Distributions for similar errors HRSA may have made.

HRSA mostly agreed to demand that providers return the overpayments alleged by OIG. However, HRSA noted that it was not feasible to audit more than 70,000 applicants and subsidiaries. Instead, HRSA noted that it “maintains a list of post-payment discrepancies that it tracks and works to resolve.”  While HRSA is known to track PRF payments and recipients, and issue demands for repayment, in this case HRSA may compare a provider’s Phase 2 application to its federal tax return (tax returns played a significant review in OIG’s review) or may simply add the issues identified by OIG to list of things HRSA reviews when a PRF recipient comes under scrutiny. In any event, healthcare providers who received funds under the PRF can expect to continue to see audits and scrutiny of PRF payments.

For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in understanding new developments in healthcare law and regulation. If you or your healthcare entity has any questions pertaining to the Provider Relief Fund or healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com