Should Providers Apply for Phase 3 General Distribution of the Provider Relief Funds?

Assuming that a provider meets all the requirements for the Phase 3 funding as enumerated in the hhs.gov website, there is nothing in the Phase 3 announcement that says that some applications will be outright rejected/not funded. In face, the opposite is true; healthcare providers are encouraged to apply, including those who previously applied, accepted or rejected payments from the Provider Relief Fund. They will now be able to provide additional information to HHS, at which point HHS will review to “confirm they have received Provider Relief Fund payment equal to approximately 2% of patient care revenue from prior general distributions. Applicants that have not yet received Relief Fund payments of 2 percent of patient revenue will receive a payment that, when combined with prior payments (if any), equals 2% of patient care revenue,” according to a press release from HHS.

The healthcare providers that just began practicing January 1, 2020 through March 31, 2020 are also able to submit applications (they should have their TIN validated for application to go through).

That said, as the priority for distribution of the $20 billion goes first to the applicants who have not yet fully received 2% of patient care revenue, those who have already capped the 2% might still be able to receive an equitable add-on, if there is still an excess. We are not yet sure how the distribution of the add-on payments will be calculated.

Some things come to mind when deciding to apply for Phase 3:

  1. Is the applicant qualified to receive federal funding?
  2. Was the prior application (for previous phase) rejected by HHS, and the issues not resolved?
  3. Did the applicant already receive 2%?
  4. Does the applicant believe that there was an error in the calculation of the funding already received prior to Phase 3?
  5. Was there a substantially poorer performance for the first 2 quarters of 2020 compared to expectations?
  6. Did the applicant exhaust the other federal funds previously received?
  7. Does the applicant consider the cumbersome the documentation requirement (administrative feasibility, cost vs. benefit), considering the reasonable amount that it can receive?

To sum it up, there is no straightforward answer if a healthcare provider should apply, but we know that only those who apply for Phase 3 have the chance to tap into the $20 billion.

If a provider decides to apply for Phase 3, the deadline to submit application is November 6, 2020 via the Provider Relief and Application and Attestation Portal.

If you would like more information regarding this, please contact Noberto (Bert) Gacho, CPA at 314-576-1350 or bgacho@bwtpcpa.com.

Noberto (Bert) Gacho is a Tax Manager with BWTP P.C.

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