Audit (2020-03-13)
- Document type
- Audit
- Date
- 2020-03-13
Summary
An audit report by the HHS Office of Inspector General, report A-02-22-01014 dated November 2024, titled Seven of Thirty Hospices Reviewed Did Not Comply or May Not Have Complied With Terms and Conditions and Federal Requirements for Provider Relief Fund Payments. It assessed whether 30 selected hospices spent Provider Relief Fund payments in line with Federal and program requirements. The report states the hospices reported using $80.2 million to offset lost revenues, $89.8 million for general and administrative expenses and $34.8 million for health care-related expenses. It finds that 23 hospices used the funds for allowable purposes, while six claimed $8.3 million of unallowable expenditures and inaccurately reported $1.5 million of lost revenues, and one claimed $4 million that may not have been allowable. OIG made two recommendations to HRSA, which concurred.
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Full text
November 2024 | A-02-22-01014
Seven of Thirty Hospices Reviewed
Did Not Comply or May Not Have
Complied With Terms and
Conditions and Federal
Requirements for Provider Relief
Fund Payments
OIG.HHS.GOV
November 2024 | A-02-22-01014
Seven of Thirty Hospices Reviewed Did Not Comply or May Not Have
Complied With Terms and Conditions and Federal Requirements for
Provider Relief Fund Payments
Why OIG Did This Audit
• The Provider Relief Fund (PRF), a $178 billion program, provided funds to eligible providers for health
care-related expenses or lost revenue attributable to COVID-19. HHS was responsible for initial PRF
program oversight and policy decisions, and HRSA administers the PRF program.
• Providers receiving PRF payments were to ensure that the payments were: (1) used to prevent,
prepare for, or respond to COVID-19; (2) used for health care-related expenses or lost revenues
attributable to COVID-19; (3) not used to cover expenses or losses reimbursed by other funding
sources; and (4) not used to pay salaries in excess of a certain threshold or to pay for certain prohibited
activities.
• This audit is part of a series reviewing PRF payments to various provider types. Specifically, this audit
assessed whether 30 selected hospices expended taxpayer funds in accordance with Federal and
program requirements.
What OIG Found
• The selected hospices reported that they used $80.2 million of their PRF payments to offset lost
revenues, $89.8 million for general and administrative expenses, and $34.8 million for health care-
related expenses.
• Of the 30 selected hospices, 23 hospices used PRF funds for allowable expenditures and lost revenues
attributable to COVID-19; however, 7 hospices did not comply with or may not have complied with
Federal requirements. Of these seven hospices, which received $98.1 million in PRF payments, six
hospices claimed a total of $8.3 million of unallowable PRF expenditures and inaccurately reported
$1.5 million of lost revenues, and one hospice claimed $4 million in expenditures that may not have
been allowable.
• These deficiencies occurred because although HRSA provided the PRF terms and conditions and
updated its guidance to PRF recipients, the hospices did not always maintain documentation for
expenses claimed, correctly interpret HRSA guidance, have procedures to verify the accuracy of lost
revenue calculations, or track expenses funded by PRF payments.
What OIG Recommends
We made two recommendations to HRSA, including that it require the selected hospices to return any
unallowable expenditures to the Federal Government or ensure that the hospices properly account for these
expenditures. HRSA concurred with our recommendations.
OIG.HHS.GOV
TABLE OF CONTENTS
INTRODUCTION ............................................................................................................................... 1
Why We Did This Audit ....................................................................................................... 1
Objective ............................................................................................................................. 2
Background ......................................................................................................................... 2
COVID-19 National Emergency and the Provider Relief Fund ................................ 2
HHS’s and HRSA’s Oversight of the Provider Relief Fund Program ........................ 4
Requirements for Hospices That Received Provider Relief Fund Payments .......... 5
How We Conducted This Audit ........................................................................................... 6
FINDINGS ......................................................................................................................................... 8
Some Hospices Used Provider Relief Fund Payments for Unallowable Expenditures and
Inaccurately Calculated Lost Revenues ............................................................................ 8
Costs Not Adequately Supported ........................................................................... 8
Unallowable Costs................................................................................................... 9
Inaccurate Lost Revenue Calculations .................................................................... 9
One Hospice May Have Used Provider Relief Fund Payments for
Unallowable Expenditures .............................................................................................. 9
Causes for Unallowable and Potentially Unallowable Expenditures and Inaccurately
Calculated Lost Revenues............................................................................................... 10
RECOMMENDATIONS ................................................................................................................... 11
HEALTH RESOURCES AND SERVICES ADMINISTRATION COMMENTS .......................................... 11
APPENDICES
A: Audit Scope and Methodology ..................................................................................... 12
B: Related Office of Inspector General Reports................................................................ 14
C: Provider Relief Fund General and Targeted Distribution Payments ............................ 15
D: Options for Calculating Lost Revenues......................................................................... 17
E: Selected Hospices’ Reported Use of CY 2020 Provider Relief Fund Payments ............ 18
Hospices’ Compliance With Provider Relief Fund Requirements (A-02-22-01014)
F: Summary of Sampled Hospices’ Unallowable or Potentially Unallowable Amounts ... 19
G: Health Resources and Services Administration Comments ......................................... 20
Hospices’ Compliance With Provider Relief Fund Requirements (A-02-22-01014)
INTRODUCTION
WHY WE DID THIS AUDIT
On March 13, 2020, the President declared the COVID-19 outbreak a national emergency. In
response, Congress passed three bills, which the President signed into law, to establish the
Provider Relief Fund (PRF). The PRF provided funds to eligible hospitals and other health care
providers (providers) for: (1) health care-related expenses or lost revenues (e.g., due to
canceled elective services) attributable to COVID-19, (2) COVID-19 testing and treatment for
uninsured individuals, and (3) the administration of vaccines.1 These Federal laws appropriated
to the PRF a combined $178 billion in funds, which were generally distributed as direct
payments to providers in a series of General and Targeted Distributions. 2 As of February 2024,
the Health Resources and Services Administration (HRSA) had distributed $145.9 billion of the
PRF to providers.3
The Department of Health and Human Services (HHS) was responsible for initial PRF program
oversight and policy decisions, and HRSA, within HHS, administers the PRF program.
COVID-19 created extraordinary challenges for the delivery of health care and human services
to the American people. As the oversight agency for HHS, the Office of Inspector General (OIG)
has provided oversight of HHS’s COVID-19 response and recovery efforts. 4 This audit assessed
selected hospice providers’ compliance with terms and conditions and Federal requirements for
expending PRF payments. It is one of several OIG audits of various aspects of PRF payments,
including: (1) HHS’s and HRSA’s controls related to the requirements for submitting revenue
information and attesting to the acceptance or rejection of PRF payments, (2) HHS’s and HRSA’s
controls over PRF payment calculations and provider eligibility determinations, and (3) claims
1
The Coronavirus Aid, Relief, and Economic Security Act, P.L. No. 116-136, signed into law on Mar. 27, 2020,
appropriated $100 billion; the Paycheck Protection Program and Health Care Enhancement Act, P.L. No. 116-139,
signed into law on Apr. 24, 2020, appropriated $75 billion; and the Consolidated Appropriations Act, 2021,
P.L. No. 116-260, signed into law on Dec. 27, 2020, appropriated $3 billion.
2
Under the General Distributions, PRF payments were distributed in four phases (Phases 1, 2, 3, and 4). For
example, under the Phase 1 General Distribution, PRF payments were distributed to eligible Medicare providers
that billed Medicare fee-for-service (Medicare Parts A or B) in calendar year 2019. Under the Targeted
Distributions, PRF payments were made to providers to address added COVID-19 challenges, such as high-need
and vulnerable populations, including nursing homes and providers serving individuals in rural areas and safety net
hospitals.
3
This dollar figure is based on latest PRF distribution data provided by HRSA. As of June 2023, with the passage of
the Fiscal Responsibility Act of 2023, P.L. No. 118-5, Congress rescinded some unobligated PRF funds. In response,
HRSA stopped making PRF payments to providers.
4
OIG developed a COVID-19 response strategic plan to guide its oversight activities. As part of this plan, available
at https://oig.hhs.gov/coronavirus/index.asp, OIG has been conducting a series of audits of PRF payments to
hospitals, home health agencies, hospices, skilled nursing facilities, rural and/or tribal providers, dental providers,
and assisted living facilities. This report is one in a series of these audits.
Hospices’ Compliance With Provider Relief Fund Requirements (A-02-22-01014) 1
for COVID-19 testing and treatment services for uninsured individuals. See Appendix B for a list
of related OIG reports.
OBJECTIVE
Our objective was to determine whether selected hospices that received PRF payments
complied with terms and conditions and Federal requirements for expending PRF funds.
BACKGROUND
COVID-19 National Emergency and the Provider Relief Fund
On January 30, 2020, the World Health Organization declared the COVID-19 outbreak a public
health emergency of international concern, and on March 11, 2020, it characterized COVID-19
as a pandemic. 5 Then, on March 13, 2020, the President declared the COVID-19 outbreak a
national emergency. 6
As a result of the COVID-19 pandemic, many States ordered health care facilities, physicians,
and other providers and professionals to delay elective or nonurgent procedures to conserve
personal protective equipment and free up staff and facilities for COVID-19 patients. According
to national hospice stakeholders, hospices throughout the Nation reported a decrease in
revenues. This was a result of decreased admissions and increased costs to secure medications
that were in short supply; personal protective equipment and other supplies; and new
telecommunications systems for providing telehealth services and keeping patients, families,
and medical staff connected. Further, hospices faced additional costs for staffing, including
costs for furloughing or quarantining staff, contracting staff to meet patient care needs, and
establishing remote workstations.7
In response to the national emergency, the PRF was established to provide funds to eligible
providers for: (1) health care-related expenses or lost revenues attributable to COVID-19,
(2) COVID-19 testing and treatment for uninsured individuals, and (3) the administration of
5
A pandemic is an epidemic that has spread over several countries or continents, usually affecting many people.
An epidemic is an increase, often sudden, in the number of cases of a disease above what is normally expected in a
population in a specific area.
6
The national emergency ended on May 11, 2023.
7
Joint memo from the National Hospice and Palliative Care Organization, the National Association for Home Care
and Hospice, the National Partnership for Hospice Innovation, and the Leading Age/Visiting Nurse Associations of
America/ElevatingHOME to the United States Congress, dated Mar. 17, 2020. Available online at:
https://www.nhpco.org/wp-content/uploads/Legislative-Asks-National-Hospice-Groups-031720.pdf. Accessed on
Mar. 28, 2024.
Hospices’ Compliance With Provider Relief Fund Requirements (A-02-22-01014) 2
vaccines to the uninsured and underinsured. 8 The PRF program received a combined
$178 billion in funding from the Coronavirus Aid, Relief, and Economic Security Act; the
Paycheck Protection Program and Health Care Enhancement Act; and the Consolidated
Appropriations Act, 2021, of which $145.9 billion was distributed to providers for health care-
related expenses or lost revenue attributable to COVID-19. 9 PRF funds were generally
distributed as direct payments to providers in a series of General and Targeted Distributions.
Exhibit 1 (next page) details these PRF distributions to health care providers. For further details
on how PRF payments were distributed, see Appendix C.
8
According to HHS’s Instructions for the Distribution for Medicaid, CHIP, and Dental Providers Via Enhanced
Provider Relief Fund Payment Portal, lost revenues attributable to COVID-19 means “the amount of any patient
care revenue that you as a health care provider lost due to coronavirus, net of any increased revenues due to
coronavirus (e.g., insurance reimbursed treatment).” This revenue may include revenue losses associated with
fewer outpatient visits or canceled elective procedures or services.
9
Congress also appropriated $8.5 billion of COVID-19-related relief for rural providers enrolled in the Medicare or
Medicaid programs (American Rescue Plan Act of 2021, P.L. No. 117-2). This funding is administered by HRSA and
has similar limitations and requirements as the PRF but is not part of the PRF.
Hospices’ Compliance With Provider Relief Fund Requirements (A-02-22-01014) 3
Exhibit 1: Provider Relief Fund Distributions to Health Care Providers
Note: Amounts for the Targeted Distributions in the above exhibit do not add to $57.5 billion due to rounding.
HHS’s and HRSA’s Oversight of the Provider Relief Fund Program
The HHS Office of the Secretary’s direct responsibility for PRF program oversight and policy
decisions allowed HHS to meet its mission to expedite the establishment of the PRF and the
distribution of funds as quickly as possible for providers’ health care-related expenses or lost
revenues attributable to COVID-19. Within HHS, HRSA is responsible for providing day-to-day
oversight and management of all aspects of the PRF program.10
10
HHS and HRSA, PRF General & Targeted Distribution Cycle Memo, dated Sept. 30, 2020, and Sept. 30, 2021.
Hospices’ Compliance With Provider Relief Fund Requirements (A-02-22-01014) 4
HRSA provided various resources to providers on the proper use and reporting of PRF
payments, including issuing a series of Frequently Asked Questions (FAQs), and guidance on
allowable expenses and lost revenue calculations.11 HRSA also conducted technical assistance
webinars on the reporting process. In addition, HRSA engaged external auditor firms to
conduct risk-based audits for a sample of providers to ensure that providers used PRF payments
in accordance with PRF terms and conditions.
Requirements for Hospices That Received Provider Relief Fund Payments
Providers, including hospices, may have been eligible to receive PRF payments from multiple
distributions.12, 13 Hospices that received PRF payments had to comply with certain provisions
of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS
Awards (45 CFR part 75). Specifically, the hospices had to comply with 45 CFR § 75.302
(Financial management and standards for financial management systems) and 45 CFR §§ 75.361
through 75.365 (Record retention and access).
As a condition of receiving PRF payments, providers agreed to the PRF terms and conditions,
including meeting eligibility criteria; filing expenditure reports; and ensuring that payments
were: (1) used to prevent, prepare for, or respond to COVID-19; (2) used for health care-related
expenses or lost revenues (i.e., patient care revenues) attributable to COVID-19; 14 (3) not used
to reimburse expenses or losses already reimbursed from other funding sources; and (4) not
used to pay salaries in excess of a certain threshold or to pay for certain prohibited activities
(e.g., lobbying). 15
11
HRSA, Provider Relief: Frequently Asked Questions web page, available at https://www.hrsa.gov/provider-
relief/faq.
12
PRF payments were distributed to providers based on providers’ taxpayer identification numbers (TINs).
Hospices and other providers were required to report on their PRF payments if they received $10,000 or more
during a payment period. We use the term “hospice” to refer to a hospice reporting entity. A hospice reporting
entity may have registered its TIN through the PRF Reporting Portal to report to HRSA on the use of PRF payments
received by that TIN and TINs associated with the entity’s subsidiary entities (e.g., individual hospices). A hospice
may be a stand-alone hospice, a hospice group, or a parent organization.
13
For details on General and Targeted Distribution payments, see Appendix C. In addition to PRF payments, we
note that hospices may have received COVID-19-related assistance from the Federal Emergency Management
Agency, the Department of the Treasury, and the Small Business Administration, as well as from grants and
donations from local and State governments or private sources.
14
Patient care means health care, services, and supports, as provided in a medical setting, at home, or via
telehealth, or in the community. Items not considered patient care revenue include non-patient care dining
services, grants, bad debt, any gains or losses on investments, and contractual adjustments.
Recipients were not allowed to use PRF funds to pay any salary at a rate in excess of Executive Level II, which
15
was set at $197,300 for 2020 and $199,300 for 2021.
Hospices’ Compliance With Provider Relief Fund Requirements (A-02-22-01014) 5
Provider Relief Fund Expenditures and Lost Revenues
Hospices were required to use PRF distributions for expenses or lost revenues attributable to
COVID-19. For expenses, hospices were required to report their use of PRF payments for
COVID-19 health care-related expenses (e.g., expenses for purchasing equipment such as
ventilators and sanitizing supplies for infection control) and COVID-19-related general and
administrative expenses (e.g., salaries, utilities, and rent), including expenses incurred prior to
receipt of PRF payments (i.e., pre-award costs dated back to January 1, 2020). 16 Hospices were
required to follow their basis of accounting (cash or accrual basis) to determine expenses and
only use PRF payments for eligible expenses or lost revenues during what is known as the
period of availability.17
For lost revenues, hospices could apply their PRF payments toward lost revenue amounts
during a period of availability calculated using one of the following three options:
1. the difference between actual net patient care revenues and 2019 net patient care
revenues,
2. the difference between budgeted patient care revenues (approved by hospice officials
prior to March 27, 2020) and actual patient care revenues, or
3. any reasonable method of estimating revenues. 18
HRSA guidance for the treatment of unallowable or ineligible expenditures of PRF funds states
that providers could replace unallowable or ineligible expenditures allocated to PRF payments
in a closed reporting period with unreimbursed lost revenues in subsequent reporting periods.
Providers are not required to return PRF payments used for unallowable purposes (e.g.,
lobbying) to the Federal Government if they have sufficient unreimbursed lost revenues to
offset unallowable amounts. See Appendix D for a detailed description of how providers could
choose to calculate lost revenues.
HOW WE CONDUCTED THIS AUDIT
Our audit covered $204.8 million in PRF Phase 1 General Distribution payments and related
interest to a nonstatistical sample of 30 hospice taxpayer identification numbers (TINs) during
16
HRSA FAQs.
17
The period of availability ends 1 year after the end of the quarter or semiannual period in which the payment
was received. The first payment receipt period was a quarter (April 1, 2020, through June 30, 2020). Subsequent
payment receipt periods were 6 months.
18
HRSA FAQs.
Hospices’ Compliance With Provider Relief Fund Requirements (A-02-22-01014) 6
calendar year (CY) 2020.19 (We refer to these sample units throughout the report as
“hospices.”) 20 The selected hospices reported that they used $80.2 million of their PRF
payments to offset lost revenues, $89.8 million for general and administrative expenses, and
the remaining $34.8 million for health care-related expenses. 21 Appendix E contains details on
how the selected hospices used PRF payments issued in CY 2020.
We selected hospices based on an analysis that considered the amount of PRF payments
received, geographic location, and organizational structure (e.g., hospice groups and stand-
alone hospices). 22 We reviewed the hospices’ PRF payments used to offset lost patient care
revenues or cover general and administrative and health care-related expenses. Specifically,
for each of the selected hospices that reported expenditures, we reviewed a nonstatistical
sample of expenses that we selected based on materiality and expense descriptions (e.g.,
salaries, supplies, equipment). For the selected hospices that reported lost revenues, we
reviewed the hospices’ lost revenues calculations. 23
We conducted this performance audit in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions
based on our audit objectives. We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based on our audit objectives.
Appendix A describes our audit scope and methodology.
19
Some hospices kept their PRF payments in an interest-bearing account and included interest in the amounts
reported on expenditure reports submitted to HRSA.
20
The sampling frame consisted of 2,606 unique hospices that received and kept 1 or more PRF payments totaling
approximately $899 million. PRF payment recipients had 90 days to return a payment to HHS, otherwise the
recipient was deemed to have accepted the terms and conditions. Our sample included hospices that received PRF
payments issued in CY 2020 and for which hospices attested to the payment terms and conditions or were deemed
to have accepted the terms and conditions.
21
Hospices reported these amounts on expenditure reports submitted to HRSA for reporting periods 1 and 2.
22
Our sample unit was a hospice that reported the use of PRF General Distribution payments. Each sampled
hospice could be a stand-alone hospice or part of a parent-subsidiary system that may include other provider types
(e.g., palliative care and home health agencies). The 30 selected hospices each received more than $1 million in
PRF payments during CY 2020 and are located in 16 States. Ten of the hospices are hospice groups and 20 are
stand-alone hospices. Appendix F contains details on the sampled hospices, including whether they were for-profit
or nonprofit entities.
23
Of the 30 selected hospices, 22 hospices claimed both expenses and lost revenues, 6 hospices claimed only
expenses, and 2 hospices claimed only lost revenues.
Hospices’ Compliance With Provider Relief Fund Requirements (A-02-22-01014) 7
FINDINGS
Of the 30 selected hospices, 23 used the funds for allowable general and administrative and
health care-related expenditures attributable to COVID-19 and to offset lost revenues
attributable to COVID-19. However, the remaining seven hospices did not comply or may not
have complied with Federal requirements. Specifically, six hospices used PRF payments for
unallowable expenditures or inaccurately calculated lost revenues, and one hospice may have
used PRF payments for unsupported or unallowable expenditures. These deficiencies occurred
because although HRSA provided the PRF terms and conditions and updated its guidance to PRF
recipients, the hospices did not always maintain documentation for expenses reported,
correctly interpret HRSA guidance, have procedures to verify the accuracy of lost revenue
calculations, or track expenses funded by PRF payments.
As a result of these deficiencies, 6 of the 30 selected hospices reported a total of approximately
$8.3 million of unallowable PRF expenditures and inaccurately reported approximately
$1.5 million of lost revenues. In addition, one of the selected hospices reported approximately
$4 million in expenditures that may not have been allowable. These funds could have been
used to offset allowable lost revenues or to support other activities related to the COVID-19
national emergency, including preventing, preparing for, and responding to COVID-19.
SOME HOSPICES USED PROVIDER RELIEF FUND PAYMENTS FOR UNALLOWABLE
EXPENDITURES AND INACCURATELY CALCULATED LOST REVENUES
Costs Not Adequately Supported
PRF recipients must comply with certain Uniform Administrative Requirements, Cost Principles,
and Audit Requirements for HHS Awards (45 CFR part 75). The financial management system of
each PRF recipient must provide accurate, current, and complete disclosure of the financial
results of each Federal award or program. The PRF recipient’s records must identify the source
and application of funds for federally funded activities and be supported by source
documentation (45 CFR §§ 75.302(b)(2) and (3)).
Four sampled hospices used their PRF payments for costs totaling $672,482 that were not
adequately supported. Two of these hospices did not provide invoices or proof of payment for
$31,670 of expenses we reviewed. Another hospice did not provide timesheets or other
documentation to support $1,044 of payroll expenses related to one contractor for two
different dates. A fourth hospice did not provide support for expenses totaling $639,768 for
another hospice that was acquired by the sampled hospice. 24 The sampled hospice (i.e., the
purchasing hospice) did not obtain any invoices or proof of payment to support the portion of
the PRF payments spent by the acquired hospice.
24
The acquired hospice received $2.5 million of PRF payments and spent $639,769.
Hospices’ Compliance With Provider Relief Fund Requirements (A-02-22-01014) 8
Unallowable Costs
As a condition of receiving PRF payments, hospices agreed to the PRF terms and conditions,
including meeting eligibility criteria; filing expenditure reports; and ensuring that payments
were: (1) used for purposes related to COVID-19 (e.g., expenses paid for purchasing equipment
such as ventilators and sanitizing equipment to prevent, prepare for, or respond to COVID-19),
(2) applied to offset eligible lost revenues attributable to COVID-19 (e.g., lost patient care
revenue), (3) not duplicated by other funding sources, and (4) not used to reimburse salaries in
excess of a certain threshold or to pay for certain prohibited activities (e.g., lobbying).
One sampled hospice inappropriately reported estimated income tax expenses among its lost
revenues, totaling $7,634,036, which are unallowable expenditures. The hospice asserted that
if it earned the amount it reported as lost revenues it would have been subject to the estimated
income taxes it reported. Although HRSA’s FAQs indicated that providers were allowed to pay
actual income taxes with PRF payments, HRSA indicated that it did not intend for providers to
calculate estimated income taxes on lost revenue amounts (i.e., income not received) and
consider them as eligible expenses.
Inaccurate Lost Revenue Calculations
PRF payment amounts not fully expended on health care-related expenses attributable to
COVID-19 may be applied to lost revenues. Lost revenues can be calculated by one of three
options, including determining the difference between 2019 net patient care revenues and net
patient care revenues during the period of availability.
In its lost revenue calculation, one sampled hospice erroneously included certain patient care
revenue amounts for 2019 that it omitted from its net patient care revenues for 2020. As a
result, the hospice received $1,461,552 of excess PRF payments. The hospice’s chief financial
officer (CFO) stated that this occurred because the hospice included intercompany account
revenues in its 2019 calculation but did not include these revenues in its 2020 calculation,
which resulted in an inflated base year revenue amount. The CFO further stated that the error
was subsequently identified by external auditors. The hospice returned the excess PRF
payments during our audit fieldwork. 25
ONE HOSPICE MAY HAVE USED PROVIDER RELIEF FUND PAYMENTS FOR UNALLOWABLE
EXPENDITURES
PRF recipients’ financial management systems must be sufficient to trace funds to a level of
expenditures adequate to establish that such funds have been used according to the Federal
statutes, regulations, and terms and conditions of the Federal award (45 CFR § 75.302(a)). The
financial management system of each PRF recipient must provide accurate, current, and
We confirmed that the hospice repaid the inaccurate lost revenues identified, totaling $1,461,552, to the Federal
25
Government on Aug. 25, 2023. Therefore, this amount is not included in our recommendations.
Hospices’ Compliance With Provider Relief Fund Requirements (A-02-22-01014) 9
complete disclosure of the financial results of each Federal award or program. The PRF
recipient’s records must identify the source and application of funds for federally funded
activities and be supported by source documentation (45 CFR §§ 75.302(b)(2) and (3)).
One sampled hospice used $3,967,025 of its PRF payments for costs that may be unallowable.
Specifically, the hospice commingled $3,967,025 in PRF payments with payments from other
funding sources26 and was not able to provide general ledger details to reconcile this amount to
the amount it reported to HRSA. 27
CAUSES FOR UNALLOWABLE AND POTENTIALLY UNALLOWABLE EXPENDITURES AND
INACCURATELY CALCULATED LOST REVENUES
These deficiencies occurred because although HRSA provided the PRF terms and conditions and
updated its guidance to PRF recipients, the hospices did not always maintain documentation for
expenses reported, correctly interpret HRSA guidance, have procedures to verify the accuracy
of lost revenue calculations, or track expenses funded by PRF payments. As a result, hospices
did not always use their PRF payments for expenses or lost revenues attributable to COVID-19
or maintain sufficient supporting documentation for costs that were allocated to their PRF
payments. Hospices asserted that during the COVID-19 national emergency they focused on
securing supplies and equipment needed for their staffs to continue to deliver high-quality care.
Further, in the context of extraordinary challenges from the COVID-19 national emergency,
HRSA’s operational objective at the beginning of the national emergency was to rapidly
disburse PRF payments to support providers facing severe economic hardship during the
national emergency. According to the hospices, the unprecedented nature of the pandemic,
coupled with a lack of resources, sometimes resulted in insufficient documentation being
maintained to support the use of PRF payments. In addition, hospices stated that HRSA’s FAQs
were sometimes confusing, which may have led hospices to misinterpret HRSA’s guidance.
In addition to the recommendations below, key stakeholders and decisionmakers should use
the information included in this report when determining lessons learned from administering
PRF distributions during the COVID-19 national emergency and look for additional ways to
safeguard Federal funds when rapidly disbursing assistance payments to providers in response
to future national emergencies. Accordingly, we plan to make a recommendation to HHS in a
future product.
26
Other funding sources for this hospice included Medicare and Medicaid claim reimbursement payments.
27
The hospice provided monthly general ledger transactions; however, it could not distinguish which expenses
applied to PRF payments.
Hospices’ Compliance With Provider Relief Fund Requirements (A-02-22-01014) 10
RECOMMENDATIONS
We recommend that the Health Resources and Services Administration:
• require the six hospices identified in our report as having used PRF payments for
unallowable expenditures, totaling $8,306,519, to return the PRF payments to the
Federal Government or ensure that the hospices properly replace the unallowable
expenditures with allowable unreimbursed lost revenues or eligible expenses, if
applicable, and
• work with the hospice identified in our report as having used $3,967,025 of its PRF
payments for potentially unallowable expenditures to determine what amounts should
have been allocated and require the hospice to return unallowable amounts to the
Federal Government or ensure that the hospice properly replaces these unallowable
expenditures with unreimbursed lost revenues or eligible expenses, if applicable.
HEALTH RESOURCES AND SERVICES ADMINISTRATION COMMENTS
In written comments on our draft report, HRSA concurred with our recommendations. HRSA
stated that it will review the records for the hospices identified in our report as having used PRF
payments for unallowable or potentially unallowable costs and seek repayment as appropriate.
HRSA also provided technical comments, which we addressed as appropriate. 28 HRSA’s
comments, excluding the technical comments, are included as Appendix G.
28
We note that HRSA’s technical comments included minor revisions to our recommendations, which we
incorporated.
Hospices’ Compliance With Provider Relief Fund Requirements (A-02-22-01014) 11
APPENDIX A: AUDIT SCOPE AND METHODOLOGY
SCOPE
We identified 2,606 unique TINs related to hospice providers that received and kept Phase 1
General Distribution PRF payments during CY 2020 totaling approximately $899 million. We
selected for audit a nonstatistical sample of 30 hospices that received PRF payments from
General Distributions totaling $204.8 million during CY 2020.29 We selected hospices based on
a risk analysis that considered the amount of PRF payments received, geographic location, and
organizational structure (e.g., hospice groups and stand-alone hospices). We reviewed the
hospices’ PRF payments used to offset lost patient care revenues and/or cover general and
administrative and health care-related expenses. We reviewed the selected hospices’ use of
PRF payments received from General Distributions.
We limited our review of HRSA’s and the selected hospices’ internal controls to those
applicable to our audit objective. We did not assess HRSA’s or the hospices’ overall internal
control structure. Specifically, we reviewed HRSA’s policies and procedures for reviewing
expenditure information submitted by providers and its guidance to providers on the use and
reporting of PRF payments. We also reviewed selected hospice providers’ policies and
procedures for monitoring, tracking, and expending PRF payments.
We established reasonable assurance of the authenticity and accuracy of the PRF payment data
by reconciling it with PRF expenditure reports hospices submitted through HRSA’s PRF
Reporting Portal.
We conducted our audit from June 2022 through August 2024.
METHODOLOGY
To accomplish our objective, we:
• reviewed applicable Federal laws, regulations, and guidance, including the PRF terms
and conditions and HRSA’s FAQs related to PRF payments;
• met with HRSA officials to gain an understanding of the PRF’s payment terms and
conditions, reporting requirements, and HRSA’s monitoring and oversight activities;
29
PRF payment recipients had 90 days to return a payment to HHS, otherwise the recipient was deemed to have
accepted the terms and conditions. Our sample included hospices that received PRF payments issued in CY 2020
and for which hospices attested to the payment terms and conditions or were deemed to have accepted the terms
and conditions.
Hospices’ Compliance With Provider Relief Fund Requirements (A-02-22-01014) 12
• reviewed HRSA’s policies and procedures related to its oversight of recipients’ reporting
on the use of PRF funds and compliance with the terms and conditions for PRF
payments;
• obtained PRF payment data for Phase 1 General Distributions in 2020;
• compiled a list of 2,606 hospices that received and kept Phase 1 General Distribution
PRF payments in 2020;
• selected a nonstatistical sample of 30 hospices that received PRF payments based on
the amount of PRF payments received, geographic location, and organizational structure
(hospice groups and stand-alone hospices);
• for each hospice selected, interviewed hospice officials; reviewed its expenditure
reports submitted to HRSA and a nonstatistical sample of expenses based on materiality
and expense descriptions; and analyzed supporting accounting, personnel, and other
records to determine whether:
o payments were used to prevent, prepare for, and respond to COVID-19;
o payments were used for health care-related expenses, general and
administrative expenses, or lost revenues attributable to COVID-19, and that the
amount for any lost revenues applied toward PRF payments was accurately
calculated; 30
o payments were used for expenses or lost revenues that were reimbursed by
other funding sources (e.g., reimbursements from the Federal Emergency
Management Agency, Medicare/Medicaid or commercial health insurance,
Paycheck Protection Program, and assistance from State or local government
agencies); and
o payments were used to pay salaries at a rate in excess of certain thresholds or
for other prohibited activities; and
• discussed the results of our audit with HRSA officials.
We conducted this performance audit in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions
based on our audit objectives. We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based on our audit objectives.
30
We recalculated the lost revenue amount using the same option that the entity used for determining lost
revenues.
Hospices’ Compliance With Provider Relief Fund Requirements (A-02-22-01014) 13
APPENDIX B: RELATED OFFICE OF INSPECTOR GENERAL REPORTS
Report Title Report Number Date Issued
HRSA Made Some Potential Overpayments to
Providers Under the Phase 2 General Distribution of A-09-22-06001 3/4/2024
the Provider Relief Fund Program
The Provider Relief Fund Helped Select Nursing Homes
Maintain Services During the COVID 19 Pandemic, but OEI-06-22-00040 12/12/2023
Some Found Guidance Difficult to Use
HHS’s Oversight of Automatic Provider Relief Fund
Payments Was Generally Effective but Improvements A-02-20-01025 10/30/2023
Could Be Made
HRSA Made COVID-19 Uninsured Program Payments
to Providers on Behalf of Individuals Who Had Health
A-02-21-01013 7/13/2023
Insurance Coverage and for Services Unrelated to
COVID-19
Targeted Provider Relief Funds Allocated to Hospitals
Had Some Differences With Respect to the Ethnicity OEI-05-20-00580 7/12/2023
and Race of Populations Served
HHS’s and HRSA’s Controls Related to Selected
Provider Relief Fund Program Requirements Could Be A-09-21-06001 9/26/2022
Improved
Hospices’ Compliance With Provider Relief Fund Requirements (A-02-22-01014) 14
APPENDIX C: PROVIDER RELIEF FUND GENERAL AND TARGETED DISTRIBUTION PAYMENTS
As of February 2024, HRSA distributed $145.9 billion of the $178 billion appropriated to the
PRF. Of the $145.9 billion, $88.4 billion was distributed in General Distributions, and
$57.5 billion was distributed in several Targeted Distributions. A portion of the remaining $32.1
billion has been distributed or allocated for HRSA’s program for uninsured individuals, the
COVID-19 Coverage Assistance Fund, and Phase 4 General Distribution payments.31
General Distributions
HRSA made General Distributions in four phases to health care providers, including Medicare
providers; providers participating in Medicaid, the Children’s Health Insurance Program (CHIP),
or Medicaid managed care plans; dentists; assisted living facilities; and behavioral health
providers.
• Phase 1 General Distribution: HRSA distributed $48.5 billion to providers in two rounds
under the Phase 1 General Distribution for eligible providers that billed Medicare fee-
for-service. These funds were allocated proportional to providers’ share of annual
patient service revenues.
• Phase 2 General Distribution: HRSA distributed $5 billion in the Phase 2 General
Distribution to Medicaid, CHIP, and dental providers, as well as assisted living facilities
and certain Medicare providers who did not receive a Phase 1 General Distribution
payment equal to 2 percent of their total patient care revenue or had a change in
ownership in 2019 or 2020. Providers were required to apply for funding and included
in their applications certain financial information related to documenting revenue
necessary to determine the amount that a facility would receive.
• Phase 3 General Distribution: HRSA distributed $19.3 billion in the Phase 3 General
Distribution to providers that had not received funding in prior distributions (i.e.,
because they were new or because they were behavioral health providers not included
in a prior allocation). Providers that had previously received PRF payments but had not
received the full 2 percent of their annual patient revenue in PRF assistance were also
eligible to apply for additional funds. Providers were required to apply for these funds.
• Phase 4 General Distribution: HRSA distributed approximately $15.6 billion in the Phase
4 General Distribution to providers based on changes in revenues and expenses as well
as the amount and type of services provided to Medicare, Medicaid, and/or CHIP
patients. Providers were required to apply for these funds.
31
As of June 2023, with the passage of the Fiscal Responsibility Act of 2023, P.L. No. 118-5, Congress rescinded
some unobligated PRF funds. In response, HRSA stopped making PRF payments to providers.
Hospices’ Compliance With Provider Relief Fund Requirements (A-02-22-01014) 15
Targeted Distributions
HRSA also distributed PRF funds to target certain types of providers that had high needs due to
COVID-19. These included the following:
• COVID-19 High-Impact Area Distributions: HRSA distributed nearly $22 billion in
COVID-19 high-impact area payments to hospitals that had large numbers of COVID-19
inpatient admissions.32
• Safety Net Hospitals and Children’s Hospitals: HRSA distributed $13.3 billion to safety
net hospitals and acute care hospitals and $1.1 billion to children’s hospitals.
• Rural Distributions: HRSA distributed $11.2 billion in payments to rural hospitals,
including rural acute care general hospitals and critical access hospitals; rural health
clinics; and Federally Qualified Health Centers located in rural areas, including specialty
rural hospitals, urban hospitals with certain rural Medicare designations, and hospitals
in small metropolitan areas.
• Tribal Hospitals, Clinics, and Urban Health Centers/Indian Health Service Provider
Payments: HRSA distributed $540 million in relief funds to Tribal hospitals, clinics, and
urban health centers. These payments were based on operating expenses.
• Skilled Nursing Facilities and Nursing Homes Payments: HRSA distributed $4.9 billion in
skilled nursing facility distribution payments. Additionally, to help combat the effects of
COVID-19, HRSA distributed $4.5 billion to skilled nursing facilities and nursing homes
nationwide, which included payments for infection control and quality incentive
payments to nursing homes that created and maintained safe environments for their
residents.
32
Hospitals that treated 100 or more COVID-19 patients between Jan. 1 and Apr. 10, 2020, were eligible for the
first round of high-impact distributions. Hospitals that treated more than 160 COVID-19 patients between Jan. 1
and June 10, 2020, were eligible for the second round of high-impact distributions.
Hospices’ Compliance With Provider Relief Fund Requirements (A-02-22-01014) 16
APPENDIX D: OPTIONS FOR CALCULATING LOST REVENUES
Providers, including hospices, could use one of the following three options to calculate their
lost revenues.
Table 1: Options for Calculating Lost Revenues
Lost Revenues
Option 1 Option 2 Option 3
Options
The difference between The difference between
Definition of Any reasonable method
actual patient care budgeted and actual
Option of estimating revenues
revenues patient care revenues
PRF Reporting 2020 Budgeted Alternate Reasonable
2019 Actual Revenue
Portal Option Revenue Methodology
Base Period for
2019 2020 or 2021 Not prescribed
Calculation
Calculation Actuals vs. Actuals
Budget vs. Actuals Not prescribed
Method (e.g., Q1 2020 vs. Q1 2019)
Frequency of
Quarterly Quarterly Quarterly
Calculation
Duration of Each quarter during the
Lost Each quarter during the Each quarter during the period of availability in
Revenues period of availability period of availability which lost revenues were
Period determined
Service Lines to All patient care services
All patient care
Include in All patient care services (as appropriate for
services
Revenues methodology)
Budget
Not applicable Before March 27, 2020 Not prescribed
Approval Date
Source: HRSA, Provider Relief Fund Lost Revenues Guide – Reporting Period 1, August 2021. Available online at
https://www.hrsa.gov/sites/default/files/hrsa/provider-relief/prf-lost-revenues-guide.pdf. Accessed on June 25,
2024.
Hospices’ Compliance With Provider Relief Fund Requirements (A-02-22-01014) 17
APPENDIX E: SELECTED HOSPICES’ REPORTED USE OF CY 2020 PROVIDER RELIEF FUND
PAYMENTS
Hospices’ Compliance With Provider Relief Fund Requirements (A-02-22-01014) 18
APPENDIX F: SUMMARY OF SAMPLED HOSPICES’ UNALLOWABLE OR POTENTIALLY
UNALLOWABLE AMOUNTS
Unallowable or
Sample Entity PRF Payment(s) Potentially Reason for Unallowable or Potentially
No. Designation Received Unallowable Amount Unallowable Amount
1 For Profit $ 3,948,975 $ -
2 Nonprofit 2,239,857 -
3 Nonprofit 8,620,154 -
4 For Profit 2,158,548 1,461,552 Inaccurate lost revenue calculation
5 For Profit 80,257,023 7,634,036 Unallowable costs
6 Nonprofit 2,465,611 -
7 For Profit 2,967,332 1,910 Costs not adequately supported
8 Nonprofit 3,652,036 -
9 Nonprofit 4,334,723 -
10 Nonprofit 5,047,215 -
11 Nonprofit 4,391,356 -
12 Nonprofit 5,296,663 -
13 Nonprofit 4,975,045 -
14 Nonprofit 5,721,679 -
15 Nonprofit 4,022,069 1,044 Costs not adequately supported
16 Nonprofit 3,868,469 -
17 Nonprofit 2,487,914 -
18 For Profit 3,967,025 3,967,025 Potentially unallowable
19 Nonprofit 3,116,893 -
20 Nonprofit 7,217,613 -
21 Nonprofit 3,603,237 -
22 Nonprofit 3,744,619 -
23 Nonprofit 2,809,581 -
24 Nonprofit 3,676,085 -
25 Nonprofit 2,226,329 29,760 Costs not adequately supported
26 For Profit 2,598,715 -
27 For Profit 2,532,207 639,768 Costs not adequately supported
28 Nonprofit 8,091,520 -
29 For Profit 2,234,270 -
30 Nonprofit 11,746,269 -
TOTAL $ 204,019,032 $ 13,735,095
Note: PRF payment amounts listed do not include related interest.
Hospices’ Compliance With Provider Relief Fund Requirements (A-02-22-01014) 19
APPENDIX G: HEALTH RESOURCES AND SERVICES ADMINISTRATION COMMENTS
Hospices’ Compliance With Provider Relief Fund Requirements (A-02-22-01014) 20
Hospices’ Compliance With Provider Relief Fund Requirements (A-02-22-01014) 21
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