HRSA Made Some Potential Overpayments to Providers Under the Phase 2 General Distribution of the Provider Relief Fund Program, A-09-22-06001
- Issuer
- Office of Inspector General
- Document type
- Report
- Date
- 2020-07-03
Summary
An audit report by the Department of Health and Human Services Office of Inspector General, Report No. A-09-22-06001, dated March 2024, on Provider Relief Fund payments HRSA made under the Phase 2 General Distribution. The audit covered payments disbursed from July 3, 2020, through June 21, 2021, and a statistical sample of 150 providers. The report finds that for 17 of the 150 sampled providers, payments were not correctly calculated or not supported by appropriate documentation, and estimates that HRSA made $159.4 million in potential overpayments. It makes three recommendations, including that HRSA review the 17 sampled providers and seek repayment of any overpayments. The report closes with HRSA's comments in response to the recommendations.
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Full text
Department of Health and Human Services
OFFICE OF
INSPECTOR GENERAL
HRSA MADE SOME POTENTIAL
OVERPAYMENTS TO PROVIDERS
UNDER THE PHASE 2
GENERAL DISTRIBUTION OF THE
PROVIDER RELIEF FUND PROGRAM
Inquiries about this report may be addressed to the Office of Public Affairs at
Public.Affairs@oig.hhs.gov.
Christi A. Grimm
Inspector General
March 2024
A-09-22-06001
Office of Inspector General
https://oig.hhs.gov
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OFFICE OF AUDIT SERVICES FINDINGS AND OPINIONS
The designation of financial or management practices as
questionable, a recommendation for the disallowance of costs
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recommendations in this report represent the findings and
opinions of OAS. Authorized officials of the HHS operating
divisions will make final determination on these matters.
Report in Brief
Date: March 2024
Report No. A-09-22-06001
Why OIG Did This Audit HRSA Made Some Potential Overpayments to
The Provider Relief Fund (PRF)
provided funds to eligible hospitals and Providers Under the Phase 2 General Distribution of
other health care providers (providers) the Provider Relief Fund Program
for health care-related expenses or lost
revenue attributable to COVID-19. The What OIG Found
Phase 2 General Distribution went to For all 150 sampled providers, HRSA made PRF payments to eligible providers.
Medicaid, CHIP, and dental providers However, for 17 of the 150 sampled providers, HRSA made PRF payments
and assisted living facilities. From that were not correctly calculated (15 sampled providers) or were not
July 3, 2020, through June 21, 2021, supported by appropriate documentation (2 sampled providers). As a result,
HRSA distributed about $4.9 billion to HRSA made $18.4 million in potential overpayments to the 17 sampled
more than 100,000 providers. HRSA providers. On the basis of our sample results, we estimated that HRSA made
calculated each payment based on $159.4 million in potential overpayments to providers (3.3 percent of the
2 percent of the provider’s patient care total PRF payment amount that we audited).
revenue. To receive a PRF payment, a
provider had to submit an application What OIG Recommends and HRSA Comments
and supporting documentation, such With respect to PRF payments made to providers under the Phase 2 General
as a Federal income tax return, to Distribution, we made three recommendations to HRSA, including that HRSA
support reported revenue. A provider conduct a review of the 17 sampled providers we identified that had potential
also had to meet certain requirements, overpayments of $18.4 million and determine the amount of and seek
such as not being excluded from repayment of any overpayments. Furthermore, should HRSA need to rapidly
participating in Medicaid. This audit is disburse similar payments to providers in response to a future national
part of OIG’s oversight of HHS’s emergency, we recommend that HRSA consider taking specified steps to
COVID-19 response and recovery safeguard taxpayer money, such as requiring providers to submit supporting
efforts. Our objective was to documentation for all revenue information provided on applications for
determine whether PRF payments payments. (The full text of our recommendations is shown in the report.)
under the Phase 2 General Distribution
were correctly calculated, supported HRSA partially concurred with our first recommendation and concurred with
by appropriate documentation, and our second and third recommendations. HRSA did not state whether it
made to eligible providers. concurred with our remaining recommendations but said that it will review
these recommendations should it need to rapidly disburse similar payments
to providers in the future. HRSA provided information on actions that it had
How OIG Did This Audit
taken or planned to take to address our recommendations.
Our audit covered 73,449 tax-filing
taxpayer identification numbers (TINs)
Regarding our first recommendation, HRSA stated that it had identified 16
for Medicaid and CHIP providers,
sampled providers with potential overpayments totaling $7,241,390 instead
dental providers, and assisted living
of 17 sampled providers with potential overpayments totaling $18,381,187
facilities for which each provider had
(as shown in our draft report). After considering HRSA’s comments and
received a total of $10,000 or more
reviewing additional documentation that HRSA provided, we maintain that
from July 3, 2020, through June 21,
for the 17 sampled providers, HRSA made PRF payments that were not
2021, under the Phase 2 General
correctly calculated or were not supported by appropriate documentation.
Distribution. HRSA disbursed $4.8
However, we recategorized the finding for 1 sampled provider and adjusted
billion to these providers. We selected
the total potential overpayment amount for the 17 sampled providers from
a statistical sample of 150 providers
$18,381,187 to $18,371,939 for the final report.
(each represented by a TIN).
View the full report.
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
General Distributions Under the Provider Relief Fund ........................................... 3
Provider Relief Fund Payments Under the Phase 2 General Distribution .............. 4
How We Conducted This Audit ........................................................................................... 7
FINDINGS ......................................................................................................................................... 8
HRSA Made Provider Relief Fund Payments That Were Not Correctly Calculated .......... 10
HRSA Made Payments to Providers Without Subtracting Payments
That Had Previously Been Made to Providers’ Subsidiary Organizations.......... 10
HRSA Made Payments to Providers Based on Incorrectly Calculated
Patient Care Revenue ......................................................................................... 12
HRSA Made Payments to Providers Based on Revenue Information
That Was Incorrectly Entered on Provider Relief Fund Applications................. 14
HRSA Made a Payment to a Provider Based on Revenue Information
for Which Bad Debt Was Not Subtracted .......................................................... 14
HRSA Made Provider Relief Fund Payments That Were Not Supported
by Appropriate Documentation ..................................................................................... 16
HRSA Made an Estimated $159 Million in Potential Overpayments to Providers ........... 16
Certain HRSA Procedures for Processing and Reviewing Provider Relief Fund
Applications and Supporting Documentation Did Not Ensure That Payments
Were Correctly Calculated and Were Supported by Appropriate Documentation ....... 17
CONCLUSION ................................................................................................................................. 18
RECOMMENDATIONS ................................................................................................................... 18
HRSA COMMENTS AND OFFICE OF INSPECTOR GENERAL RESPONSE.......................................... 19
HRSA Comments ............................................................................................................... 20
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001)
Office of Inspector General Response .............................................................................. 21
APPENDICES
A: Audit Scope and Methodology ..................................................................................... 23
B: Statistical Sampling Methodology ................................................................................ 25
C: Sample Results and Estimates ...................................................................................... 27
D: HRSA Comments ........................................................................................................... 28
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001)
INTRODUCTION
WHY WE DID THIS AUDIT
On March 13, 2020, then-President Trump 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). 1 The PRF provided funds to eligible hospitals and other
health care providers (which we collectively refer to as “providers” in this report) for: (1) health
care-related expenses or lost revenue (e.g., due to canceled elective services) attributable to
COVID-19 and (2) COVID-19 testing and treatment for uninsured individuals. 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
Under the General Distributions, PRF payments were distributed in four phases to eligible
providers, such as providers that participate in the Medicaid program. On July 3, 2020, the
Department of Health and Human Services (HHS), through the Health Resources and Services
Administration (HRSA), began distributing PRF payments under the Phase 2 General
Distribution to Medicaid, the Children’s Health Insurance Program (CHIP), and dental providers.
Later HRSA also included assisted living facilities in those distributions. As of June 21, 2021 (the
end of our audit period), HRSA had distributed about $4.9 billion to 103,830 providers in
Phase 2. 3
HRSA calculated each PRF payment to a provider under the Phase 2 General Distribution based
on 2 percent of the provider’s patient care revenue. 4 To receive a PRF payment, a provider was
required to submit a PRF application and documentation, such as a Federal income tax return
(Federal tax return), to support the revenue reported on the application. Furthermore, a
provider had to meet certain eligibility requirements, such as not being excluded from
participating in Medicaid.
1
The Coronavirus Aid, Relief, and Economic Security Act, P.L. No. 116-136, was signed into law on Mar. 27, 2020;
the Paycheck Protection Program and Health Care Enhancement Act, P.L. No. 116-139, was signed into law on
Apr. 24, 2020; and the Consolidated Appropriations Act, 2021, P.L. No. 116-260, was signed into law on
Dec. 27, 2020.
2
Under the Targeted Distributions (which were not covered by this audit), PRF payments were distributed to
eligible providers or specific provider types in areas particularly affected by the COVID-19 outbreak.
3
The payment and attestation data HRSA provided included 111,390 payments made to 103,830 unique taxpayer
identification numbers (TINs) from July 3, 2020, through June 21, 2021 (audit period). Throughout this report, we
use the term “tax-filing TIN” to refer to a TIN that a provider entered on its Federal income tax return or annual
information returns, which included parent organizations that filed returns on behalf of themselves and their
subsidiary organizations. For the purposes of this report, we refer to a provider’s tax-filing TIN as a “provider.”
4
Patient care revenue does not include revenue such as grants, insurance, investment, or real estate revenue.
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 1
The COVID-19 national emergency (which ended May 11, 2023) posed unprecedented
challenges to HHS to distribute PRF payments in a fast, fair, and transparent manner and to
provide immediate financial relief to providers on the front lines of the COVID-19 response. For
that reason, this audit assessed whether PRF payments that HRSA made to providers under the
Phase 2 General Distribution were correctly calculated, supported by appropriate
documentation, and made to eligible providers. These PRF payments were disbursed from
July 3, 2020, through June 21, 2021 (audit period). 5 Furthermore, this audit is one of several
Office of Inspector General (OIG) audits that will examine various aspects of PRF payments,
including HHS’s and HRSA’s oversight of payment calculations and provider eligibility, as well as
providers’ compliance with Federal requirements for reporting and using PRF payments. 6
COVID-19 has created extraordinary challenges for the delivery of health care and human
services to the American people. As the oversight agency for HHS, OIG oversees HHS’s
COVID-19 response and recovery efforts. This audit is part of OIG’s COVID-19 response
strategic plan.7
OBJECTIVE
Our objective was to determine whether PRF payments under the Phase 2 General Distribution
were correctly calculated, supported by appropriate documentation, and made to eligible
providers.
BACKGROUND
COVID-19 National Emergency and the Provider Relief Fund
COVID-19 is a disease caused by a highly contagious coronavirus, called SARS-CoV-2. On
January 30, 2020, the World Health Organization (WHO) declared the COVID-19 outbreak a
public health emergency of international concern, and on March 11, 2020, WHO characterized
5
Within 7 months of the signing of the first Federal law appropriating funds for the PRF (March 2020), HRSA
rapidly distributed $3.5 billion of the $4.9 billion (71 percent) total payments distributed under the Phase 2
General Distribution.
6
The first report, HHS's and HRSA's Controls Related to Selected Provider Relief Fund Program Requirements Could
Be Improved (A-09-21-06001), was issued Sept. 26, 2022. The second report, HHS’s Oversight of Automatic
Provider Relief Fund Payments Was Generally Effective but Improvements Could Be Made (A-02-20-01025), was
issued Oct. 30, 2023.
7
OIG’s COVID-19 response strategic plan and oversight activities can be accessed at
https://oig.hhs.gov/coronavirus/index.asp.
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 2
COVID-19 as a pandemic.8 Later, on March 13, 2020, then-President Trump declared the
COVID-19 outbreak a national emergency. 9
In response to the national emergency, the PRF was established to provide funds to eligible
hospitals and other health care providers for: (1) health care-related expenses or lost revenue
attributable to COVID-19 and (2) COVID-19 testing and treatment for uninsured individuals. 10
The PRF program received a combined $178 billion in funding from the Coronavirus Aid, Relief,
and Economic Security (CARES) Act; the Paycheck Protection Program and Health Care
Enhancement Act; and the Consolidated Appropriations Act, 2021. 11 Under the CARES Act,
Congress directed that PRF payments be distributed to “eligible healthcare providers” using the
“most efficient payment systems practicable to provide emergency payment.”
Because of the unprecedented national emergency, HHS faced substantial challenges in
distributing PRF payments in a fast, fair, and transparent manner to provide immediate
financial relief to providers on the front lines of the COVID-19 response. Within a month of the
signing of the first Federal law appropriating funds for the PRF, HHS developed initial PRF
distribution and payment calculation methodologies, PRF requirements for providers, and
oversight procedures designed to help ensure that correct payments were rapidly made to
eligible providers. HHS refined and updated these methodologies, requirements, and oversight
procedures as PRF payments were being made to providers.
General Distributions Under the Provider Relief Fund
According to HRSA, to support providers facing severe economic hardship that affected their
ability to respond to emerging health crises and to prevent the loss of life during the national
emergency, HHS allocated most of the PRF funds in a series of General and Targeted
Distributions. For the General Distributions, HHS initially allocated $109.5 billion to providers in
four phases:
• $50 billion under Phase 1 for eligible providers that billed Medicare fee-for-service;
8
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.
9
The national emergency ended on May 11, 2023.
10
According to HHS’s Instructions for the Distribution for Medicaid, CHIP, and Dental Providers Via Enhanced
Provider Relief Fund Payment Portal, “lost revenue attributable to COVID-19” means “the amount of any patient
care revenue that you as a healthcare 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. (In August 2020, HRSA removed from the
instructions the field for lost revenue and the definition of “lost revenue attributable to COVID-19.”)
Congress appropriated $8.5 billion of COVID-19-related relief for rural providers that are enrolled in the
11
Medicare or Medicaid programs (American Rescue Plan Act of 2021, P.L. No. 117-2).
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 3
• $18 billion under Phase 2 for Medicaid and CHIP providers, dental providers, and
assisted living facilities; 12
• $24.5 billion under Phase 3 for behavioral health providers that were not previously
eligible for the General Distribution and previously eligible providers with losses or
incurred expenses during the first half of calendar year 2020; 13 and
• $17 billion under Phase 4 for eligible providers with losses or incurred expenses from
July 1, 2020, through March 31, 2021.
The HHS Office of the Secretary was responsible for PRF program oversight and policy decisions
so that the program met its mission to distribute funds as quickly as possible for providers’
health care-related expenses or lost revenue (e.g., due to canceled elective services)
attributable to COVID-19. Within HHS, HRSA was responsible for providing day-to-day oversight
and management of all aspects of the PRF program. 14
Provider Relief Fund Payments Under the Phase 2 General Distribution
Beginning on July 3, 2020, HRSA distributed PRF payments under the Phase 2 General
Distribution to Medicaid and CHIP providers as well as dental providers, and later to assisted
living facilities. The payments were based on completed applications submitted through the
PRF Application and Attestation portal (application and attestation portal), which was used to
help collect information from providers during the application and attestation process. As of
June 21, 2021, HRSA had distributed about $4.9 billion to 103,830 providers in Phase 2.15, 16
12
HHS received less than $18 billion in applications from providers for Phase 2 General Distribution funding. As a
result, the PRF allocation was revised to $5.98 billion.
13
Providers that received previous PRF payments under the Phase 1 or Phase 2 General Distributions may have
been eligible to apply for additional PRF payments under the Phase 3 General Distribution.
14
HHS and HRSA, PRF General & Targeted Distribution Cycle Memo, dated Sept. 30, 2020, and Sept. 30, 2021. The
2021 memo stated that the HHS Office of the Secretary was replaced by the HHS Immediate Office of the
Secretary.
15
Under the Phase 2 General Distribution, HRSA assigned a “wave” number and a “subwave” number to a group of
payments based on the payment recipient type (i.e., Medicaid or CHIP provider, dental provider, or assisted living
facility) and the payment issuance date. Specifically, HRSA assigned two wave numbers (i.e., waves 8 and 15) and
their related subwave numbers (e.g., 8A, 8Fa, 8Fb, and 15A) to a group of payments made under the Phase 2
General Distribution.
16
A provider that received a previous payment under the Phase 1 General Distribution may have been eligible to
apply for additional PRF payments under the Phase 2 General Distribution if the provider had not yet received a
payment that was approximately 2 percent of its patient care revenue.
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 4
For PRF payments under the Phase 2 General Distribution, the following sections describe:
(1) HRSA’s calculations of the payments, (2) provider submission of supporting documentation
for the payments, and (3) provider eligibility requirements for the payments.
HRSA’s Calculation of Provider Relief Fund Payments
HRSA calculated the PRF payments for waves 8 and 15 and related subwaves under the Phase 2
General Distribution. Figure 1 illustrates how payments under the Phase 2 General Distribution
were disbursed in designated waves.
Figure 1: Disbursement of Payments Under Phase 2 General Distribution
in the Designated Waves
Specifically, HRSA worked with a HRSA contractor (Contractor A) to calculate each PRF payment
to a provider under the Phase 2 General Distribution. According to HHS’s Provider Relief
Programs: Provider Relief Fund and American Rescue Plan Rural Payments Frequently Asked
Questions (PRF FAQs), the payment was generally based on 2 percent of the provider’s patient
care revenue.
When applying for payments under the Phase 2 General Distribution, a provider was required
to enter the following on the PRF application: (1) its revenue, (2) the fiscal year for that
revenue, and (3) the percentage of revenue from patient care.17 (We refer to these three items
as “revenue information.”) Contractor A used the revenue information reported on the
application to calculate the PRF payment. Contractor A submitted methodology memos to
HRSA to document the contractor’s process for preparing payment files, which included
calculating payments. 18
17
The PRF FAQs instructed providers to report the revenue amount from the provider’s most recent Federal tax
return for 2017, 2018, or 2019.
According to HRSA, it developed the payment calculation methodology, which Contractor A documented in the
18
methodology memos.
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 5
If a provider had received previous payments under the General Distribution or Targeted
Distribution and had not yet received a payment that was approximately 2 percent of patient
care revenue, the provider could receive additional payments under the Phase 2 General
Distribution. To ensure that the total payment made to a provider did not generally exceed
2 percent of the provider’s patient care revenue, Contractor A accounted for the payments that
a provider had previously received when it determined the payment amount under the Phase 2
General Distribution. Contractor A then prepared the payment files and provided them to
HRSA for approval, which sent the payment files to another HRSA contractor (Contractor B) to
disburse payments to each provider.
Figure 2 shows HRSA’s overall payment calculation methodology for payments under the
Phase 2 General Distribution.
Figure 2: HRSA’s Overall Payment Calculation Methodology for Payments
Under the Phase 2 General Distribution
Provider Submission of Supporting Documentation for Provider Relief Fund Payments
When a provider applied for PRF payments under the Phase 2 General Distribution, the
provider was required to submit a PRF application and documentation supporting the revenue
and the fiscal year for that revenue reported on the application. Documentation included the
provider’s most recent Federal tax return for 2017, 2018, or 2019, or a written statement
explaining why it was exempt from filing a Federal tax return (e.g., it was a State-owned
hospital or health care clinic). However, for the percentage of revenue from patient care, HRSA
did not require a provider to submit supporting documentation. For example, a provider could
self-report on the application that 100 percent of its revenue came from patient care.
Furthermore, the provider was required to report on the application its organization taxpayer
identification number (TIN) and any subsidiary TINs to show the parent-subsidiary relationship.
Contractor A analyzed the provider’s revenue and TIN information for potential flags that HRSA
defined, such as: (1) potential duplicate payments, (2) inconsistent subsidiary TIN information,
and (3) potential payments more than $1 million. If Contractor A identified any providers with
one of these flags, another HRSA contractor (Contractor C) prepared a list of those providers
and submitted the list to Contractor D for manual review.
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 6
Contractor D reviewed the revenue reported on the providers’ applications and the revenue
shown in any supporting documentation and then prepared a list of providers that: (1) did not
submit supporting documentation, (2) had conflicting revenue information (e.g., the revenue
reported on the application was more than the established percentage of the revenue shown in
the supporting documentation), or (3) had special situations (e.g., did not include a breakdown
of the revenue by subsidiary TINs, if any, on the supporting documentation). 19 Contractor D
referred these providers to HRSA for further review by submitting a list (i.e., Contractor D’s
worksheet summarizing the results of its manual review or the summary review worksheet) so
that HRSA could determine whether payments should be made to the providers.
Provider Eligibility Requirements for Provider Relief Fund Payments
To be eligible for PRF payments under the Phase 2 General Distribution, a provider must not
have been terminated from participation in Medicare or be precluded from receiving payment
through Medicare Advantage or Medicare Part D; must not be excluded from participation in
Medicare, Medicaid, and other Federal health care programs; and must not have had Medicare
billing privileges revoked. To determine a provider’s eligibility, HRSA checked whether a
provider’s TIN was included in several sanctions lists (e.g., the Centers for Medicare & Medicaid
Services’ [CMS’s] list of individuals or entities that are currently barred from participation in
Medicare and OIG’s list of individuals and entities excluded from participation in Federal health
care programs). Furthermore, a provider’s TIN or its subsidiary TIN must be included in the
State-provided curated lists of eligible Medicaid and CHIP providers and in the HHS-created
curated lists of Medicare providers, dental providers, and assisted living facilities (curated
lists). 20, 21
HOW WE CONDUCTED THIS AUDIT
Our audit covered 73,449 tax-filing TINs for Medicaid and CHIP providers, dental providers, and
assisted living facilities for which each provider had received a total payment of $10,000 or
more from July 3, 2020, through June 21, 2021, under the Phase 2 General Distribution of the
PRF. HRSA disbursed total payments of $4.8 billion to these providers.
We selected for review a stratified random sample of 150 providers (each represented by a tax-
filing TIN) and did the following:
19
An example of conflicting revenue information between the revenue on the PRF application and the revenue in
the supporting documentation is when a provider’s revenue reported on the application was more than the
established percentage of the revenue reported on the Federal tax return.
20
According to HRSA, a provider could also establish eligibility for payment under the Phase 2 General Distribution
by having previously received a PRF payment under the Targeted Distribution.
21
Providers’ compliance with Federal requirements for reporting and using PRF payments is outside the scope of
this audit.
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 7
• To determine whether HRSA correctly calculated the PRF payment amount for each
provider, we recalculated the PRF payment amount by following the steps outlined in
Contractor A’s methodology memos for calculating payments.
• To determine whether the PRF payments were supported by appropriate
documentation as identified in HHS’s instructions for the PRF application, we reviewed
the supporting documentation (e.g., a Federal tax return) that HRSA provided for each
sampled provider. In addition, after reviewing the supporting documentation, we
obtained additional documentation (e.g., general ledgers and audited financial
statements) from 35 of the 150 sampled providers to verify the revenue information
reported on each application when that information appeared to conflict with the
revenue information included in the supporting documentation.22
• To determine whether payments were made to eligible providers, we reviewed the
sanctions lists and curated lists.
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, Appendix B describes our statistical
sampling methodology, and Appendix C contains our sample results and estimates.
FINDINGS
For all 150 sampled providers, HRSA made PRF payments to eligible providers. However, for
17 of the 150 sampled providers, HRSA made PRF payments that were not correctly calculated
(15 sampled providers) or were not supported by appropriate documentation (2 sampled
providers).
Specifically, for the 15 sampled providers for which PRF payments were not correctly
calculated, HRSA made payments: 23
• without subtracting payments that had previously been made to providers’ subsidiary
organizations (6 sampled providers),
22
For example, we performed this additional review for a provider if the provider had entered 100 percent as its
percentage of revenue from patient care on the PRF application and appeared to have non-patient care revenue
based on our review of the provider’s Federal tax return.
23
The total number of sampled providers is greater than 15 because 2 providers had more than 1 deficiency.
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 8
• based on incorrectly calculated patient care revenue (5 sampled providers),
• based on revenue information that providers incorrectly entered on PRF applications
(5 sampled providers), and
• based on revenue information for which bad debt was not subtracted (1 sampled
provider).
For the remaining two sampled providers, HRSA made payments based on revenue that was
not supported by Federal tax returns.
As a result, HRSA made $18.4 million in potential overpayments to the 17 sampled providers.24
On the basis of our sample results, we estimated that HRSA made $159.4 million in potential
overpayments to providers (3.3 percent of the total PRF payment amount that we audited). 25
For an additional four sampled providers, HRSA made payments without subtracting PRF
payments that had previously been made to providers’ subsidiary organizations (three sampled
providers) and based on revenue information that was incorrectly entered on the PRF
application (one sampled provider). However, these providers voluntarily returned to HRSA the
payments totaling $282.5 million. 26
These potential overpayments occurred because certain HRSA procedures for processing and
reviewing providers’ PRF applications and supporting documentation did not ensure that PRF
payments were correctly calculated and were supported by appropriate documentation. For
example, HRSA’s procedures did not include requiring providers to submit documentation
supporting the percentage of revenue from patient care.
To prepare for a possible public health emergency in the future, HRSA should use the
information included in this report when determining lessons learned from administering PRF
24
HRSA made $18,371,939 in potential overpayments to the 17 sampled providers. We consider these payments
potential overpayments because HRSA allows providers to use the overpaid amounts on expenses attributable to
COVID-19 or lost revenue before HRSA’s deadline for using the payments. Furthermore, according to HRSA, the
overpayments would be accounted for when HRSA calculates subsequent phase distributions to a provider.
Specifically, HRSA may calculate a smaller payment or no payment to a provider by accounting for the
overpayment (which HRSA refers to as a “passive offset”). Without further reviews, we cannot confirm whether
providers used overpaid amounts on expenses attributable to COVID-19 or lost revenue before the HRSA deadline
for using the payments and whether later phase distributions to a provider accounted for the overpayments and
resulted in a smaller payment or no payment to the provider.
25
Specifically, we estimated that HRSA made potential overpayments of $159,379,359. In addition, the 90-percent
confidence interval for potential overpayments to providers in the sampling frame was $82,323,127 to
$236,435,591.
26
The amount that the four sampled providers returned to HRSA was $282,508,037. When estimating the total
potential overpayments, we did not include this amount because the providers had voluntarily returned their
payments before we selected them as part of our sample.
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 9
distributions during the COVID-19 national emergency. HRSA should also look for additional
ways to safeguard taxpayer money when rapidly disbursing payments to health care providers
in response to future national emergencies.
HRSA MADE PROVIDER RELIEF FUND PAYMENTS THAT WERE NOT CORRECTLY CALCULATED
HRSA made incorrectly calculated PRF payments to 15 sampled providers. Specifically, HRSA
made payments: (1) without subtracting payments that had previously been made to providers’
subsidiary organizations, (2) based on incorrectly calculated patient care revenue, (3) based on
revenue information that was incorrectly entered on the PRF applications, and (4) based on
revenue information for which bad debt was not subtracted.
HRSA Made Payments to Providers Without Subtracting Payments That Had Previously
Been Made to Providers’ Subsidiary Organizations
According to HHS’s instructions for the application and attestation portal, a provider enters its
organization TIN in the portal and enters any subsidiary TINs in the portal’s section “List all
Subsidiary TIN(s) Associated with this Entity.” HRSA collects the TIN information to identify
organizational structure (i.e., the parent-subsidiary relationship) so that HRSA does not make
incorrect payments to a parent organization that includes the revenue of a subsidiary
organization on its Federal tax return and files a Federal tax return on behalf of a subsidiary
organization. Furthermore, according to Contractor A’s methodology memos, PRF payments
that providers and their subsidiaries previously received are subtracted from providers’
potential payments under the Phase 2 General Distribution. In addition, the PRF FAQs included
guidance that PRF payments under the Phase 2 General Distribution were generally based on
2 percent of the provider’s patient care revenue.
HRSA made payments to six sampled providers without subtracting PRF payments that had
previously been made to the providers’ subsidiary organizations.27 As a result, HRSA made
potential overpayments of $7,274,503 to these providers. 28
The following are two examples of HRSA’s incorrectly calculated payments to providers:
• One sampled provider submitted a PRF application with a 2019 Federal tax return and
supporting documentation that listed its 18 subsidiary organizations and their revenues,
which were part of the revenue entered on the provider’s Federal tax return. The
27
HRSA also made payments to three other sampled providers without subtracting PRF payments that had
previously been made to the providers’ subsidiary organizations. However, these providers voluntarily returned to
HRSA their payments totaling $254,714,960.
28
HRSA also made a potential overpayment to one of the six sampled providers based on incorrect revenue
information, i.e., for which bad debt was not subtracted from the provider’s reported revenue on its PRF
application. (See the finding in the section “HRSA Made a Payment to a Provider Based on Revenue Information
for Which Bad Debt Was Not Subtracted.”)
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 10
18 subsidiary organizations had received previous PRF payments of $1,146,080 under
the Phase 1 General Distribution. However, HRSA did not subtract that amount when it
calculated the provider’s PRF payment under the Phase 2 General Distribution. As a
result, HRSA paid this provider $31,627,424 instead of $30,481,344, which was
$1,146,080 more than it should have paid.
• For another sampled provider, on February 24, 2021, HRSA calculated a PRF payment of
$11,901,774 under the Phase 2 General Distribution. However, HRSA could not disburse
the payment on that date because the provider was not enrolled in a health care
payment delivery solution that HRSA required a provider to enroll in if it was to receive
more than $100,000 in PRF payments. Therefore, the payment was withheld until
June 8, 2021. During the period when the payment was withheld (from February 24,
2021, through June 8, 2021), HRSA made $3,690,600 in PRF payments to the provider’s
subsidiary organizations. However, on June 8, 2021, HRSA made a payment of
$11,901,774 to the provider without accounting for the $3,690,600 that it had already
paid to the provider’s subsidiary organizations. Furthermore, HRSA did not subtract
$832,911 of previous PRF payments that had been disbursed to the provider’s subsidiary
organizations when it calculated the provider’s PRF payment under the Phase 2 General
Distribution. As a result, HRSA paid the provider $4,523,511 ($3,690,600 + $832,911)
more than it should have paid.29
According to HRSA’s process document for Contractor D’s manual review of information
submitted by providers, the manual review was required to identify only providers that met
one of three conditions (e.g., providers that did not include a breakdown of the revenue by
subsidiary TINs, if any, on the supporting documentation) and to refer those providers to HRSA
for further review. Because the manual review identifies only providers that meet certain
conditions, Contractor D did not identify all providers with subsidiary organizations that may
have received previous payments and whose revenue was included in each provider’s Federal
tax return, and it did not refer those providers to HRSA for further review.30
Furthermore, HRSA did not have a process to recalculate PRF payments to a provider for which
HRSA had withheld the disbursement of approved payments, i.e., by considering additional
payments that HRSA had made to a provider’s subsidiary organizations during the period when
the payment was withheld.
29
This provider received the potential overpayment of $11,901,774, which consisted of $3,690,600 from previous
PRF payments that had been disbursed to the provider’s subsidiary organizations (during the period when the
$11,901,774 payment was withheld) and were not subtracted; $832,911 from previous PRF payments that had
been disbursed to the provider’s four subsidiary organizations and were not subtracted; and $7,378,263 from the
adjustment made to the percentage of revenue from patient care—from 99 percent to 70 percent. (See the
finding in the following section, “HRSA Made Payments to Providers Based on Incorrectly Calculated Patient Care
Revenue.”)
30
Contractor D reviewed four of the six sampled providers and referred one provider for HRSA’s further review
because the provider’s reported quarterly data were unclear (not because the providers’ subsidiary organizations
received previous payments).
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 11
Finally, according to HRSA, it did not have data to confirm that the subsidiary organization TINs
that the providers reported on their applications were correct and complete. 31
HRSA Made Payments to Providers Based on Incorrectly Calculated Patient Care Revenue
According to HHS’s instructions for the PRF application, a provider enters on the application the
revenue from its most recent Federal tax return for 2017, 2018, or 2019.32 For example, if a
provider is a tax-exempt organization, it reports the amount entered on line 9 from Form 990,
U.S. Return of Organization Exempt from Income Tax, after subtracting any joint venture
income. HRSA refers to this amount as “revenue.” In addition, the application instructions
state that a provider enters the percentage of its revenue that represents the amount received
for patient care furnished for the same fiscal year as the revenue entered. The application
instructions also state that a provider should exclude non-patient care revenue from its
percentage of revenue from patient care, such as grants, insurance, investment income, or real
estate revenue.
Figure 3 shows the formula used to calculate patient care revenue according to the PRF FAQs.
Figure 3: Formula Used To Calculate Patient Care Revenue
HRSA made payments to five sampled providers based on incorrectly calculated patient care
revenue. 33 Specifically, Contractor A used: (1) the provider’s total revenue reported on the PRF
application, which included non-patient care revenue, or (2) the incorrect percentage of
revenue from patient care reported on the application. As a result, HRSA made potential
overpayments of $7,545,737 to the five sampled providers.
Of the five sampled providers, three were tax-exempt providers that entered on their
applications the revenue from line 12 (total revenue) instead of line 9 (program service
31
CMS’s Provider Enrollment, Chain, and Ownership System provides information on organizational structure that
shows the parent-subsidiary relationship when available, which HRSA could use, in part, to develop for future use a
dataset for parent-subsidiary relationships.
32
HHS’s Instructions for the Distribution for Medicaid, CHIP, and Dental Providers Via Enhanced Provider Relief Fund
Payment Portal for applications submitted before Aug. 10, 2020, and Instructions for Phase 2 – General Distribution
Via Provider Relief Fund Application and Attestation Portal for applications submitted on or after Aug. 10, 2020.
33
HRSA made two payments to another sampled provider based on incorrectly calculated patient care revenue,
which resulted in a total potential overpayment of $126,271. We obtained from HRSA the provider’s application
and a worksheet showing that HRSA made a later payment to the provider by accounting for the potential
overpayment of $126,271. When estimating the total potential overpayment, we did not include this amount.
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 12
revenue) from Form 990 of the Federal tax return. The revenue from line 12 included
non-patient care revenue. For example, one provider entered revenue of $9,063,381 from line
12, which included $499,176 of non-patient care revenue, instead of $8,564,205 from line 9 of
Form 990. As a result, HRSA paid this provider $179,455 based on revenue of $9,063,381
instead of $169,571 based on revenue of $8,564,205, which was $9,884 more than it should
have paid.34
The remaining two sampled providers reported the incorrect percentage of revenue from
patient care on their applications. For example, a provider reported on the application that the
percentage of revenue from patient care was 99 percent, which included real estate revenue.
However, the additional documentation that we obtained from the provider showed that the
percentage of revenue from patient care was 70 percent. As a result, HRSA paid this provider
$11,901,774 based on the 99 percent instead of $4,165,480 based on the 70 percent, which
was $7,378,263 more than it should have paid. 35
Contractor D manually reviewed the supporting documentation for one of the five sampled
providers and referred the provider to HRSA for further review because the provider’s reported
quarterly data were unclear. However, Contractor D did not indicate to HRSA whether it had
reviewed the percentage of revenue from patient care. HRSA then made a payment based on
the provider’s percentage of revenue from patient care entered on the application (99 percent)
and did not request from the provider additional documentation supporting that percentage.
According to HRSA, it required providers to submit Federal tax returns and considered these
returns to be sufficient to calculate the revenue from patient care. However, the Federal tax
return for this sampled provider did not include detailed information on what made up the
reported revenue, which may have consisted of revenue from both patient and non-patient
care. Without detailed information on what made up the reported revenue, the provider’s
percentage of revenue from patient care could not have been calculated.
For the remaining four sampled providers, because the potential payments were less than
$1 million, according to HRSA, the providers’ applications were not manually reviewed.
34
The provider entered 99 percent for its percentage of revenue from patient care.
35
We determined that the entire amount of $11,901,774 that the provider received was the potential
overpayment. This potential overpayment included: (1) $3,690,600 from previous PRF payments that had been
disbursed to the provider’s subsidiary organizations (during the period when the $11,901,774 payment was
withheld) and were not subtracted and (2) $832,911 from previous PRF payments that had been disbursed to the
provider’s four subsidiary organizations and were not subtracted. (See footnote 29.) Because the potential
overpayment cannot exceed the amount that the provider received, for this finding, we determined that only
$7,378,263 of the $7,736,294 ($11,901,774 – $4,523,511) was a potential overpayment.
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 13
HRSA Made Payments to Providers Based on Revenue Information That Was Incorrectly
Entered on Provider Relief Fund Applications
According to HHS’s instructions for the PRF application, a provider enters on the application the
revenue from its most recent Federal tax return for 2017, 2018, or 2019.
HRSA made payments to providers based on revenue information that was incorrectly entered
on the providers’ PRF applications. Specifically, HRSA made payments to five sampled providers
that generally had entered extra digits for revenue on their applications. 36 As a result, HRSA
made potential overpayments of $3,521,328 to these providers.
For example, one sampled provider entered revenue of $44,630,500 on its application instead
of the $446,305 shown on its Federal tax return. The provider entered two extra zeroes that
overstated its revenue by $44,184,195.37 As a result, HRSA paid this provider $892,610 instead
of $8,926, which was $883,684 more than it should have paid.
According to HRSA, the payments were made based on self-reported revenue on the providers’
applications, and the applications were not flagged for manual review. In addition, HRSA’s
application and attestation portal did not have a function that requested a provider to check
that the revenue amount reported in the revenue field of the application was entered correctly.
HRSA Made a Payment to a Provider Based on Revenue Information for Which Bad Debt
Was Not Subtracted
According to HHS’s instructions for the PRF application, a provider enters on the application the
revenue from its most recent Federal tax return for 2017, 2018, or 2019. A provider that is a
partnership, C corporation, or S corporation is required to subtract bad debt when calculating
the revenue to be reported on the application. 38
Figure 4 on the next page shows a portion of a fictitious partnership organization’s Form 1065,
U.S. Return of Partnership Income, that we created for illustration purposes. The provider in
this example should enter on the application the net amount for revenue ($49,700,000) by
subtracting the amount on line 12 (bad debt of $300,000) from the amount on line 1c (gross
receipts or sales balance of $50,000,000).
36
HRSA paid another sampled provider $27,793,077 based on revenue information that the provider incorrectly
entered on its PRF application; however, this provider voluntarily returned the payment to HRSA.
37
According to HRSA, it has resolved this issue in later phases of the General Distributions by limiting all of the
revenue fields on the PRF application to whole numbers and adding formatting with commas to make any error
more apparent to a provider. We did not verify HRSA’s resolution of this issue.
38
According to the Internal Revenue Service, bad debt is the “total debts that became worthless in whole or in part
during the tax year.”
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 14
Figure 4: A Portion of a Sample Form 1065 for a Federal Tax Return With Bad Debt
HRSA made a payment to one sampled provider that reported on its application incorrect
revenue—i.e., for which bad debt was not subtracted. As a result, HRSA made a potential
overpayment of $12,768 to this provider.39
Specifically, the sampled provider submitted two applications: the first one on June 19, 2020,
and the second one on October 7, 2020. On the first application, the provider reported
revenue of $50,052,851 for 2019 and submitted a 2019 Federal tax return as supporting
documentation. In accordance with HHS’s application instructions, the provider correctly
subtracted bad debt of $638,407 when it reported revenue on the first application. Based on
that application, HRSA made a payment of $1,001,057 to the provider. 40 On the second
application, the provider reported revenue of $50,691,258 for 2019 without subtracting bad
debt of $638,407 as required. The provider resubmitted the same 2019 Federal tax return that
it had submitted with the first application. Based on the higher revenue that included bad
debt, HRSA made an additional payment of $12,768 to the provider. As a result, HRSA paid this
provider a total of $1,013,825 instead of $1,001,057, which was $12,768 more than it should
have paid.
Contractor D manually reviewed both of the provider applications and indicated in its summary
review worksheet for the second application that the “applicant did not adjust for bad debt
39
HRSA made a payment to another sampled provider: (1) based on revenue information for which bad debt was
not subtracted, which resulted in a potential overpayment of $13,337, and (2) without considering the provider’s
revised revenue information, which resulted in a potential overpayment of $534,925. We obtained from HRSA the
provider’s application and a worksheet showing that HRSA made a later payment to the provider by accounting for
the potential overpayment of $548,262 ($13,337 + $534,925). When estimating the total potential overpayments,
we did not include this amount.
40
When calculating this first payment, HRSA did not subtract a payment of $146 that had previously been made to
this provider under the Phase 1 General Distribution. If HRSA had subtracted this amount from $1,001,057, the
provider would have received a first payment of $1,000,911 under the Phase 2 General Distribution. We included
the potential overpayment of $146 as part of the finding “HRSA Made Payments to Providers Without Subtracting
Payments That Had Previously Been Made to Providers’ Subsidiary Organizations.”
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 15
expense” and provided the worksheet to HRSA for further review. However, HRSA made the
additional payment of $12,768 based on the second application.
According to HRSA, it made the additional payment of $12,768 because the revenue reported
on the application was not more than the established percentage of revenue shown in the
supporting documentation. In addition, HRSA’s application process allowed providers to submit
multiple applications but did not allow them to indicate that the applications included revised
revenue information.
HRSA MADE PROVIDER RELIEF FUND PAYMENTS THAT WERE NOT SUPPORTED
BY APPROPRIATE DOCUMENTATION
According to HHS’s instructions for the PRF application, a provider enters on the application the
revenue from its most recent Federal tax return for 2017, 2018, or 2019. The PRF FAQs and
HHS’s application instructions specified that providers upload the most recent Federal tax
return for 2017, 2018, or 2019.
HRSA made payments to two sampled providers based on revenue reported on the PRF
applications that was not supported by the providers’ Federal tax returns. As a result, HRSA
made potential overpayments of $17,603 to these providers.
For example, for 2019, one sampled provider reported revenue of $2,739,760 on its application.
However, the provider did not submit a 2019 Federal tax return as supporting documentation.
Instead, it submitted a 2018 Federal tax return with revenue of $2,333,929. 41 HRSA did not
request that the provider submit its 2019 Federal tax return to support the revenue of
$2,739,760 for 2019 and calculated the payment of $8,116 based on the revenue amount
reported on the application. As a result, HRSA paid this provider $8,116 more than it should
have paid.
According to HRSA, Contractor D did not manually review sampled providers’ supporting
documentation because the potential payments were less than $1 million.
HRSA MADE AN ESTIMATED $159 MILLION IN POTENTIAL OVERPAYMENTS TO PROVIDERS
HRSA made $18,371,939 in potential overpayments to 17 of the 150 sampled providers. On the
basis of our sample results, we estimated that HRSA made $159,379,359 in potential
overpayments (3.3 percent of the total PRF payment amount that we audited). 42 HRSA could
have saved approximately $159,379,359 in PRF payments during our audit period.
41
The sampled provider submitted two PRF applications: one for 2018 and another for 2019. It had received a
previous payment of $46,679 based on the 2018 application. On the 2018 application, the provider reported
revenue of $2,333,939, which was $10 more than the revenue reported on the 2018 Federal tax return.
42
See footnote 25.
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 16
For an additional four sampled providers, HRSA made payments without subtracting all of the
payments that had previously been made to providers’ subsidiary organizations (three sampled
providers) and based on revenue information that was incorrectly entered on the PRF
application (one sampled provider). However, these providers voluntarily returned to HRSA
their payments of $282,508,037. 43
CERTAIN HRSA PROCEDURES FOR PROCESSING AND REVIEWING PROVIDER RELIEF FUND
APPLICATIONS AND SUPPORTING DOCUMENTATION DID NOT ENSURE THAT PAYMENTS
WERE CORRECTLY CALCULATED AND WERE SUPPORTED BY APPROPRIATE DOCUMENTATION
The potential overpayments occurred because certain HRSA procedures for processing and
reviewing PRF applications and supporting documentation did not ensure that PRF payments
were correctly calculated and were supported by appropriate documentation. Specifically:
• HRSA’s procedures did not include an in-depth review of all providers’ supporting
documentation when manual reviews were conducted to identify all providers with
subsidiary organizations that may have received previous payments and whose revenue
was included in the providers’ Federal tax returns.
• HRSA’s procedures did not include recalculating PRF payments to a provider for which
HRSA had withheld the disbursement of approved payments, i.e., by considering
additional payments that HRSA had made to a provider’s subsidiary organizations during
the period when the payment was withheld.
• HRSA did not have data to confirm that the subsidiary organization TINs that providers
reported on their applications were correct and complete.
• HRSA’s procedures did not include requiring providers to submit documentation
supporting the percentage of revenue from patient care.
• HRSA’s application and attestation portal did not have a function that requested a
provider to check that the revenue amount reported in the revenue field of its
application for payment was entered correctly. The portal allowed a provider to submit
multiple applications but did not allow the provider to indicate that the applications
included revised revenue information (e.g., higher revenue that included bad debt),
which could have impacted the payments the provider was eligible to receive.
43
Because these providers voluntarily returned their payments, we did not include these payments when
estimating the total potential overpayments.
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 17
CONCLUSION
The COVID-19 national emergency posed unprecedented challenges to HRSA to distribute PRF
payments in a fast, fair, and transparent manner and to provide immediate financial relief to
providers on the front lines of the COVID-19 response. For that reason, this audit assessed
whether PRF payments that HRSA made to providers under the Phase 2 General Distribution
were correctly calculated, supported by appropriate documentation, and made to eligible
providers.
Our audit found that for all 150 sampled providers, HRSA made PRF payments to eligible
providers. However, for 17 of the 150 sampled providers, HRSA made PRF payments that were
not correctly calculated (15 sampled providers) or were not supported by appropriate
documentation (2 sampled providers). For example, HRSA made payments based on incorrectly
calculated patient care revenue. On the basis of our sample results, we estimated that HRSA
made $159.4 million in potential overpayments to providers.44
These potential overpayments occurred because certain HRSA procedures for processing and
reviewing providers’ PRF applications and supporting documentation did not ensure that PRF
payments were correctly calculated and were supported by appropriate documentation. For
example, HRSA’s procedures did not include requiring providers to submit documentation
supporting the percentage of revenue from patient care.
To prepare for a possible public health emergency in the future, HRSA should use the
information included in this report when determining lessons learned from administering PRF
distributions during the COVID-19 national emergency. HRSA should also look for additional
ways to safeguard taxpayer money when rapidly disbursing payments to health care providers
in response to future national emergencies.
RECOMMENDATIONS
With respect to PRF payments that were already made to providers under the Phase 2 General
Distribution, we recommend that the Health Resources and Services Administration do the
following:
• Conduct a review of the 17 sampled providers we identified that had potential
overpayments of $18,371,939 and determine the amount of and seek from these
providers repayment of any overpayments.
• Identify other providers with subsidiary organizations that had revenues included in the
providers’ Federal tax returns. Determine whether the payments made to the
subsidiary organizations were correctly accounted for when calculating payments for
the providers under the Phase 2 General Distribution. In addition, determine the
44
See footnote 25.
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 18
amount of and seek from these providers repayment of any overpayments. If it is not
feasible to review all providers, HRSA could conduct a cost-benefit analysis for
conducting manual reviews to identify providers and, if the benefit outweighs the cost,
it could select some providers to review.
• Identify other providers for which payments under the Phase 2 General Distribution
were approved and withheld, determine whether their subsidiary organizations
received additional payments during the period when the payments were withheld, and
if so, recalculate the payments made to these providers and determine the amount of
and seek from these providers repayment of any overpayments.
Furthermore, should HRSA need to rapidly disburse similar payments to providers in response
to a future national emergency, we recommend that HRSA consider taking the following steps
(to the extent they are applicable) to safeguard taxpayer money, which could have saved
approximately $159,379,359 during our audit period:
• Work with CMS to use the information from CMS’s Provider Enrollment, Chain, and
Ownership System and use Federal tax returns (e.g., Schedule R of Form 990 for
information on a tax-exempt provider’s subsidiary organizations), in part, to develop a
more complete dataset to show parent-subsidiary relationships.
• Require providers to submit supporting documentation for all revenue information
provided on applications for payments (e.g., the percentage of revenue from patient
care).
• Establish an application and attestation portal function that requests a provider to check
that the revenue amount entered in the revenue field of its application for payment is
entered correctly. For example, HRSA could modify its application and attestation
portal by adding a step in which, after a provider enters its revenue amount, the portal
generates a new screen that displays the entered amount and requests that the
provider confirm the amount.
• Add a field in the application for payment that allows a provider to indicate that an
application includes revised revenue information that may impact the payment that a
provider is eligible to receive.
HRSA COMMENTS AND OFFICE OF INSPECTOR GENERAL RESPONSE
In written comments on our draft report, HRSA partially concurred with our first
recommendation and concurred with our second and third recommendations. HRSA did not
state whether it concurred with our fourth recommendation but said that it will review this
recommendation should it need to rapidly disburse similar payments to providers in the future.
(HRSA referred to our fourth through seventh recommendations as “recommendation #4” and
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 19
addressed our four recommendations in one section of its comments.) HRSA provided
information on actions that it had taken or planned to take to address our recommendations.
After considering HRSA’s comments and reviewing additional documentation that HRSA
provided, we maintain that our first recommendation is valid, but we adjusted the potential
overpayment amount for the 17 sampled providers.
HRSA also provided technical comments on our draft report, which we addressed as
appropriate. HRSA’s comments, excluding the technical comments, are included as Appendix D.
HRSA COMMENTS
HRSA had the following comments on our four recommendations:
• Regarding our first recommendation, HRSA partially concurred and stated that where it
concurs with our finding, it will seek repayment. HRSA stated that in one case it did not
find any overpayment, and in five cases it agreed that there was an overpayment but
disagreed with the amount. HRSA stated that it had reviewed our findings and
identified 16 sampled providers with potential overpayments totaling $7,241,390
instead of 17 sampled providers with potential overpayments totaling $18,381,187.
HRSA stated that some of the payments we identified as overpayments were:
(1) incorrectly calculated or did not follow HRSA’s payment calculation methodology and
(2) were based on information not available to HRSA at the time the payments were
calculated. HRSA also stated that in accordance with the program’s standard
postpayment oversight processes, HRSA will analyze the information associated with
these payments and will take appropriate action, including seeking repayment.
• Regarding our second recommendation, HRSA concurred and stated that it had weighed
the costs and benefits of reviewing all Phase 2 applications to identify providers whose
applications included subsidiary organizations’ revenue and had determined that
reviewing all Phase 2 applications in this manner is not feasible. However, HRSA said
that as part of its program integrity work, it maintains a list of postpayment
discrepancies that it tracks and works to resolve, and depending on the availability of
resources, HRSA will consider adding this recommendation to its postpayment followup.
• Regarding our third recommendation, HRSA concurred and stated that it required
providers to enroll in a health care payment delivery solution for payments greater than
$100,000 (a fraud risk mitigation step). HRSA stated that pending a provider’s
enrollment, payments were placed on hold, sometimes for several weeks. HRSA also
stated that in some instances it did not recalculate a payment to account for any
payments issued to the provider’s subsidiary organizations while the parent
organization’s payment was on hold. HRSA said that as part of its program integrity
work, it maintains a list of postpayment discrepancies that it tracks and works to
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 20
resolve, and depending on the availability of resources, HRSA will consider adding this
recommendation to its postpayment followup.
• Regarding our fourth recommendation (shown as the fourth through seventh
recommendations in the “Recommendations” section of this report), HRSA stated that it
will review this recommendation should it need to rapidly disburse similar payments to
providers in the future. HRSA said that it took actions in subsequent application cycles
that align with this recommendation, such as updating the portal to limit revenue fields
to whole numbers and adding formatting to assist applicants. HRSA also said that it had
updated the instructions and provided robust technical assistance to support providers
applying in Phases 3 and 4. HRSA stated that the recommendation to add a field in the
payment application that allows a provider to indicate that an application includes
revised revenue information that may impact the payments that a provider is eligible to
receive was not feasible for Phase 2 payments. HRSA stated that in Phase 3, it
permitted only a single application per provider and considered only the last, on-time
application.
OFFICE OF INSPECTOR GENERAL RESPONSE
Regarding HRSA’s comments on our first recommendation, we maintain that for the
17 sampled providers, HRSA made PRF payments that were not correctly calculated or were not
supported by appropriate documentation. However, after reviewing additional documentation
that HRSA provided for 1 of these sampled providers, we recategorized the finding for this
provider and adjusted the potential total overpayment amount for the 17 sampled providers.
Specifically, we removed this sampled provider from our finding on PRF payments that were
not supported by appropriate documentation and added it to our finding on PRF payments that
were not correctly calculated. Because this sampled provider entered incorrect and extra digits
for revenue on its payment application, we included the provider in the finding section “HRSA
Made Payments to Providers Based on Revenue Information That Was Incorrectly Entered on
Provider Relief Fund Applications.” 45 As a result of recategorizing the finding for the 1 sampled
provider, we adjusted the total potential overpayment amount for the 17 sampled providers
from $18,381,187 (as shown in the draft report) to $18,371,939.
In its comments, HRSA identified 16 sampled providers with potential overpayments totaling
$7,241,390 instead of 17 sampled providers with potential overpayments totaling $18,371,939.
The difference of $11,130,549 includes $7,378,263 that HRSA paid to one sampled provider
based on using 99 percent as the percentage of revenue from patient care (which the provider
reported on its application) to calculate the patient care revenue amount instead of 70 percent
45
The sampled provider entered revenue of $46,239,198 on its application instead of the $462,392 shown on its
Federal tax return. The provider entered one incorrect digit and two extra digits that overstated its revenue by
$45,776,806. As a result, HRSA paid this provider $924,784 instead of $9,248, which was $915,536 more than it
should have paid.
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 21
(which was shown in additional documentation we obtained from the provider). According to
HRSA, for this sampled provider, we calculated the overpayment based on information that was
not available to HRSA at the time the payment was calculated. However, as part of its program
oversight, HRSA could have instructed providers to submit documentation to support the
percentage of revenue from patient care reported on applications for payments.
For the remaining recommendations, we believe the actions that HRSA stated it has taken or
plans to take should improve the safeguarding of taxpayer funds distributed as part of the
Phase 2 General Distribution and taxpayer funds that could be distributed in a future public
health emergency.
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 22
APPENDIX A: AUDIT SCOPE AND METHODOLOGY
SCOPE
Our audit covered 73,449 tax-filing TINs for Medicaid and CHIP providers, dental providers, and
assisted living facilities for which each provider had received a total payment of $10,000 or
more from July 3, 2020, through June 21, 2021, under the Phase 2 General Distribution of the
PRF. HRSA disbursed total payments of $4,800,368,201 to these providers.
We selected for review a stratified random sample of 150 providers (each represented by a tax-
filing TIN), for which HRSA paid $736,982,240.
We did not perform an overall assessment of the internal structure of HRSA because our
objective did not require us to do so. Rather, we limited our review of internal controls to
those that were significant to our objective. Specifically, we: (1) reviewed the PRF FAQs, terms
and conditions of the Phase 2 General Distribution, and instructions for the PRF application to
obtain an understanding of HRSA’s policies and procedures for the Phase 2 General Distribution
payment calculation and the requirements for supporting documentation and provider
eligibility; and (2) interviewed HRSA officials and its contractors to obtain an understanding of
controls related to the Phase 2 General Distribution payment calculation and the requirements
for supporting documentation and provider eligibility.
Our review enabled us to establish reasonable assurance of the accuracy and completeness of
the data obtained from HRSA.
We conducted our audit from May 2021 through September 2023.
METHODOLOGY
To accomplish our objective, we:
• reviewed applicable Federal laws, regulations, and guidance;
• reviewed the PRF FAQs, terms and conditions of the Phase 2 General Distribution, and
instructions for the PRF application to obtain an understanding of HRSA’s policies and
procedures for the Phase 2 General Distribution payment calculation and the
requirements for supporting documentation and provider eligibility;
• interviewed officials from HRSA and its contractors to obtain an understanding of
controls related to the Phase 2 General Distribution payment calculation and the
requirements for supporting documentation and provider eligibility;
• reviewed Contractor A’s methodology memos to obtain an understanding of the
Phase 2 General Distribution payment calculation;
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 23
• obtained from HRSA and analyzed the payment and attestation data for the Phase 2
General Distribution, including the crosswalk for subsidiaries;
• created a sampling frame that consisted of 73,449 provider tax-filing TINs, each of which
received a total of $10,000 or more during our audit period, for which HRSA disbursed a
total payment of $4,800,368,201 (Appendix B);
• selected a stratified random sample of 150 providers from our sampling frame and, for
each sampled provider, obtained from HRSA the supporting documentation (e.g., the
PRF application and Federal tax return submitted by the provider) and determined
whether the PRF payments were calculated correctly, supported by appropriate
documentation, and made to an eligible provider; 46
• analyzed the Phase 1 General Distribution and Targeted Distribution PRF payment data
from HRSA to determine whether any of the 150 sampled providers had received
previous PRF payments and whether those payments should have been subtracted
when HRSA calculated the PRF payment under the Phase 2 General Distribution;
• estimated the total potential overpayments that HRSA made to providers for PRF
payments that were not calculated correctly or supported by appropriate
documentation (Appendix C); 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.
46
After reviewing HRSA’s supporting documentation for each of the 150 sampled providers, we obtained
additional documentation (e.g., general ledgers and audited financial statements) from 35 of those sampled
providers to verify their revenue information reported on the PRF application when that information appeared to
conflict with the revenue information shown in the supporting documentation.
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 24
APPENDIX B: STATISTICAL SAMPLING METHODOLOGY
SAMPLING FRAME
The sampling frame consisted of 73,449 provider tax-filing TINs for Medicaid and CHIP
providers, dental providers, and assisted living facilities for which each provider received a total
payment of $10,000 or more from July 3, 2020, through June 21, 2021, under the Phase 2
General Distribution of the PRF and for which HRSA disbursed total payments of
$4,800,368,201.
SAMPLE UNIT
The sample unit was a provider tax-filing TIN–total payment.47
SAMPLE DESIGN AND SAMPLE SIZE
We used a stratified random sample (Table 1). The four strata were based on total payments
received by a provider tax-filing TIN.
Table 1: Strata for Our Sample
Dollar Range of Total Sample
Stratum Payments Received Frame Size Value of Frame Size
Total payments equal to or
greater than $10,000 but
less than or equal to
1 $70,000 62,959 $1,660,646,484 45
Total payments greater
than $70,000 but less than
2 or equal to $500,000 9,587 1,412,277,996 40
Total payments greater
than $500,000 but less
than or equal to
3 $8,000,000 878 1,035,589,300 40
Total payments greater
4 than $8,000,000 25 691,854,421 25
Total 73,449 $4,800,368,201 150
SOURCE OF RANDOM NUMBERS
We generated the random numbers with the OIG, Office of Audit Services (OAS) statistical
software.
47
For the purposes of this report, we refer to a provider’s tax-filing TIN as a “provider.”
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 25
METHOD OF SELECTING SAMPLE ITEMS
We sorted the providers that received a total payment of $10,000 or more in ascending order
based on the provider’s tax-filing TIN. We then consecutively numbered the providers in each
stratum of the sampling frame. After generating the random numbers for our sample according
to our sample design, we selected the corresponding frame items for review.
ESTIMATION METHODOLOGY
We used the OIG-OAS statistical software to estimate the dollar amount of potential
overpayments that HRSA made to providers. Specifically, we used the software to compute the
point estimate and corresponding two-sided 90-percent confidence interval (Appendix C).
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 26
APPENDIX C: SAMPLE RESULTS AND ESTIMATES
Table 2: Sample Details and Results
No. of Sample
Items With Value of
Sample Value of Potential Potential
Stratum Frame Size Value of Frame Size Sample Overpayments Overpayments
1 62,959 $1,660,646,484 45 $1,164,824 1 $8,116
2 9,587 1,412,277,996 40 5,425,340 4 91,751
3 878 1,035,589,300 40 38,537,655 9 5,143,732
4 25 691,854,421 25 691,854,421 3 13,128,340
Total 73,449 $4,800,368,201 150 $736,982,240 17 $18,371,939
Table 3: Estimated Value of Potential Overpayments in the Sampling Frame
(Limits Calculated at the 90-Percent Confidence Level)
Point estimate $159,379,359
Lower limit 82,323,127
Upper limit 236,435,591
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 27
APPENDIX D: HRSA COMMENTS
HRSA
5600 Fishers Lane
Rockville., MD 20857
DAU:: October 27, 2023
T O: JulietT. Hodgkins
Principal Deputy Inspector Gen
FROM: Carole Johnson
Administrator
SUBJECT:
Attached is !he Health Resources and Sen,ces Administration's response to !he above referenced
report. If you have any questions, please conlact Sandy Seaton in the Health Resources and
Services Administration's Office ofFederal Assislance Management at (301) 443-2432.
Attachment
Health Resources and Services Administration
www .hrsa.gov
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 28
GENERAL COMMENTS FROM THE DEPARlMENT OF HEALTH AND HUMAN
SERVICES ON THE omCE OF THE INSPECTOR GENERAL' S PRELIMINARY DRAF11'
REPORT A-09-22-06001
The Heal1h Resources and Services Administration (HRSA) appreciates the opportunity to
comment on the Office of Inspector General's (OIG) audit of Provider ReliefFund (PRF) Phase
2 General Distnoution payments.
The audit re,iewed whether the IleJ)artment ofHeal1h and Human Services and HRSA Phase 2
General Distnoution PRF payments were correctly calculated, supported by appropriate
documentation and made to eligrole pro,iders. Phase 2, which began in 2020, represented the
second distribution of the PRF for which pro,iders submitted applications for payment. The
audit covered $4.9 billion in PRF pa'/DlOlltS 1hat were disbursed to more 1han 100,000 pro,iders,
covering 73,449 tax filing taxpayer identification numbers. Pa'/DlOllt recipients included
pro,iders who participated in Medicaid and Children's Health Insurance Program, dental
pro,iders and assisted living facilities who did not also participate in Medicare and therefore had
not been eligrole for an earlier payment.
The goal of the PRF program was to help enable the health care S)'Slem to remain operational at a
time when many health care providers were eaperiencing unprecedented and abrupt losses in
revenue and increased expenses. As you know, there were incredfble demands on pro\tiders in
responding to the pandemic and a Congressional directive to distnoute the funds "in
consideration of the most efficient payment S)'Slems practicable." Therefore, HRSA established
a risk mitigation strategy to manually re,iew Phase 2 applications 1hat met certain criteria,
including potential payments over $1 million, to ensure greater ~ayment scrutiny of higher
risk, larger payments and to leverage post-payment oversight through reporting and audits for the
broader set of pro,iders who received funds. This strategy also took into account 1hat many of
the providers who were eligrole under Phase 2 were smaller pro,iders with smaller profit
margins and less administrative capacity to complete complea applications.
Additioually, HRSA used an approach 1hat sought to manage risk while enuring timely
processing of applications in response to Congress' directive and pro,iders' needs. As a result, it
established a policy to manually re,iew applications where reported revenues and e.-q,enses did
not fall wi1hin expected ranges. In addition, since the methodologies used to calculate
subsequent PRF payments took into account prior payments, a potential o,,erpayment would
have been corrected by reducing the subsequent payment by the value of the prior payments. In
these instances, HRSA re,iewed all payments made to the providers reviewed by OIG and foWld
1hat often the Phase 2 potential overpayment was offset by a subsequent payment in Phase 3 and
recoupment was operationaliz.ed in this way. In these cases, the findings were removed from the
OIG's recommendations.
HRSA's response to the OIG draft recommendations are as follows:
Recommendation #l
Conduct a review of the 17 sampled providers we identified that had potential overpayments
ofS18,381,187 and determine the amount of and seek these providers repayment of any
1
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 29
overpayments.
HRSA Response #1
HRSA partially concws with OIG' s recommendations. Where HRSA concws with the OIG
finding, HRSA will seek repaymeot. However, in one case, HRSA does not find any
overpayment and, in five cases, HRSA agrees that there was an overpayment, but di,;agrees with
the amount In total, of the 17 providers that OIG identified as having overpayments, HRSA
reviewed OIG's findings and identified 16 providers with overpaymeots totaling $7,241,390.
Thedel1a between theOIG' s findings and HRSA'sreview is equal to Sll,139,798. Some of tbe
paymeots that OIG identified as overpaymeots were incorrectly calculated or did not follow
HRSA' s paymeot calculation methodology. Further, some of the payments that OIG identified
as overpayments were based on infonnation not available to HRSA at the time the paymeots
were calculated. In accordance with the program's standard post-paymeot oversight processes,
HRSA will analyz.e the infonnation associated with these paymeots and based on the results of
that analysis, will take appropriate action including seeking repaymeot.
Recommendation #2
Identify other providers with subsidiary organizations that bad revenues included in the
pro,iders' Federal tu returns. Determine whether the payments made to the subsidiary
organizations were comctly accounted for when calculating paymeots for the providers under
the Phase 2 General Distribution. In addition., determine the amount of and seek from these
pro,iders repaymeot of any overpaymeots. If it is not feaS1ole to review all pro,iders, HRSA
could conduct a cost-benefits analysis for conducting manual re>iews to identify providers and,
if the benefit outweighs the cost, it could select some providers to review.
HRSA Response #2
HRSA concws wi1b OIG' s recommendation. HRSA weighed the costs and benefits ofreviewing
all Phase 2 applications to identify providers whose applications included subsidiary
organizations' revenue, in-line with the OIG recommendation. HRSA determined that reviewing
all Phase 2 applications in this manner is not feaS1ole. However, as part of HRSA' s program
integrity work, HRSA maintains • list of post-paymeot discrepancies that it tracks and works to,
resolve. Depending on the availability of resources, which are significantly limited by the
recission of funds through the Fiscal Responsibility Act, HRSA will consider adding this
recommendation to its post-payment follow-up.
Recommendation #J
Identify other providers for which payments under Phase 2 General Distribution were approved
and delayed, determine whether their subsidiary organizations received additional paymeots
during the period of delay, and if so, recalculate the paymeots made to these providers and
determine the amount of and seek from these providers repaymeots of any overpayments.
HRSA Response #3
HRSA concws with OIG' s recommendation. HRSA required providers to enroll in OptumPay,, a
fraud risk mitigation step for payments greater than SI 00,000. Pending the pro,ider' s
enrollment in OptumPay, paymeots were placed on bold, sometimes for several wedcs. In some
instances, HRSA did not recalculate the payment to account for any paymeots issued to the
pro,ider' s subsidiary organizations while the parent's payment was on bold. As part of HRSA' s
program integrity work, HRSA maintains a list of post-paymeot discrepancies that it tracks and
2
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 30
works to resolve. Depending on the availability of resources, which are significantly limited by
the recission of f\mds through the Fiscal Responsioility Act, HR.SA will consider adding this
recommendation to its post-payment follow-up.
&sommsndatioe f:f
Furthennore, should HR.SA need to rapidly disburse similar assistance payments to providers in
response to a future national emergency, we recommend that HR.SA consider taking the folio~
steps (to the extent they are applicable) to safeguard taxpayer money, which could ha,,. saved
approximately $159,582,349 during our audit period:
a. Wolk with CMS to use the information from CMS's Provider Enrollment, Chain, and
O..uership System and use Federal tax returns (e.g., Schedule R ofform 990 for
information on a tax-e.i:empt pro,i der's subsidiary organizations), in part, to develop a
more complete dataset to show parent-subsidiary relationships.
b. Require pro,iders to submit supporting documentation for all revenue information
pro,ided on applications for assistance payments (e.g., the percentage of m,enue from
patient care).
c. Establish an application and attestation portal function that requests providers to confum
that the re...nue entered on their applications for assistance payments is correct. For
example, HTSA could modify its application and attestation portal by adding a step in
which, after a provider enters its revenue amount, the portal generates a new screen that
displays the entered amount and requests that the provider confinn the amount
d. Add a field in applications for assistance payments that allows a provider to indicate that
an application includes revised re\""1tle information that may impact the payment that a
pro,ider is eligible to receive.
HRSA Response fU
HR.SA will re.iew this recommendation should it need to rapidly disburse similar assistance
payments to providers in the future. HR.SA took actions in subsequent application cycles that
align with this recommendation. For example, HR.SA updated the portal to limit the revenue
fields to whole DUDlbers and added formatting to assist applicants. In addition, HR.SA updated
the instructions and pro,ided robust technical assistance to support providers applying in Phases
3 and 4.
Finally, the recommendation to add a field in the application that allows a provider to indicate
that an application includes revised revenue information that may impact the payment that a
pro,ider is eligible to receive was not feasiole for Phase 2 payments, which were made on a
rolling basis. However, in Phase 3, HR.SA only permitted a single application per provider and
only the last, on-time application was considered.
3
HRSA’s Provider Relief Fund Payments Under the Phase 2 General Distribution (A-09-22-06001) 31
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