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Determining Lost Revenues Attributed to Coronavirus and Reporting Capital Equipment– Are You Ready?


On October 22 and November 2 HHS updated its guidance on the reporting requirements for recipients of Provider Relief Funds (PRF).  This guidance has been supplemented through the HHS’s Frequently Asked Questions (FAQ) document. In our first of this article series, we discussed the reporting of increased expenses due to COVID-19, which are reported net of increased expenses covered by other programs.

Determining Lost Revenues Attributed to Coronavirus

The next step is for providers to determine their “Lost Revenues Attributed to Coronavirus.” The definition of this category was significantly changed from the initial September guidance. In September, HHS considered “lost revenues” as “net change in profitability” from year to year. This was a significant change from the original terms and conditions under which providers applied for the PRF. This new guidance should assist many providers.

The amount of lost revenues considered an appropriate use of PRF is now capped at the change in 2019 to 2020 “actual revenue from patient care.” All providers will be required to report their patient care revenues for 2019 and 2020, on a calendar quarter basis, for the two years in the following categories (even if their increased expenses exceed the amount of PRF funds received):

  • Medicare (parts A, B and C)
  • Medicaid
  • Commercial insurance
  • Self-pay
  • Other patient revenue sources

Clarification from HHS

On November 18, HHS clarified in their FAQ document that net patient revenue payment that providers received from periods not related to care provided in 2019 or 2020 can be excluded from the reporting of net patient revenues. For example, if a provider received an incentive payment in 2019 for services provided in 2018, these can be excluded from the 2019 net patient revenues. However, incentive payments received in 2020 for services in 2019 would have to be included.

Providers will also need to report to HHS all “Other Assistance Received” in 2020 in the quarter it was received. This includes amounts received from the PPP and SBA, FEMA, CARES Act testing, local or state governments, business interruption insurance, and any other assistance received.

If a provider’s increase in expense and decrease in patient revenues do not cover the PRF receipts in 2020, they will have until June 30, 2021, to utilize the funds under the new guidance. A final report will be due after that date.

We recommend that providers monitor these lost revenue calculations on a monthly basis. It is important to mention that the lost revenues are calendar year 2019 compared to calendar year 2020, not on a quarterly basis. Many factors may impact the year-over-year revenue comparison. For example, if a provider had a significant revenue increase in Q3 and Q4 of 2019, that increase could offset the lost revenues in Q1 and Q2 of 2020. 

Fluid and Complicated Guidelines

As noted in our previous article, the HHS guidelines are fluid and change frequently. For example, in the FAQs issued on October 28 are these questions and answers:

“Do providers report total purchase price of capital equipment or only the depreciated value? (Added 10/28/2020) Providers who use accrual or cash basis accounting may report the relevant depreciation amount based on the equipment useful life, purchase price and depreciation methodology otherwise applied. Providers may report an expense for items purchased with a useful life of 12 months or less if in accordance with their existing accounting policies.” (As we predicted, the answer to this question was updated on November 18.)

“How does “other assistance received” factor into my reported expenses? (Added 10/28/2020) Other assistance received is reported as operating revenue and used in the calculation of year-over-year change in patient care related revenue.” (We expect further clarification to be forthcoming.)

Are You Ready?

The Brown Smith Wallace Health Care team is ready to help you prepare for the Provider Relief Fund reporting requirements. Did you know that our consulting services can be covered by any non-allocated Provider Relief Funds? We can also assist you in strategically utilizing any non-allocated funds. Please contact Ron Present at 314.983.1358 or or Mark Renken at 636.754.0234 or



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