On Aug. 24, the Health Resources and Services Administration (HRSA) released a Provider Relief Fund (PRF) Lost Revenue Guide.
The guide provides an overview of what is not considered patient care revenue and a high-level summary of documentation requirements based on the reporting option chosen (Option i: Actuals; Option ii: Budgets; Option iii: Alternative Reasonable Methodology). It also provides simplistic examples of how to report for each of the three reporting options.
The example related to the Alternative Reasonable Methodology is instructive given the lack of prior guidance for option iii. HRSA confirms that it may be used to account for providers’ unique circumstances, when options i or ii may not appropriately capture their situation (e.g., adding a new service, which made revenue appear higher than an apples-to-apples comparison, major changes in response to COVID-19 preventing planned changes that would have generated more revenue, etc.). HRSA confirms the intent of option iii, as many have speculated, is to create an “apples-to-apples” comparison of the periods impacted by COVID-19 to those prior to the public health emergency.
The example related to option iii also suggests best practices, which include:
- Measure the amount of baseline revenue and lost revenues consistently.
- Give consistent treatment (e.g., (1) if using the fiscal year as a baseline, estimate lost revenues over the course of a fiscal year, (2) if patient care revenues are consolidated in financial statements, report the consolidated amount in the PRF report).
- Be consistent with policies and procedures and apply them uniformly to federal and other sources of funds.
- Check to ensure any amounts fully covered through direct expenses in lost revenues are not included (e.g., if the provider used PRF payments as a direct expense to account for an increase in patient encounter cost by charging all expenses which contribute to the patient encounter cost, providers should not also factor the margin in its calculation of lost revenues).
- The same approach used for lost revenues calculation should be used in any subsequent reporting periods.
Along with the Lost Revenue Guide, HRSA also posted a Resource Guide for Reporting Period 1.