Latest round of COVID-19 provider aid poses audit risk for new mergers

Providers who receive at least $10,000 in payments from the latest rounds of Provider Relief Fund disbursements might be at greater risk of audits if they engage in merger or acquisition activity, the Health and Human Services Department said Tuesday.

The updated terms and conditions apply to providers who accept funding from distributions that began last month.

HHS said the update is intended to “ensure relief funds are being used to address the financial impact of COVID-19.”

“Providers who report a merger or acquisition may be more likely to be audited to ensure compliant use of funds,” HHS said in a news release.

The new rules will apply to providers who received at least $10,000 from an $8.5 billion pool of funding HHS began distributing last month to providers serving rural patients. It will also apply to disbursements the agency will start making this week from another $17 billion pool for other providers.

The changes come after a New York Times article published earlier this year found big hospital chains who received Provider Relief Funds were buying up competitors and doctors’ practices.

The Biden administration has indicated it will increase scrutiny of mergers and acquisitions in the healthcare industry amid concerns that consolidation leads to higher healthcare costs.

HHS announced $9 billion in awards from the $17 billion pool Thursday for health providers that have experienced revenue losses and expenses related to the pandemic.

According to a news release, the average payment is $1.7 million for large providers, $289,000 for medium-sized providers and $58,000 for small providers.

About 75% of the funding is being distributed based on expenses and decreased revenues from July 1, 2020 to March 31, 2021, with smaller providers being reimbursed for a higher percentage of losses and expenses.

More than 69,000 providers in all 50 states will receive aid from the latest round of funding announced Tuesday, with payments going out later this week.

The funds can be used to recruit and retain staff, purchase masks and other supplies, modernize facilities or other COVID-19-related activities, HHS said.

With the funding announced Tuesday, there will be about $8 billion left to award to providers, with the next payments being announced next year, HHS said.

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