HHS Extends the Provider Relief Fund Compliance Deadline by 45 days
On May 22, the U.S. Department of Health and Human Services (HHS) announced a 45-day deadline extension for providers who are receiving payments from the Provider Relief Fund to accept the Terms and Conditions for Provider Relief Fund payments. Providers now have 90 days from the date they received a payment to accept HHS Terms and Conditions or return the funds.
All providers who have received Provider Relief Fund payments must agree to the Terms and Conditions, if they wish to keep the funds.
HHS previously announced that $50 billion of the Provider Relief Fund was allocated for general distribution to facilities and providers that bill Medicare and were impacted by COVID-19, based on eligible providers' net patient revenue. To expedite providers getting money as quickly as possible, HHS distributed $30 billion immediately, proportionate to providers' share of Medicare fee-for-service reimbursements in 2019. Then, beginning on April 24, HHS began distributing an additional $20 billion to providers based on their share of net patient revenue, and began accepting submissions from eligible providers of their financial data.
Providers will now have 90 days from the date they received a payment to accept the Terms and Conditions or return the funds. Providers that do not accept the Terms and Conditions after 90 days of receipt will be deemed to have accepted the Terms and Conditions.
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SBA and Treasury Issue Rule on PPP Loan Forgiveness
On May 22, the Small Business Administration (SBA), in consultation with the Department of the Treasury, issued an interim final rule (IFR) related to loan forgiveness for the Paycheck Protection Program (PPP). The IFR retains the requirement that 75% of loan proceeds be used for payroll costs to receive full loan repayment, which has been a point of contention for the business community and may be repealed by Congress in the Paycheck Protection Program Flexibility Act. However, the SBA provides several other key clarifications to assist small business owners.
- Since payroll cycles may not align neatly with the eight-week period eligible for forgiveness, the IFR provides flexibility to borrowers with bi-weekly or more frequent payroll cycles, by allowing them to use an alternative payroll covered period.
- Clarifies that certain nonpayroll costs incurred during the eight weeks, but paid by the next regular billing date, will still be eligible for forgiveness even if that billing date falls outside the covered period.
SBA also provides several key clarifications related to reductions in loan forgiveness amounts.
- Allows for full loan forgiveness, if employees are rehired or salary levels are reestablished on or before June 30.
- No “double penalty” in that any loan forgiveness reductions due to changes in number of employees will not be not counted toward any reductions related to changes in salary.
- Establishes the exact process a borrower must follow to avoid a reduction in forgiveness for employees who reject rehiring offers.
- Provides leniency for employers as it relates to employees who are fired for cause, or voluntarily resign or request a reduced schedule.
SBA clarifies that, for purposes of the PPP, a “full-time equivalent employee” means an employee who works 40 hours or more on average each week and provides two options for how to calculate employees who were paid for less than 40 hours per week. In addition, the IFR reaffirms the 60 days for the lender to review the loan forgiveness application and 90 days for the SBA to respond, clarifies that payroll costs are broadly defined as well as denoting payroll compensation for owner-employees and self-employed individuals, and provides additional information on loan forgiveness documentation.