HHS issued new guidance related to the reporting requirements tied to receiving Provider Relief Fund (PRF) payments, walking back the September 19 guidance, which changed “lost revenue” to mean net operating income. Under the October 22 guidance, providers can keep PRF dollars equal to their year-over-year change in revenue from 2019 to 2020. In other words, HHS has scrapped the change in net operating income definition from the September 19 guidance. This also eliminates the part of the guidance that allowed providers with negative 2019 margins to keep provider relief revenue up to a break even in 2020.

As was the case with the September 19 guidance, the provider-level impact will vary.

– Many providers are pleased with the change because they will have a better case for keeping more money by demonstrating lost revenue and not lost profit.

– Others—particularly those with negative 2019 margins—will be in a worse position.

– In either case, there is still a risk that some providers will not be able to retain their full PRF payment. For example, providers that received particularly large payments (e.g., hot spot hospitals and rural providers that received large targeted distributions) are at the greatest risk for needing to return funding.