PRF: It’s a Grant Until You Make It a Loan
Free money. That’s what you were told PRF was. A grant to help you negotiate the COVID-19 environment. Never to be repaid, and no questions asked.
PRF funds were deposited in your TIN, and labeled ‘HHSPAYMENT’. You attested to receipt. Now it’s approaching the time when you must report how you used the money. This is the tricky part. The piece you didn’t give much thought to. The rules that were buried deep inside the terms and conditions that you didn’t read (who does?).
You’re walking a tightrope, and it’s a bit shaky up there. Because if you don’t report proper use of funds – and evidence of use – then the government will come after you and request repayment of the grant that didn’t need to be repaid. Oh, and they may charge you interest, too.
Here’s how to keep your balance.
Step #1: Understand How You Can Spend PRF Dollars
The idea of PRF is to help providers continue to provide care during COVID-19. Originally, the grants given were to be used on items such as PPE and testing of your workforce. This was quickly adjusted to include cover of lost revenue caused by COVID-19.
HHS stipulates that PRF funds can be used in the following two ways:
- To cover expenses that are caused directly by COVID-19 and for which you do not get reimbursed from other sources
- To cover lost revenues, where the loss is as a direct result of COVID-19
Step #2: Calculate COVID-19 Expenses and Lost Revenues
The expenses you incur because of COVID-19 should be reasonably easy to calculate. The cost of PPE for those working in COVID wards or in areas where COVID-19 rules dictate the use of PPE, for example.
Figuring out how much revenue COVID-19 has cost you is a little trickier. For this, HHS has said that you should refer to your previous year’s revenues and calculate the change then to now.
Step #3: Get Your Paperwork in Order
It was easy to obtain PRF cash. The government was throwing money at the pandemic, content to leave the finer details until later. Well, later is now – and you just know that HHS will want evidence of how you spent PRF cash. If you can’t provide this evidence, you could be in for a shock.
The thing to remember is that you must demonstrate that you used PRF because of COVID-19. Here’s what is recommended:
· Keep all PRF funds separate from your main accounts and in a separate PRF account
Set up a separate account for each PRF grant you receive. Never mix the funds with your general account.
· Never assume expenses will be permitted
Question every expense. Take the view that it is not permitted as applicable under PRF, and then prove that it is. Always ask if COVID-19 caused this expense. If it did, it is permitted.
Don’t forget to include costs such as additional hires – if those hires were caused by COVID-19.
· Allocate PRF spending into separate expense accounts
Remember that you must show that any spending covered by PRF is attributable to the costs of COVID-19. (You really won’t get away with allocating your entire PPE costs to your PRF.) Therefore, make sure that you receive invoices separately, and allocate this spending to separate expense accounts. This includes any additional payroll costs.
· Exclude PRF from your usual operational revenues
This is important. If you include PRF in your usual operational revenue, your reference point for calculation of future PRF will be blurred. And that means lower payments.
· Keep a paper trail
At some point you will be audited. Keep that paper trail in order.
· Do it now!
Don’t wait to do all the above. The sooner you do it, the better prepared you will be – for reporting and for audit, whenever that may be.
Report and Return!
Now you are ready to report on your PRF. The PRF deadline has been extended, but reporting should be made within 90 days. Remember, any portion of a PRF funding that you haven’t used must be paid back.
Making sure that you properly account for each cent of PRF will ensure that you don’t fall foul of HHS rules. You really don’t want to turn your PRF into what would, effectively, become a loan.