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, , 10 July, 2020

5 Keys to Taxation and Provider Relief Payments

HHS announced plans to distribute $15 billion from the Provider Relief Fund targeted to eligible providers that participate in state Medicaid and CHIP programs and have not yet received a payment from the Provider Relief Fund General Distribution. This funding will supply relief to Medicaid and CHIP clinicians experiencing lost revenues or increased expenses due to COVID-19. Additional payments will also be made to safety-net hospitals.

To be eligible for this funding:

  1. You must not have received payments from the $50 billion Provider Relief Fund General Distribution.
  2. You have directly billed their state Medicaid/CHIP programs or Medicaid managed-care plans for health-care-related services between January 1, 2018, and May 31, 2020.

HHS launched the Enhanced Provider Relief Fund Payment Portal( on June 10. To receive a payment:

  1. Report annual patient revenue through the HHS Portal (
    1. The distribution will be equal to at least 2% of reported gross revenues from patient care.
    1. The final amount each provider receives will be determined after the data are submitted, including information about the number of Medicaid patients served.
    1. The deadline to submit an application for the Medicaid Targeted Distribution is July 20, 2020.

Instructions( and the application form( are provided to assist applicants in applying for funds. Once a payment is received, providers must sign an attestation confirming receipt of the funds and agree to the Terms and Conditions( within 90 days.

These are grants, not loans, and do not have to be repaid.

Note:  that the funds will go to each organization’s TIN that normally receives Medicare payments, not to each individual physician. Disbursement began on April 10.

“In mid-April, both ADA and HHS leadership began working on how this fund could best provide relief to dentists. Soon after our initial talks, HHS confirmed dentists would be included and today I am happy to report many dentists will see some relief from this fund,” ADA President Chad P. Gehani said in a June 9 Issues Alert to members.

We all wanted to believe that the federal government would not hold payments from the Provider Relief Fund against providers receiving PPP loans, especially given the lack of clarity before launching the program, But two days prior to the SBA’s deadline for returning PPP loans, the agency still had not indicated how it would review good-faith certifications. Finally, on May 13th the SBA released FAQ 46.

FAQ 46 details how SBA determines whether borrowers requested PPP loans in good faith. The FAQ explained that any borrower that received a loan of less than $2 million will be deemed as having made the required good-faith certification concerning the necessity of the loan.

If a recipient has received a loan under the Paycheck Protection Program (“PPP”), can it accept and keep the payment received from the Provider Relief Fund?

  1. Providers that receive a PPP loan can still accept monies from the Provider Relief Fund.
  2. The two are not mutually exclusive.
    1. Recipients cannot use the relief funds “to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse.”
  3. If a provider’s PPP loan did not cover all of its payroll costs for laid off employees or current employees to allow it to continue to provide care, it appears the relief payments can be used for that purpose.
  4. Providers who are relying on both PPP funds and Provider Relief funds should ensure that detailed documentation is maintained to demonstrate that funds are properly used, as noted above with regard to all use of funds

Health care providers that receive a payment from the Provider Relief Fund cannot exclude this payment from gross income as a qualified disaster relief payment. There may be some exceptions, contact your CPA for details.

Tax-exempt health care providers usually are exempt from paying tax on the Provider Relief Fund. One exception is if a tax-exempt health care provider uses the Provider Relief Fund if the payment reimburses the provider for expenses or lost revenue for an unrelated.


Note: The material and contents provided in this article are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.