A new audit from the Office of Inspector General (OIG) found that ten of thirty selected nursing facilities did not comply, or may not have complied, with the terms and conditions and federal requirements for using provider relief fund (PRF) payments.
Congress appropriated $178 billion to the Department of Health and Human Services (HHS) for the PRF, which reimbursed eligible providers for healthcare-related expenses or lost revenue attributable to COVID-19. HHS oversaw initial PRF program policy and administration, while the Health Resources & Services Administration (HRSA) managed its implementation.
PRF recipients were required to ensure that the funds were:
- Used to prevent, prepare for, or respond to COVID-19;
- Used for healthcare-related expenses or lost revenues attributable to COVID-19;
- Not used to cover expenses or losses reimbursed by other funding sources; and
- Not used to pay salaries in excess of a certain threshold or to pay for certain prohibited activities.
According to the OIG, this audit is part of an ongoing series evaluating PRF payments across provider types. It specifically reviewed whether thirty selected nursing facilities used the funds in compliance with federal and program guidelines.
The OIG found that eight facilities used $2.3 million in PRF payments for unallowable expenses or lost revenues, and three used $333,000 for expenses that may not have been allowable. These ten facilities, including one with multiple deficiencies) received a total of $178 million in PRF payments. The remaining facilities used the funds appropriately.
Several reasons were cited for the deficiencies, including inadequate documentation, misinterpretation of HRSA guidance, clerical errors, and ineffective tracking of PRF-funded expenses. This occurred despite the requirement to attest to PRF terms and the availability of updated guidance from HRSA.
The OIG issued two recommendations to HRSA: that it require the identified nursing facilities to return unallowable funds to the federal government or ensure that the facilities properly account for the expenditures and lost revenues in question. HRSA concurred with the recommendations.
Access the OIG’s report here.
Compliance Perspective
Issue
Facilities that receive external funding—whether federal, state, or private—are required to comply with specific terms and conditions for how those funds are used. Audits have found that noncompliance often results from inadequate documentation, misinterpretation of guidance, clerical errors, or insufficient tracking of expenditures. Facilities must implement clear internal controls to ensure that all funds are used appropriately and in accordance with applicable requirements.
Discussion Points
- Review policies and procedures for managing external funding to ensure they define allowable uses, documentation standards, approval processes, and responsibilities for oversight. Policies should be updated regularly to reflect current requirements from the funding source.
- Train all relevant staff on funding requirements and protocols for documenting and tracking expenditures. Education should include how to interpret guidance, maintain proper records, and ensure compliance across departments.
- Conduct periodic audits of fund usage to verify adherence to applicable guidelines and internal policies. Audits should evaluate documentation, financial reporting, and oversight mechanisms. Use audit findings to guide corrective actions and future staff training.
*This news alert has been prepared by Med-Net Concepts, Inc. for informational purposes only and is not intended to provide legal advice.*