During the COVID-19 pandemic, DCH Health System (DCH) developed a methodology to identify eligible costs in accordance with the Health and Human Services (HHS) produced COVID-19 Provider Relief Fund (PRF) Reporting Requirements and FAQ guidance. DCH's methodology identified costs used to prevent, pr...
During the COVID-19 pandemic, DCH Health System (DCH) developed a methodology to identify eligible costs in accordance with the Health and Human Services (HHS) produced COVID-19 Provider Relief Fund (PRF) Reporting Requirements and FAQ guidance. DCH's methodology identified costs used to prevent, prepare for, and respond to coronavirus that fell into the following categories: COVID-19 specific costs, direct and indirect incremental costs due to COVID-19, and calculated lost revenue. To calculate direct and indirect incremental costs due to COVlD-19 for DCH Regional Medical Center, DCH leveraged HHS FAQ guidance from October 28, 2020, that introduced examples demonstrating how providers could calculate marginally increased expenses related to coronavirus using a reasonable methodology comparing pre-pandemic to post-pandemic average expenses for an office visit. OCH utilized this methodology to calculate direct and indirect incremental costs due to COVID-19 on a per-patient discharge basis, which is akin to an office visit for a hospital, per the HHS FAQ guidance. Though this specific example was removed in subsequent versions of the FAQ, HHS never communicated that the guidance that DCH relied upon to calculate incremental expenses was incorrect. DCH's view is that the total cost of patient discharge includes direct patient care and indirect costs (overhead and general administrative (G&A) costs). Indirect costs (e.g., facilities, maintenance, utilities, and management salaries) were incurred by DCH to prepare, prevent, and respond to COVID-19, consistent with the intention of the purpose of the PRF to 'provide financial support to providers who experienced lost revenues and increased expenses during the pandemic in order to maintain national health system capacity.' For instance, the ability to serve COVID-19 patients relied on incurring utility expenses to keep ventilators and other equipment functioning, of which the organization utilized well more than the norm which resulted in higher utility costs. These costs were vital for accommodating COVID-19 patients during the pandemic, just as they were necessary for serving other patient types before the onset of COVID-19. These incremental indirect costs were also not reimbursed through other sources. DCH allocated indirect costs in accordance with other accepted government rules as defined in various government regulations such as 2 CFR and the Federal Acquisition Regulation. The indirect costs allocated to patient care costs were considered part of the total cost of patient discharge. In addition, though DCH calculated lost revenue, DCH did not report on lost revenue as part of the system's use of funds (please note that there was one reporting period where Fayette had to report separate from DCH because of targeted funds received. Fayette did report lost revenue in that period based on a budget to actual calculation). DCH believes that the funds identified and reported are consistent with HHS guidance and the spirit of the law to maintain national health system capacity It is DCH's understanding that Single Audit Finding 2022-001 is particularly focused on DCH's approach to identifying indirect incremental costs due to COVID-19, citing these expenses as ineligible costs that were included in the HHS PRF portal submission. Similarly, DCH did not report lost revenues, resulting in 'inaccurate lost revenues reported.' Both FORVIS and DCH acknowledge that DCH incurred eligible expenses and lost revenue sufficient to cover the PRF funds received. Therefore, based on the FORVIS finding, and assuming the finding is sustained, DCH will implement processes to submit future PRF reports as suggested in Single Audit Finding 2022- 001, which includes identifying specific individual expenses incurred during the reporting period to prevent, prepare for, and respond to COVID-19, rather than utilizing the initial HHS guidance for calculating incremental costs due to COVID-19. In addition, OCH will include lost revenue in the PRF portal submission.