On August 26, 2020, CMS issued an update on COVID-19 Frequently Asked Questions (FAQs) on some cost report issues. The following summarizes current CMS guidance.
Reporting Provider Relief Funding – All providers are to report funding provided on the respective statement of revenues for information purposes. Providers should discuss revenue recognition with their appropriate financial advisor. Currently, we are expecting to report revenue as earned through qualifying expenses and lost revenues. Remember, cost reports are to be prepared on the accrual-basis and not cash-basis.
- Hospital, form CMS-2552-10, Worksheet G-3, line 24.50
- Skilled Nursing Facility, form CMS-2540-10, Worksheet G-3, line 24.50
- HHA, form CMS-1728-94, Worksheet F-1, line 31.50
- Hospice, form CMS-1984-14, Worksheet F-2, column 3, line 16.50
- ESRD, form CMS-265-11, Worksheet F-1, line 31.50
- FQHC, form CMS-224-14, Worksheet F-1, line 28.50
- CMHC, form CMS-2088-17, Worksheet F, line 20.50
Reporting SBA Loan Forgiveness – If a provider receives forgiveness for the SBA loan, or any portion thereof, the provider must report the forgiven amount on the cost report’s statement of revenues for informational purposes. The loan forgiveness amount must be reported in aggregate, on the same cost report forms, worksheets, and lines as the Provider Relief Funding. If the provider does not receive forgiveness for the SBA loan, or any portion thereof, the provider reports no forgiven amounts on the Medicare cost report. If the provider pays interest on any portion of the SBA loan, the provider may report the interest expense with other interest expense on the cost report. The interest would be administrative and general in nature. SBA loan forgiveness does not represent revenue until such time as the forgiveness is secured.
Offsetting Provider Relief Funding and SBA Loan Forgiveness Against Qualifying Expenses – No Provider Relief Funding or SBA Loan Forgiveness will be used to offset otherwise allowable expenses on the respective Medicare cost report.
Other items are mentioned in the updated FAQs; however, such items are as expected. Do not hesitate to contact us with any questions you may have regarding treatment of these revenues or other COVID-19 PHE related expenses and the cost reporting impact associated therewith.
TAX TREATMENT FOR PROVIDER RELIEF FUNDING AND SBA LOAN FORGIVENESS
Providers are encouraged to discuss income tax treatment of both Provider Relief Funding and SBA loan forgiveness with their respective tax advisor, regardless of whether tax filings are on an accrual-basis, cash-basis, or some other basis.