The U.S. Department of Health and Human Services (“HHS”), Office of Inspector General (“OIG”) has added “Audit of CARES Act Provider Relief Funds-Distribution of $50 Billion to Health Care Providers” to the OIG Work Plan. It will be the responsibility of the OIG to examine the effectiveness of HHS controls over the awarding and disbursement of the $50 billion of payments to hospitals and other providers. Specifically, the OIG will review how the payments were calculated and compliance with the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act requirements. The OIG is to determine that payments were correctly calculated and disbursed to eligible providers.
The description of the OIG review provides no information concerning the use of the outcome of the review; however, no implications to the provider because of the review are expected.
SBA RELEASES MORE INTERIM GUIDANCE
The Small Business Administration has issued two interim final rules relating to the Paycheck Protection Program (“PPP”). These rules relate to the Loan Forgiveness Application and responsibilities of both the borrower and lender. These rules can be reviewed here and here.
These rules provided for, but are not limited to the following:
- Establishment of an alternative method for determining when the eight-week period starts for businesses with pay cycles of biweekly or more frequent. Borrowers can elect an alternative payroll covered period, which is the eight-week period starting the first day of the pay period after they received the funds. Businesses with pay periods less frequent than biweekly must still use payroll costs beginning with the date that funds are received. The alternative payroll covered period only relates to payroll costs and no other expenditures.
- Clarification that bonuses and hazard pay are eligible for loan forgiveness, as are salary and wages payments to furloughed employees.
- Guidance for when employers can exclude from loan forgiveness calculations employees who refuse to be rehired. The new guidance provides that when calculating any reduction in full time equivalent employees, employers can exclude any employees who decline a good faith offer to return at the same pay and hours as before they were laid off or furloughed. The guidance includes a requirement for borrowers to notify the state unemployment office of an employee’s rejected offer within 30 days of that rejection.
- Borrowers can restore forgiveness if they rehire employees by June 30 and reverse reductions to salaries and wages for FTE employees by June 30. The guidance said loan forgiveness totals would not be reduced for both hours and wage reductions for the same employee.
- Definition of full-time equivalent as 40 hours, and two methods for calculating FTEs for part-time employees.
Establishes that the SBA may review any PPP loan, regardless of size, to determine if the borrower is eligible for PPP loans under the CARES Act, whether the borrower calculated the loan amount correctly and used the funds for eligible costs, and whether the borrower is eligible for the amount of loan forgiveness it requests.