The calculation of Provider Relief Fund (PRF) Phase 4 payments involves deducting any prior PRF payments that exceeded certain thresholds. Specifically, these deductions are based on a percentage of annual patient care revenue or changes in operating revenues and expenses for the first half of calendar year 2020.
To break it down further, let’s consider the two criteria for deduction:
1. 2% of annual patient care revenue: This means that if a provider received PRF payments that exceeded 2% of their annual patient care revenue, the excess amount would be deducted from their Phase 4 payment. For example, if a provider received $100,000 in PRF payments and their annual patient care revenue was $1 million, the excess amount above 2% (which is $20,000 in this case) would be deducted from their Phase 4 payment.
2. 88% of changes in operating revenues and expenses for the first half of 2020: This criterion looks at the changes in a provider’s operating revenues and expenses during the first six months of 2020. If the total PRF payments received by a provider exceed 88% of their net revenue or losses during this period, the excess amount would be deducted from their Phase 4 payment. For instance, if a provider had a net revenue of $500,000 and received $400,000 in PRF payments during the first half of 2020, the excess amount above 88% (which is $440,000 in this case) would be deducted from their Phase 4 payment.
It’s important to note that these deductions are made to ensure that the PRF payments are targeted towards providers who were most affected by the financial impact of the COVID-19 pandemic. By deducting any excess payments, it helps to redistribute the funds to those in greater need.
In my personal experience, I have seen how these calculations can have a significant impact on providers. Many healthcare organizations have relied on PRF payments to sustain their operations during these challenging times. However, the deductions can sometimes be a source of concern for providers who have already received substantial PRF payments and now face the possibility of having a portion of it deducted from their Phase 4 payment.
PRF Phase 4 payments are calculated by deducting any prior PRF payments that exceeded 2% of annual patient care revenue or 88% of changes in operating revenues and expenses for the first half of calendar year 2020. These deductions are made to ensure that the funds are allocated to providers who were most affected by the pandemic.