Throughout the course of the pandemic, the Health Resources and Services Administration (HRSA) distributed $178 billion in Provider Relief Funds (PRF) to hospitals and health care providers.  The Public Health Emergency has ended, and HRSA is now turning an eye to how the money was spent, and whether it was spent properly. 

PRF funds were distributed with nearly no-strings-attached; hospitals and providers had to simply agree to a few terms and conditions.  Yet a number of facilities and providers have received one of two types of letters from HRSA: (1) a Final Repayment Notice stating the money must be returned, or (2) a letter stating that HRSA will be conducting an audit.  

Provider Relief Funds: What to Expect

Providers who received a total of more than $10,000 in PRF funds were required to report on the use of funds during one of nine reporting periods, depending on when the funds were received.  For those who failed to report during the reporting periods, HRSA issued several reminders, deadline extensions, and finally began issuing requests for repayment.  HRSA has now started to issue Final Repayment Notices.

Is a final notice really final?

A Final Repayment Notice will say something to the effect of “Debt is owed to HRSA as a result of failure to comply with the Terms and Conditions of funding received through the Provider Relief Fund,” and will enumerate the total amount due. 

A provider who has received a Final Repayment Notice has 60 days to either return PRF payments to HRSA, arrange for a payment plan, or submit a request for a Decision Review (HRSA’s dispute resolution process).  The outcome of the Decision Review is considered by HRSA to be final and is not appealable.  HRSA’s position is that the scope of a Decision Review is limited to contesting repayment only, and that the period for contesting the calculation or amount of repayment has closed.   However, to date, HRSA has not published binding regulations on point. We have observed that the Decision Review process is relatively quick, taking on average two to three weeks, and the decision is usually “no” with an instruction to return the funds. After an adverse and final answer to the provider’s Decision Review, the only option left if the amount in controversy is financially significant is to seek judicial review in federal court.

Audit of Provider Relief Funds

Providers who expended (not received) $750,000 or more in government grants (which includes but is not limited to: PRF distributions, Federal Emergency Management Agency (FEMA) awards, and uninsured and underinsured COVID testing and treatment) are required to complete single audits or OMB Circular A-133 audits (the “Single Audit”) for the applicable fiscal year.  These Single Audits are submitted by CPAs through federal or commercial audit portals and are colloquially called “yellow book audits” because they used to feature yellow covers.  All recipients of PRF audits are required to retain records in accordance with federal law, and to promptly submit such records upon HRSA’s request. 

Additionally, HRSA may decide to audit a provider regardless of whether a Single Audit was submitted.  There are three reasons why HRSA may have decided to audit your organization: 1) luck of the draw; 2) your PRF reports may have claimed that you used the money to replace lost revenue on a method other than the 2019 actuals or a budget approved prior to March 27, 2020.  HRSA allowed providers to account for lost revenue by a method other than by the aforementioned options but stated that if you selected an alternative method that you would be at increased odds of being selected for an audit; or 3) there is something unusual in your PRF reports that raised a flag. 

What do you do now?

First, let your accounting firm know that you were selected for an audit.  Due to HRSA’s limited resources, it is using outside accounting firms.  Most national accounting firms also did Single Audit compliance audits for providers and may be conflicted out of working for HRSA. 

Second, engage an attorney who can engage your accountant or consultant under privilege.  That way, any findings will be protected by attorney-client privilege.  Once engaged, your accountant or consultant should review PRF reports and supporting documentation and identify any issues. 

Based on your accountant or consultant’s findings, you may need to amend your PRF reports.  You will have to communicate to HRSA that you completed your initial reports in good faith and based on the knowledge that you had at the time of submitting the report.  However, upon review, you have identified additional information and are submitting an amended report.  As soon as you identify any material discrepancies, you will need to correct the report promptly.   

HRSA may also review audits and reports filed for the coordination of funds with other federal programs, such as those administered by FEMA and the Small Business Administration’s Paycheck Protection Program.  It may shine a spotlight on general and targeted distributions, and uninsured and underinsured COVID testing and treatment.  For these more nuanced issues, an attorney’s counsel is highly recommended. 

Epstein, Becker & Green attorneys can help you to negotiate payment terms with HRSA and to evaluate possible options in the event of a final adverse decision.  The facts and circumstances of an individual case may vary, but it is important to understand your rights and options as early as possible. If you have questions concerning a Final Repayment Notice or audit letter, please contact Robert Wanerman, Colin G. McCulloch, and Eleanor T. Chung.

Back to Health Law Advisor Blog

Search This Blog

Blog Editors


Related Services



Jump to Page


Sign up to receive an email notification when new Health Law Advisor posts are published:

Privacy Preference Center

When you visit any website, it may store or retrieve information on your browser, mostly in the form of cookies. This information might be about you, your preferences or your device and is mostly used to make the site work as you expect it to. The information does not usually directly identify you, but it can give you a more personalized web experience. Because we respect your right to privacy, you can choose not to allow some types of cookies. Click on the different category headings to find out more and change our default settings. However, blocking some types of cookies may impact your experience of the site and the services we are able to offer.

Strictly Necessary Cookies

These cookies are necessary for the website to function and cannot be switched off in our systems. They are usually only set in response to actions made by you which amount to a request for services, such as setting your privacy preferences, logging in or filling in forms. You can set your browser to block or alert you about these cookies, but some parts of the site will not then work. These cookies do not store any personally identifiable information.

Performance Cookies

These cookies allow us to count visits and traffic sources so we can measure and improve the performance of our site. They help us to know which pages are the most and least popular and see how visitors move around the site. All information these cookies collect is aggregated and therefore anonymous. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.