HHS issues New Guidelines on Capital Purchase Reporting

As an update for reporting capital purchases, the U.S. Department of Health & Human Services (HHS) provided clarifications in the Frequently Asked Questions (FAQ) dated November 18, 2020. Previously, HHS stated that the “relevant depreciation amount” may be reported for capital equipment purchased during the pandemic. HHS has now expanded this section with two categories: “Capital Equipment and Inventory” and “Capital Facility Projects.” Providers may fully expense capital purchases if they fall under these two categories and guidelines.

Capital Equipment and Inventory

Providers may fully expense capital equipment and inventory if “the purchase was directly related to prevent, prepare for and respond to the coronavirus.” HHS provided the following examples:

• Ventilators, computerized tomography scanners, and other intensive care unit- (ICU) related equipment put into immediate use or held in inventory
• Masks, face shields, gloves, gowns
• Biohazard suits
• General personal protective equipment
• Disinfectant supplies

Capital Facility Projects

Providers may fully expense capital facility projects if “the purchase was directly related to preventing, preparing for and responding to the coronavirus.” HHS provided the following examples:

• Upgrading a heating, ventilation, and air conditioning (HVAC) system to support negative pressure units
• Retrofitting a COVID-19 unit
• Enhancing or reconfiguring ICU capabilities
• Leasing or purchasing a temporary structure to screen and/or treat patients
• Leasing a permanent facility to increase hospital or nursing home capacity

This is good news for providers who have already made or are planning to make capital purchases and improvements in response to the coronavirus, as the second wave is starting to sweep the country.

In addition, another FAQ addresses the reporting requirement for net patient revenue. HHS has clarified that when reporting net patient revenue, you should exclude any payments received or payments to third parties for care that was not provided in either 2019 or 2020.

Marcum will continue to provide updates on the HHS Funding FAQs as they are released. Please reach out to your Marcum Healthcare Advisor with any questions you may have.