Practice Management Alert

Question: My organization has assets we’d like to sell, but their connected to the CARES Act Provider Relief Fund (PRF) payments. Is there anything we should know before we move forward? 

New Mexico Subscriber

Answer: Purchasers and sellers should “be aware of the restrictions on the receipt and transfer of those payments,” cautions attorney John Waters with Roetzel & Andress in Chicago. In its PRF frequently asked question set, HHS makes clear that “providers that received Provider Relief Fund payments prior to a sale of their assets may not transfer those funds to the buyer,” Waters points out.

It’s not totally cut and dried, however. “If the transaction is a purchase of the recipient entity (e.g., a purchase of its stock or membership interests), then the Provider Relief Fund recipient may continue to use the funds, regardless of its new owner,” HHS explains in one of its “Ownership Structures and Financial Relationships” FAQs. “But if the transaction is an asset purchase … then the original recipient must use the funds for its eligible expenses and lost revenues and return any unused funds to HHS. In these circumstances, the Provider Relief Fund money does not transfer to the buyer.”

See the FAQs at www.hhs.gov/coronavirus/cares-act-provider-relief-fund/faqs/provider-relief-fund-general-info/index.html.