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ASCA Advocates for Non-Taxable Federal Aid for COVID-19

Provider Relief Funding currently comes with conditions

BY STEVE SELDE | SEPTEMBER 2020

For many ASCs, money from the Provider Relief Fund has been an important source of relief during the trying financial times tied to the COVID-19 emergency. This monetary assistance, however, comes with strings attached. Under current rules, ASCs that accepted aid from the Provider Relief Fund will face tax implications related to that assistance next year.

The Provider Relief Fund came through this year when Congress passed, and President Donald Trump signed into law, the Coronavirus Aid, Relief, and Economic Security (CARES) Act and subsequent bills to provide federal support for healthcare providers, businesses and communities. Overall, Congress allocated $175 billion to the Public Health and Social Services Emergency Fund (Provider Relief Fund), which is administered by the US Department of Health & Human Services, to provide financial relief to healthcare providers. Many ASCs benefited from the first tranche of money from the fund.

Unlike some of the other federal assistance programs that Congress created, like the Paycheck Protection Program (PPP), the legislative text for the Provider Relief Fund did not exempt these funds from being taxed. The tax payments currently required would result in a 21 percent or greater reduction to the benefit for taxpaying healthcare providers as compared to non-taxpaying healthcare providers.

To fix this issue and to ensure that ASCs receive the full potential of these relief funds, ASCA worked with other healthcare associations on a solution. On June 25, ASCA and other healthcare associations sent a letter to leaders in Congress urging that legislative action be taken to correct this situation. This early stage of advocacy contributed to a fix being included in the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, which the US House of Representatives passed on May 15.

Negotiations between both parties, however, stalled out on an additional comprehensive COVID-19 relief package, with the Senate refusing to consider the full HEROES Act. As the likelihood for quick passage of a larger COVID-19 relief bill became less likely, Representatives Cindy Axne (D-IA) and Neal Dunn (R-FL), MD, introduced in the House, and Senator Marsha Blackburn for Tennessee's 7th congressional district introduced in the Senate, the Eliminating the Provider Relief Fund Tax Penalties Act. If enacted, this legislation would ensure that all healthcare providers, regardless of their taxpaying status, would not be subject to taxes on aid provided through the Provider Relief Fund. Additionally, the bill would ensure that expenses attributable to the Provider Relief Fund would be tax deductible.

ASCA supported each of these bills as introduced, joining other associations in sending a letter on August 25 to the bill sponsors reaffirming support for the legislation. For many ASCs, Provider Relief Funding has been an important form of financial relief, and ASCA remains committed to ensuring that centers get the full benefit of this support. This issue will continue to be an advocacy priority for ASCA as Congress continues to consider a larger COVID-19 relief package.

The success of ASCA’s advocacy effort relies on members’ participation and input. Write Steve Selde to become an advocate for the ASC community.