On June 12 and June 13, 2025, the Office of Inspector General (OIG) announced the results of its most recent audits on COVID-19 Provider Relief Fund (PRF) payments. The findings revealed widespread noncompliance for hospitals and skilled nursing facilities (SNFs), which led the OIG to publish recommendations to the Health Resources and Services Administration (HRSA).
This article will cover the audit results and potential impacts on hospitals and SNFs, as well as potential steps for navigating these developments.
OIG Audit Background on Hospitals
On March 13, 2020, President Donald Trump declared the COVID-19 outbreak a national emergency. In response, Congress passed three bills, which the president signed into law. These federal laws appropriated a combined $178 billion in funds to the Department of Health & Human Services (HHS), which HHS used to establish the Provider Relief Fund (PRF). The PRF provided payments to eligible hospitals and other healthcare providers (collectively referred to as “providers”) for: 1) healthcare-related expenses or lost revenues, e.g., due to canceled elective services, attributable to COVID-19; 2) COVID-19 testing and treatment for uninsured individuals; and 3) the administration of vaccines. According to the OIG report, “HHS distributed PRF funds, in part, as direct payments to providers in a series of PRF General and Targeted Distributions.” The report further noted that the Health Resources and Services Administration (HRSA) had distributed $145.9 billion of the PRF to providers as of October 2024.
The OIG selected hospitals for audit based on an analysis that considered the amount of PRF payments received during 2020, geographic location, i.e., areas most impacted by COVID-19, and organizational structure, e.g., hospital systems and standalone hospitals. This nonstatistical sample accounted for $6.6 billion in PRF payments. The audit assessed selected hospitals’ compliance with terms and conditions and federal requirements for expending PRF payments. As a condition of receiving PRF payments, providers agreed to the PRF terms and conditions, including meeting eligibility criteria, filing expenditure reports, and ensuring that payments were: 1) used to prevent, prepare for, or respond to COVID-19; 2) used for healthcare-related expenses or lost revenues, i.e., patient care revenues, attributable to COVID-19; 3) not used to reimburse expenses or losses already reimbursed from other funding sources; and 4) not used to pay salaries in excess of a certain threshold or to pay for certain prohibited activities, e.g., lobbying.
Hospital Findings Summary
The OIG report found that 11 out of 30 hospitals selected failed to comply with the HHS terms and conditions for use of the PRF payments, amounting to approximately $708.6 million in unallowable expenditures or inaccurately reported lost revenues.
Of the 30 hospitals selected, 10 hospitals used PRF payments for unallowable expenditures totaling $63 million, and two hospitals inaccurately reported lost revenues totaling $645.6 million (one hospital had both errors). A specific breakdown of the findings shows the following:
- Salary overpayments: Salaries exceeded the Executive Level II cap, e.g., $197,300 in 2020, and total overpayments came in at $4.6 million.
- Unsupported costs: $52.5 million in salary and fringe benefit costs lacked supporting documentation.
- Costs not incurred: $143,881 was charged based on estimates or incorrect fringe benefit rates.
- Duplicate expenses: $5.8 million was reported in multiple periods.
- Inaccurate lost revenue calculations: $645.6 million was overstated due to duplication or incorrect baselines.
OIG Audit Background on SNFs
As mentioned previously, HRSA has distributed $145.9 billion of PRF payments to providers since March 2020. Of the $145.9 billion distributed, PRF payments to SNFs totaled $23.6 billion. These payments were made under two distributions, which were the focus of the OIG’s audit:
- SNFs targeted distribution, and
- Nursing Home Infection Control (NHIC) targeted distribution.
The OIG selected SNFs for audit based on an analysis that considered the total amount of SNF and NHIC distribution payments received and kept, along with geographic location (urban and rural areas in various states). This nonstatistical sample accounted for $385 million in SNF or NHIC PRF payments. The audit assessed selected SNFs’ compliance with terms and conditions and federal requirements for expending PRF payments.
As a condition of receiving PRF payments, providers agreed to the PRF terms and conditions, including meeting eligibility criteria, filing expenditure reports, and ensuring that payments were: 1) used to prevent, prepare for, or respond to COVID-19; 2) used for healthcare-related expenses or lost revenues, i.e., patient care revenues, attributable to COVID-19; 3) not used to reimburse expenses or losses already reimbursed from other funding sources; and 4) not used to pay salaries in excess of a certain threshold or to pay for certain prohibited activities, e.g., lobbying.
SNFs Findings Summary
In this instance, the OIG report found that 10 out of 30 SNFs selected failed to comply with the HHS terms and conditions for use of the PRF payments, amounting to approximately $2.6 million in unallowable expenditures or inaccurately reported lost revenues.
Of the 30 SNFs selected, 10 did not comply with federal requirements. Specifically, these SNFs used PRF payments for unallowable expenditures and lost revenues totaling $2,589,066. The following breakdown of these findings shows:
- Misuse of funds: Some facilities spent PRF money on legal fees, landscaping, or duplicate expenses—none of which were tied to the COVID-19 response.
- Poor documentation: A few facilities did not have adequate support documentation for their expenditures, e.g., receipts, invoices, or proof of payment.
- Wrong use of infection control funds: One facility used infection control funds to cover lost revenue, which is explicitly prohibited.
- Incorrect lost revenue calculations: One facility used outdated or unapproved budget data to claim revenue losses, leading to overreporting of lost revenues.
OIG Recommendations
According to the OIG, these deficiencies occurred because the hospitals and SNFs made clerical errors in their reporting of expenditures and did not always correctly interpret HRSA guidance, maintain documentation to support reported expenditures, or have procedures to verify the accuracy of lost revenue calculations.
As a result of the findings, the OIG made two recommendations to HRSA: 1) require the selected hospitals and SNFs to return any unallowable expenditures and lost revenue amounts to the federal government; and 2) ensure that the hospitals and SNFs properly account for the expenditures and lost revenues. HRSA agreed with both recommendations.
Next Steps & How Forvis Mazars Can Help
Based on the OIG’s audits and recommendations to HRSA, it appears that hospitals and SNFs that are out of compliance with the PRF terms and conditions will not be held harmless, and repayment of PRF payments is likely. If your organization has not been selected for an audit, these PRF payments may still be at risk. Thus, organizations may proactively assess their compliance with PRF terms and conditions.
Our healthcare professionals at Forvis Mazars help organizations across the care continuum achieve regulatory excellence by maintaining compliance and acting strategically within a complex regulatory environment. If you need assistance interpreting the PRF terms and conditions or would like to conduct a mock PRF audit, please reach out to our professionals and we can help you prepare for what’s next.