Allowable Expenses

What is an Allowable Expense?

An allowable expense under the Provider Relief Fund (PRF) must be used to prevent, prepare for, and respond to coronavirus. PRF recipients must follow their basis of accounting (e.g., cash, accrual, or modified accrual) to determine expenses. The cited expenses or losses must not have been reimbursed from other sources and other sources must not be obligated to reimburse them.

Recipients may use PRF payments for allowable expenses or lost revenue incurred prior to receipt of those payments (i.e., pre-award costs) so long as they are to prevent, prepare for, and respond to coronavirus. HHS expects that it would be highly unusual for providers to have incurred eligible expenses prior to January 1, 2020. All recipients are subject to audit.

Recipients must support all expenses with adequate documentation and maintain documents to substantiate that these funds were used for health care-related expenses or lost revenues attributable to coronavirus. The burden of proof is on the recipient to maintain documentation that shows how expenses prevent, prepare for, and respond to coronavirus.

Review the Allowable Expenses One-Pager (PDF - 43 KB) (excludes Nursing Home Infection Control payments).

When considering if an expense is allowable, ask yourself:

  • Is this expense necessary and reasonable to support patient or client care efforts to prevent, prepare for, or respond to coronavirus?
  • Is this expense incurred consistent with our organization’s policies and procedures?

Use of Funds Guidance

The June 11 Notice of Reporting Requirements (PDF - 232 KB) states that PRF payments can be used by any provider of health care, services, and support in a medical setting, at home, or in the community towards health care-related expenses attributable to coronavirus that another source has not reimbursed and is not obligated to reimburse, which may include General and Administrative (G&A) or health care-related operating expenses. Reference the Reporting and Auditing FAQ for additional details and guidance.

Examples of Allowable Expenses for Provider Relief Fund Payments

This list is intended to clarify the intent and provide examples of allowable expenses for the use of PRF General and Targeted Distribution payments. This is not an exhaustive list of allowable expenses, but will help to inform and support providers as they categorize expenses for reporting on use of funds.

G&A expense examples:

  • Mortgage/rent: Rent for a clinical setting, medical office building, etc.
  • Insurance: Property, malpractice, or other business insurance
  • Personnel: Direct employee expenses for staff such as nurses, contractor payroll administrators, or support personnel
  • Fringe benefits: Employee health insurance, childcare assistance, transportation, temporary housing, overtime pay, hiring bonuses, hazard pay, or recruitment and retention payments to expand or maintain patient/client care capacity
  • Utilities/operations: HVAC services, environmental services for cleaning, or food and nutrition services

Health care-related expense examples:

  • Supplies: N95 or surgical masks, gowns, temperature monitoring devices, or cleaning agents
  • Equipment: Ventilators, HVAC systems or improved filtration for infection control, or lab and radiology diagnostic equipment
  • Information technology: Telehealth software and hardware, improved internet services to support increased telehealth or remote working, or new Electronic Medical Record modules to support patient or client care
  • Facilities: Temporary Emergency Department expansions for patient volume increases, inpatient unit retrofits to accommodate COVID-19 or other patients, or outpatient clinics, school-based health centers, adult day centers, assisted living facilities, or enhancements for improved infection control
  • Please Note: As outlined in the most recently published Post-Payment Notice of Reporting Requirements (PDF - 232 KB), Nursing Home Infection Control Distribution payments may only be used for infection control expenses limited to those outlined in the Terms and Conditions.

Skilled Nursing Facility and Nursing Home Infection Control Distribution examples:

Skilled Nursing Facility and Nursing Home Infection Control Distribution, including Quality Incentive Payments (QIP) program, may be used for infection control expenses limited to those outlined in the Terms and Conditions as follows:

  • Costs associated with administering COVID-19 testing;
  • Reporting COVID-19 test results to local, state, or federal governments;
  • Hiring staff to provide patient care or administrative support;
  • Providing additional services to residents; or
  • Other expenses incurred to improve infection control

Additional Resources

PRF payments can also be used for a wide variety of direct and indirect costs of recruiting and retaining personnel during the pandemic. Download the Personnel Recruitment and Retention Fact Sheet (PDF - 129 KB).

Date Last Reviewed:  January 2022