On June 13, 2025, OIG announced the results of an audit it conducted of 30 hospitals that received provider relief fund (PRF) payments during COVID-19 (the Audit). OIG found that 11 of the 30 audited hospitals failed to comply with federal terms and conditions for expending PRF payments, either by using funds for unallowable costs or by inaccurately reporting lost revenues. Based on its findings, OIG made two recommendations to HRSA: (1) that HRSA require selected hospitals to return any unallowable expenditures and lost revenue amounts to the federal government; (2) that hospitals be required to properly account for expenditures and lost revenues. HRSA agreed with both recommendations.
At the outset of COVID-19 public health emergency, many states ordered hospitals and other providers to postpone elective and nonurgent procedures to free up staff and facilities to care for COVID-19 patients. As a result, hospitals and providers faced declining revenues and increased costs, and many hospitals depleted their cash reserves. Rural hospitals and facilities especially faced financial risk and uncertainty.
In response to the public health emergency, Congress established the PRF program to provide funds to eligible providers for healthcare related expenses or lost revenue attributable to COVID-19. Congress allocated $178 billion in funding to HHS, and it distributed $145.9 billion in PRF payments to providers. HRSA oversaw and managed day-to-day aspects of the PRF program.
Providers had to meet several conditions to receive PRF payments. They were required to ensure 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). Hospitals and providers that received PRF payments were also obligated to meet reporting requirements to HRSA.
As part of a series of audits reviewing PRF payments to various provider types, OIG conducted the Audit of 30 selected hospitals to assess whether selected hospitals that received PRF payments complied with the terms and conditions and Federal requirements for expending PRF funds. The Audit covered $6.6 billion in PRF payments to a nonstatistical sample of 30 hospitals during CY 2020.
OIG made the following findings in its Audit report:
- 19 of the 30 hospitals used PRF funds for allowable healthcare related expenditures and to offset lost revenues;
- 10 of the 30 hospitals used PRF funds for unallowable expenditures;
- 2 of the 30 hospitals inaccurately calculated lost revenues;
- 11 of the 30 selected hospitals used PRF payments for unallowable expenditures totaling $63 million and/or inaccurately calculated lost revenues totaling $645.6 million; and
- Hospitals 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 noted above, as a result of its Audit, OIG made two recommendations to HRSA. First, OIG recommended that the 10 audited hospitals which used PRF payments for unallowable expenditures be required to return those funds to the federal government or replace them with allowable lost revenues or eligible expenses. Second, OIG recommended that the 2 audited hospitals that inaccurately calculated and reported lost revenues be required to identify and return funds improperly used to offset lost revenues or, alternatively, replace them with allowable lost revenues or eligible expenses. HRSA concurred with both recommendations and said it would seek repayment as appropriate.
Notably, HRSA’s intention to seek repayment from the audited hospitals does not signal a general amnesty for PRF recipients. Unless and until more visibility into HHS enforcement policy is available, non-audited PRF recipients remain at risk for enforcement depending on the circumstances.
A copy of OIG’s Audit report is available here.
