COVID-19-Related Stimulus Options for Healthcare Providers
It is no secret that due to COVID-19, most people—including our clients’ patients—are doing their best to stay home to do their part in flattening the curve. And even though most healthcare providers are considered “essential businesses,” patients staying home and putting off non-emergent care will invariably affect a provider’s bottom line.
Thankfully, the same legislative lifelines that the federal government has fashioned to rescue small business throughout the country are also available to most healthcare providers. These lifelines have been evolving in real-time, well-received, exhausted, and now replenished; but as of today, here is what healthcare providers need to know about the four primary forms of economic relief that is available to healthcare providers from the federal government.
First, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES” Act) created the Public Health and Social Services Emergency Fund (the “Relief Fund”). The Relief Fund was set up to keep the U.S. healthcare system operating during the COVID-19 pandemic. On April 10, the U.S. Department of Health and Human Services (“DHHS”) announced that it was releasing the first $30 billion in grants. These relief payments are not loans, so if you are eligible to receive the funds, you do not have to repay them. All facilities and providers that received Medicare fee-for-service (“FFS”) reimbursements in 2019 are eligible for these relief payments, which will be directly deposited in your provider account according to your tax identification number. If eligible, you should receive roughly 6.2% of the amount you billed for FFS in 2019.
Providers who receive a relief payment as part of the Relief Fund must sign an attestation within 30 days of receiving payment confirming receipt of the funds and agreeing to the terms and conditions of payment. The attestation is currently available at https://covid19.linkhealth.com /#/step/1. Initially, there was some concern over a condition that recipients must be “currently” providing diagnoses, testing, or care for individuals with possible or actual cases of COVID-19. But late last week DHHS changed the terms to require that attesting providers attest that they provide or provided care after January 31, 2020. In doing so, DHHS confirmed that providers forced to close their doors due to COVID-19 are still eligible to receive and keep funds, and that that care does not have to be specifically targeted to COVID-19 patients. Indeed, “HHS broadly views every patient as a possible case of COVID-19.”
On April 22, the Trump administration laid out a plan for how to disperse the remaining $70 billion of the Relief Fund. From that $70 billion, an additional $20 billion dollars will be allocated to providers directly in the form of grants, but the distribution will be based on net patient revenues from 2018. So while the initial $30 billion was allocated based on historical Medicare payments, this “new” $20 billion will be based on all sources. DHHS will launch a portal this week at https://hhs.gov/providerrelief where providers can submit revenue information for the $20 billion in general funds. DHHS Secretary Alex Azar said on a call with reporters last Wednesday that “payments will go out weekly on a rolling basis.”
Second, the CARES Act expanded the Centers for Medicare and Medicaid Services’ (“CMS”) authority to provide accelerated or advance payments to all providers during the public health emergency. So, the Accelerated and Advance Payment Program is the second lifeline available to eligible Medicare providers, who must submit a request to the appropriate Medicare Administrative Contractor (“MAC”). You are eligible if you have billed Medicare within the last 180 days, have no outstanding overpayments, are not in bankruptcy, and are not under active medical review or program integrity investigation. Most healthcare providers can request 100% of their Medicare reimbursements for a 3-month period. The Accelerated or Advance Payment Request form is available on each MAC’s website.
Once payment is requested under the Accelerated and Advance Payment Program, providers should receive the funds within 7 days of the MAC receiving the request. However, unlike the relief funds delivered through the CARES Act, funds from the Accelerated and Advance Payment Program must be repaid. CMS has extended the repayment of these accelerated/advance payments to begin 120 days after the date of issuance of the payment. Providers will have 210 days from the date of the accelerated or advance payment was made to repay the balance. The repayments will be automatic through offsets, meaning after the 120-day period ends, the recoupment process will begin, and every claim submitted by the provider will be offset from the new claims to repay the accelerated/advanced payment. The Accelerated and Advance Payment Program is basically an interest free bridge loan collateralized by you future Medicare A/R.
Third, the CARES ACT created the Paycheck Protection Program (“PPP”), which provided for forgivable loans of up to 250% of your practice’s monthly payroll (wages – capped at $100K per annum per employee, employee benefits, state/local taxes). The program, which is administered by private banks but secured by the U.S. Small Business Administration (“SBA”), was originally allocated $349 billion in the CARES Act. But the program was so popular that funds were depleted in 12 days. Fortunately, on Tuesday April 21, the U.S. Senate approved a $484 billion supplemental relief bill that allocated $370 billion in additional funding for the PPP and Economic Injury Disaster Loans, with the House expected to vote on Thursday, April 23, 2020. Of the additional funding, $310 billion will replenish the PPP. Even with the additional funding, it is unclear how long it will last and how many eligible applicants will be able to receive assistance.
Because the PPP program secures loans designed to provide a direct incentive for small businesses to keep their workers on the payroll, the SBA will “forgive” those loans, i.e., pay the banks back on your behalf, if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. The amount that qualifies for forgiveness is the amounts spent for the following costs during the eight week period after the loan is made: (i) payroll including benefits, but wages again are capped at $100,000 on an annualized basis for each employee: (ii) mortgage interest; (iii) rent; and (iv) utility costs. Current employee and compensation levels must be maintained or there are forgiveness reductions. This is up to you to calculate. The application, which is currently unavailable, is located at https://www.sba.gov/ funding-programs/loans/coronavirus-relief-options/paycheck-protection-program-ppp.
Fourth, the CARES Act recognized the COVID-19 crisis as an “economic injury” for purposes of applying for and obtaining an SBA Economic Injury Disaster Loan (“EIDL”). These loans allow small businesses with less than 500 employees to apply for an SBA EIDL up to $2 million dollars. This application is made to the SBA directly, not through a bank. An EIDL includes a $10,000 advance, paid within 3 days of submitting an updated application, which does not have to be repaid; however, aside from this $10,000 advance, EIDL are not forgivable. An EIDL does have a few stipulations, mainly they require collateral and personal guarantees, require “proof” of an economic injury, and cannot be used for the same purposes as a PPP loan, and receipt of an EIDL must be disclosed on the PPP application, should either of these applications open back up. You can, however, refinance an EIDL into a PPP loan. The supplemental funding bill expected to pass the House and be signed into law on April 23 included an additional $50 billion to replenish the EIDL, which was also exhausted during the last several weeks based on unprecedented demand.
As always, our attorneys are here to answer any questions you may have about how to keep your head above water during these trying time. Please feel free to call us at 609-799-5150 or mail us at info@buttacilaw.com any time with your questions or concerns.
Stay safe, stay healthy, and we will get through this together.
- Posted on: Apr 27 2020