Potential Relief for Physician Practices
The U.S. House of Representatives and Senate passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27, 2020 with the second wave of funding being distributed beginning April 24, 2020. Below are some of the provisions under the CARES Act and the Medicare Accelerated and Advanced Payment Program aimed at alleviating the financial challenges of physician practices.
CARES Act: Provider Relief Fund
From the $2 trillion allocated by the CARES Act, $100 billion has been dedicated to the Provider Relief Fund that will be sent directly to hospitals and other healthcare providers fighting the coronavirus. Funds received are to be used for healthcare-related expenses or to recoup lost revenues due to the virus.[1]
In order to be eligible, a private practice must have billed Medicare in 2019 and “provide or have provided after January 31, 2020 diagnoses, testing, or care for individuals with possible or actual cases of COVID-19.”[2] Any monies received from the Provider Relief Fund are considered a grant, not a loan, and do not require repayment.[3]
While some healthcare providers already have and will continue to receive this grant automatically in a direct-deposit based on 2019 Medicare fee-for-service data, other providers without adequate data will need to submit their data via an application.[4] Any recipient of a grant through this fund will also need to sign an attestation to the fund’s rules and requirements, available here.
Aside from $50 billion for the generally allocated fund, the Provider Relief Fund also provides various targeted funds:
- $10 billion for hospitals in COVID-19 high impact areas
- $10 billion for rural health providers
- $400 million for the Indian Health Service
- Remaining balance for the care of the uninsured along with other providers (i.e. dentists, Medicaid providers, and skilled nursing facilities)
Options for Practices without Paycheck Protection funding?
The CARES Act provides another measure of financial aid through tax relief that private practices should consider. Tax relief in the CARES Act exists in two forms but is only applicable to businesses whose Paycheck Protection Program (PPP) loans are not forgiven[5]. First, if a practice’s operations were fully or partially suspended due to a COVID-19 shutdown order or if its gross receipts decreased significantly compared to the same quarter in the prior year, a business can receive the fully refundable Employee Retention Tax Credit.[6] This tax credit equals 50% of qualified wages paid to employees, up to $10,000 per employee.[7] Further tax relief is available through the deferment of certain payroll taxes through the end of 2020. Any amount deferred will be due in equal installments in 2021 and 2022.[8]
Medicare Accelerated and Advanced Payment Program
In addition to utilizing the funding options above, private practices should also consider the Medicare Accelerated and Advanced Payment Program. If a practice has billed Medicare for a claim in the last 180 days prior to the date of application, it can request to receive up to 100% of Medicare reimbursements for a three-month period as an advanced payment.[9] All applications must be made through a practice’s appropriate Medicare Administrative Contractor.[10] A provider has 210 days from the date of receipt of the advanced payment to repay the balance.[11] This program helps put cash in the hands of private practices quickly, whether or not they have helped provide coronavirus relief.
For more information on these programs or for more specific assistance with your medical office, contact an HMS expert today.
The information provided herein is accurate as of the date of entry and relies on data available at the time of writing. Given the rapidly changing environment, the information provided is intended as a resource only and should not replace direct consultation of relevant laws, policies, and guidelines. HMS Valuation Partners is committed to ensuring that clients have accurate and up-to-date information and is closely monitoring any changes in policy and practice relevant to COVID-19.
[1] “CARES Act Provider Relief Fund.” U.S. Department of Health and Human Services. 22 April 2020. https://www.hhs.gov/provider-relief/index.html. 22 April 2020.
[2] “Relief Fund Payment Terms and Conditions.” U.S. Department of Health and Human Services. https://www.hhs.gov/sites/default/files/relief-fund-payment-terms-and-conditions.pdf. 22 April 2020.
[3] “CARES Act: Loans & other financial assistance for physician practices.” American Medical Association. 21 April 2020. https://www.ama-assn.org/delivering-care/public-health/cares-act-loans-other-financial-assistance-physician-practices.
[4] “CARES Act Provider Relief Fund.” U.S. Department of Health and Human Services. 22 April 2020. https://www.hhs.gov/provider-relief/index.html.
[5] “CARES Act: Loans & other financial assistance for physician practices.” American Medical Association. 21 April 2020. https://www.ama-assn.org/delivering-care/public-health/cares-act-loans-other-financial-assistance-physician-practices.
[6] “FAQs: Employee Retention Credit under the CARES Act.” Internal Revenue Service. 10 April 2020. https://www.irs.gov/newsroom/faqs-employee-retention-credit-under-the-cares-act.
[7] Ibid.
[8] “CARES Act: Loans & other financial assistance for physician practices.” American Medical Association. 21 April 2020. https://www.ama-assn.org/delivering-care/public-health/cares-act-loans-other-financial-assistance-physician-practices.
[9] “Fact Sheet: Expansion of the Accelerated and Advance Payments Program for Providers and Suppliers During COVID-19 Emergency.” Centers for Medicare & Medicaid Services. https://www.cms.gov/files/document/Accelerated-and-Advanced-Payments-Fact-Sheet.pdf.
[10] Ibid.
[11] Ibid.
