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Relief Opportunities Available to
Healthcare Providers Impacted
by COVID-19
April 24, 2020
Our firm provides the information in this webinar
presentation for general guidance only, and does not
constitute the provision of legal advice, tax advice,
accounting services, investment advice, or professional
consulting of any kind.
The information provided herein should not be used as a
substitute for consultation with professional tax, accounting,
legal, or other competent advisers.
Before making any decision or taking any action, you should
consult a professional adviser who has been provided with
all pertinent facts relevant to your particular situation.
Today’s Agenda
• Introduction
• Updates
• Key PPP & EIDL Takeaways & Considerations
• Other Employer Stimulus Programs
• Loan Forgiveness
• CARES Act Health Care Provider Relief Fund
Introduction
Susan Reed, CPA, CFP®
Partner, Sax LLP
Head of Healthcare Practice
Grace D. Mack
Shareholder, Wilentz, Goldman & Spitzer, P.A.
Co-Chair of Health Law Group
Deborah Nappi, CPA, MST
Director, Sax LLP
Tod Christianson, CPA
Partner, Sax LLP
Updates
UpdatesGovernmental Action
• The House and Senate approved an additional $370B in
funding for small businesses on April 21, 2020
– $310B for PPP
– $60B for EIDL
• Presidential approval anticipated as well
Key PPP & EIDL Takeaways
& Considerations
Loan Programs Key General & EIDL Takeaways & Considerations
• General Takeaways & Considerations
– Applicants are eligible for loans under both programs
– Main Street Lending Program eligibility
– Interactions with other deferrals, credits and incentives
• Economic Injury Disaster Loans
– $2,000,000 maximum loan balance at SBA discretion
– $10K advance limit up to $1k x 10 employees
– Net worth and taxable income limitations
– Detailed application process through SBA
– No forgiveness aspect (other than potential $10K advance)
– 30 year amortization, 2.75% - 3.75% interest rate
Loan Programs Key PPP Takeaways & Considerations
• Paycheck Protection Program Loans
– $10,000,000 maximum loan balance (formulaic computation)
– Forgiveness of some/all of the debt is available
– Payroll Cost Clarifications
• $100K + Non-Cash Benefits
• SE Income of general active partners
– Individual partners in partnerships may not submit separate PPP
applications
– Borrowers may use payroll from calendar 2019 or trailing 12
months
– Differences between use of funds and funds eligible for
forgiveness
– Application process completed at SBA designated banks
– 2 year amortization period, 1.0% interest rate
• Interest accrual commences upon funding
Loan Programs Key PPP Takeaways & Considerations (Self-Employed)
• Self-Employed Eligibility
– Filed or will file 2019 Schedule C, Profit or Loss from Business
– Operating as of February 15, 2020
• Must plan to file Schedule C with 2020 tax return
– If there are employees on payroll:
• Form 941;
• State quarterly wage unemployment tax reporting forms; and
• Evidence of retirement and health insurance contributions
– Owner compensation loan forgiveness limited to 8 weeks of 2019 profit
• Documentation / PPP Application requirements
– 2019 Schedule C;
– 2019 Form(s) 1099-MISC, invoice, bank statement or book of record;
– 2020 invoice, bank statement or book of record
– February 15, 2020 payroll statement or similar documentation (if
applicable)
Other Employer Stimulus
Programs
Deferral of Employer Social Security (FICA) Tax
• Can defer this 6.2% payroll tax incurred now through the
earlier of:
– 12/31/20 or
– the date loan forgiveness is granted under the PPP
program
• Half is due at the end of 2021, half at the end of 2022
• Note: Deferring this tax has no effect on the loan
forgiveness calculation under the PPP program.
Paid Sick and Family Leave Credits
• Families First Coronavirus Response Act (FFCRA)
• Paid leave for specified reasons related to COVID-19:
– Quarantined
– Caring for a family member
– Caring for a child if their school or place of care is closed
• Dollar-for-dollar tax credit for entire amount of wages
paid:
– Immediate reduction of payroll tax remittance
– 941 quarterly payroll tax return, not income tax return
Loan Forgiveness
PPP Loan ForgivenessGeneral Rules
• SBA clarification of forgiveness expected via additional
guidance
• Payroll costs include:
– Compensation of employees (principal place of residence is the
US)
• Wages, Salaries, Commissions or similar compensation
• Payment of vacation, parental, family, medical or sick leave,
allowance for separation or dismissal
• Payment for provision of employee benefits consisting of
– Group Health Care Coverage including insurance premiums
– Retirement
– Payment of State and Local Taxes Assessed on Employees
Compensation
• Per the SBA Interim Final Rule, not more than 25% of the loan
forgiveness may be attributable to non-payroll costs.
PPP Loan ForgivenessGeneral Rules (cont’d)
• Only 25% can be used for the following payments over the
eight–week period following the date of the loan:
– Payments on interest on mortgage obligations incurred before
February 15, 2020;
– Rent payments on leases entered into prior to February 15,
2020; and/or
– Utility payments under service agreements entered into prior to
February 15, 2020
• Utilities include payments for electricity, gas, water,
transportation, telephone or internet access
PPP Loan ForgivenessHeadcount Decrease
• Loan amount eligible for forgiveness may be reduced (but not
increased) by the following 2 part formula:
– Part I
• (a) Average number of full-time equivalent (“FTE”) employees
during the 8-week period beginning with the date of the
origination on the loan
• (b) Average number (at the borrower’s discretion) of FTE
employees from
– February 15, 2019 – June 30, 2019; or
– January 1, 2020 – February 29, 2020
– Part II
• (c) Paycheck Protection Program loan used for eligible costs
• The formula is (a) / (b) x (c)
PPP Loan ForgivenessSalary Decrease
• Loan amount eligible for forgiveness may also be reduced by
decreases in salary and wages of any employee if:
– Decrease occurs during the 8-week period beginning with
the date of the origination on the loan; and
– The decrease is in excess of 25% of the of the total salary
or wages of the employee during the most recent full
quarter during which the employee was employed prior the
commencement of the 8-week period
– Employees who received annualized wages or salary in
excess of $100,000 are excluded
PPP Loan ForgivenessExemptions from Reductions
• Exemptions from forgiveness reductions are available if:
– During the period from February 15, 2020 – April 26, 2020, there
is a workforce or salary reduction that meets the criterion on the
earlier slides, but:
• Borrower restores FTE employees to pre-February 15, 2020
amounts by June 30, 2020; and/or
• Borrower restores the reduced salaries or wages for
employees to pre-February 15, 2020 amounts by June 30,
2020
PPP Loan ForgivenessDocumentation Requirements
• Documentation Requirements:
– # of FTE employees on payroll and pay rates;
– Payroll tax filings with the Internal Revenue Service;
– State income, payroll, and unemployment filings;
– Cancelled checks, payment receipts, transcripts of accounts, or
other documents verifying payments on covered mortgage
obligations, covered lease obligations, and covered utility payments;
– Independent Contractors & Sole Proprietors – See earlier slides
– Certification from an authorized representative that:
• The documentation presented is true and correct; and
• The amount for which forgiveness is requested was used to
retain employees, or make interest payments on mortgage
obligations, rent obligations and/or utility payments in force prior
to February 15, 2020
• Lenders have 60 days from receipt of documentation to render decision
PPP Loan ForgivenessOpen Questions
• The following questions still are unclear and need further guidance
from the SBA:
1. Are the costs for the 8-week period to be determined on a cash basis or
an accrual basis?
2. At least 75% of the loan proceeds shall be used for Payroll Costs.
What happens if I spend less?
3. Should full year bonuses and/or year end profit-sharing contributions be
included in the forgiveness calculation?
4. Does rent cover only costs for facilities or do equipment rentals count
as rent for forgiveness purposes?
5. How is full-time equivalent calculated?
6. How are non-COVID-19 reductions in workforce and/or salary treated
for purposes of the loan forgiveness reduction?
7. Will the formula for salary reduction be pro-rata adjusted?
8. Do the exceptions for headcount and/or salary reduction allow for a
replacement of the terminated worker?
PPP Loan ForgivenessOpen Questions (cont’d)
• The following questions still are unclear and need further guidance
from the SBA:
9. What types of transportation costs qualify as utility costs?
10.For employees re-hired by June 30th, is there a time period for which
they need to be employed in order to count towards headcount/salary
restoration?
11.Will the expenses associated with the forgiven funds give rise to a tax
deduction?
12.Will the forgiven funds be tax-exempt for state tax purposes?
CARES Act Health Care
Provider Relief Fund
The CARES Act
The Coronavirus Aid, Relief, and Economic Security
(CARES) Act, which was signed into law on March 27,
2020, provided for $100 billion in relief funds to hospitals
and other healthcare providers:
– To support healthcare-related expenses or lost
revenue attributable to COVID-19 and
– To ensure uninsured Americans can get testing and
treatment for COVID-19.
$100 Billion Dollars
$30 Billion Infusion
The Department of Health and Human Services (HHS)
began the infusion of $30 billion of the $100 billion into
healthcare system with payments arriving via direct deposit
beginning, April 10, 2020, to eligible providers.
According to the HHS Release, these are payments, not
loans, to healthcare providers, and will not need to be
repaid.
This differs from payments received under the CMS
COVID-19 Accelerated and Advance Payment Program
which are advances against future payments.
$30 Billion Infusion
Who is Eligible?
All facilities and providers that received Medicare fee-for-
service (FFS) reimbursements in 2019 are eligible.
*Subject to Terms and Conditions
$30 Billion Infusion
How will the $ be distributed?
• Providers will be distributed a portion of the initial $30
billion based on their share of total Medicare FFS
reimbursements in 2019. Total FFS payments were
approximately $484 billion in 2019.
• According to the HHS Release: A provider can estimate
their payment by dividing their 2019 Medicare FFS (not
including Medicare Advantage) payments they received
by $484,000,000,000, and multiply that ratio by
$30,000,000,000. Providers can obtain their 2019
Medicare FFS billings from their organization's revenue
management system.
$30 Billion Infusion
How will the $ be distributed?
Example: A community hospital billed Medicare FFS $121
million in 2019. To determine how much they would
receive, use this equation:
$121,000,000/$484,000,000,000 x $30,000,000,000
= $7,500,000
$30 Billion Infusion
Who gets the Payment?
All relief payments are made to the billing organization
according to its Taxpayer Identification Number (TIN).
• Large Organizations and Health Systems: Large
Organizations will receive relief payments for each of their
billing TINs that bill Medicare. Each organization should look
to the part of their organization that bills Medicare to identify
details on Medicare payments for 2019 or to identify the
accounts where they should expect relief payments.
• Employed Physicians: Employed physicians should not
expect to receive an individual payment directly. The
employer organization will receive the relief payment as the
billing organization.
$30 Billion Infusion
Who gets the Payment?
• Physicians in a Group Practice: Individual physicians and
providers in a group practice are unlikely to receive individual
payments directly, as the group practice will receive the relief
fund payment as the billing organization. Providers should
look to the part of their organization that bills Medicare to
identify details on Medicare payments for 2019 or to identify
the accounts where they should expect relief payments.
• Solo Practitioners: Solo practitioners who bill Medicare will
receive a payment under the TIN used to bill Medicare.
$30 Billion Infusion
What is the method of Payment?
HHS has partnered with UnitedHealth Group (UHG) to provide
these rapid payments to providers eligible for the distribution of
the initial $30 billion in funds. Providers will be paid via
Automated Clearing House account information on file with UHG
or the Centers for Medicare & Medicaid Services (CMS).
• The automatic payments will come to providers via Optum
Bank with "HHSPAYMENT" as the payment description.
• Providers who normally receive a paper check for
reimbursement from CMS, will receive a paper check in the
mail for this payment as well, within the next few weeks.
Terms and Conditions
HHS' payment of funds is conditioned on the healthcare
provider's acceptance of the Terms and Conditions within
30 days of receipt of payment. Providers should review the
Terms and Conditions carefully.
https://www.hhs.gov/sites/default/files/relief-fund-
payment-terms-and-conditions-04092020.pdf
Terms & Conditions
The Recipient certifies that:
• It billed Medicare in 2019;
• It provides or provided after January 31, 2020 diagnoses,
testing, or care for individuals with possible or actual cases of
COVID-19; HHS clarified on April 13 that health care
providers that have ceased operation as a result of the
COVID-19 pandemic are eligible to receive funding as long as
they provided diagnoses, testing, or care for individuals with
possible or actual cases of COVID-19, noting that care does
not have to be specific to treating COVID-19. HHS noted in
the updated guidance that it “broadly views every patient as a
possible case of COVID-19.”
• Does not have its Medicare billing privileges revoked and is
not currently terminated or excluded from participation in
Medicare, Medicaid, and other Federal health care programs
Terms & Conditions
• The Recipient certifies that the Payment will only be
used to prevent, prepare for, and respond to
coronavirus, and shall reimburse the Recipient only for
health care related expenses or lost revenues that are
attributable to coronavirus.
• Although HHS noted in the updated guidance that it
“broadly views every patient as a possible case of
COVID-19”, we are still awaiting guidance on the details.
Terms & Conditions
• The Recipient certifies that it will not use the Payment
to reimburse expenses or losses that have been
reimbursed from other sources or that other sources
are obligated to reimburse.
Terms & Conditions
• As a condition to receiving these funds, providers must
agree not to seek collection of out-of-pocket payments
for all care for a presumptive* or actual case of COVID-
19 from a COVID-19 patient that are greater than what
the patient would have otherwise been required to pay if
the care had been provided by an in-network provider.
The Secretary concluded that the COVID-19 public health
emergency has caused many healthcare providers to have
capacity constraints. As a result, patients that would
ordinarily be able to choose to receive all care from in-
network healthcare providers may no longer be able to
receive such care in-network.
Note that updated Terms and Conditions replaced
“possible” with “presumptive”.
Terms & Conditions
• The Recipient shall submit reports as the Secretary
determines are needed to ensure compliance with
conditions that are imposed on this Payment, and such
reports shall be in such form, with such content, as
specified by the Secretary in future program instructions
directed to all Recipients.
Documentation and Reporting Requirements & Conditions
What are some of the Documentation and Reporting
requirements?
• The Recipient shall maintain appropriate records and cost
documentation including, as applicable, documentation required by
45 CFR § 75.302 – Financial management and 45 CFR § 75.361
through 75.365 – Record Retention and Access, and other
information required by future program instructions to substantiate
the reimbursement of costs under DEPARTMENT OF HEALTH &
HUMAN SERVICES this award.
• The Recipient shall promptly submit copies of such records and cost
documentation upon the request of the Secretary, and Recipient
agrees to fully cooperate in all audits the Secretary, Inspector
General, or Pandemic Response Accountability Committee conducts
to ensure compliance with these Terms and Conditions.
Reporting Requirements
What are some of the Reporting Requirements?
• Not later than 10 days after the end of each calendar
quarter, any Recipient that is an entity receiving more
than $150,000 total in funds under the Coronavirus Aid,
Relief, and Economics Security Act (P.L. 116-136), the
Coronavirus Preparedness and Response Supplemental
Appropriations Act (P.L. 116-123), the Families First
Coronavirus Response Act (P.L. 116-127), or any other
Act primarily making appropriations for the coronavirus
response and related activities, shall submit to the
Secretary and the Pandemic Response Accountability
Committee a report.
Documentation and Reporting Requirements
This report shall contain:
• the total amount of funds received from HHS under one of the
foregoing enumerated Acts;
• the amount of funds received that were expended or obligated for
reach project or activity;
• a detailed list of all projects or activities for which large covered funds
were expended or obligated, including:
• the name and description of the project or activity,
• and the estimated number of jobs created or retained by the project or
activity, where applicable; and
• detailed information on any level of sub-contracts or subgrants
awarded by the covered recipient or its subcontractors or subgrantees,
to include the data elements required to comply with the Federal
Funding Accountability and Transparency Act of 2006 allowing
aggregate reporting on awards below $50,000 or to individuals, as
prescribed by the Director of the Office of Management and Budget.
Documentation and Reporting Requirements & Conditions
• The HHS portal makes it clear that HHS intends to
audit providers. Documentation will be essential if
audited.
• HHS guidance states “There will be significant anti-
fraud and auditing work done by HHS, including the
work of the Office of the Inspector General”.
Sample Tools
• Provider Relief Loss Calculator prepared by the
American Academy of Family Physicians (AAFP).
• Disclaimer: Note that this is an example only and
each practice should work with its finance
department and accountant to customize the
worksheet based on its circumstances.
• https://www.aafp.org/content/dam/AAFP/documents/advocacy/p
revention/crisis/AAFP-COVID-19-Related-LossCalculator.xlsx
• https://www.aafp.org/content/dam/AAFP/documents/advocacy/p
revention/crisis/Example-AAFP-COVID-Calculator.pdf
Additional Terms and Conditions
The following statutory provisions also apply:
• Executive Pay. None of the funds shall be used to
pay the salary of an individual, through a grant or
other extramural mechanism, at a rate in excess of
Executive Level II. $197,300
• Guns. None of the funds made available in this title
may be used, in whole or in part, to advocate or
promote gun control.
• Lobbying
• Prohibits Use of Federal Funds for Abortions (with
some exceptions)
Additional Terms and Conditions
The following statutory provisions also apply:
• Embryo Research
• Legalization of Controlled Substances
• Pornography
• Needle Exchange Except in Limited Circumstances
(risk for, a significant increase in hepatitis infections
or an HIV outbreak due to injection drug use, and
such program is operating in accordance with State
and local law).
Additional Terms and Conditions
Government-wide General Provisions
• Some Examples;
– No Propaganda.
– No Unpaid Federal Tax Liability.
– Criminal Felony Limitation.
– No Trafficking in Persons
Additional Terms and Conditions
• No funds appropriated under this Act shall be used
on any project that entails the capture or
procurement of chimpanzees obtained from the wild.
Non-Acceptance of Terms and Conditions
If a provider receives payment and does not wish to
comply with these Terms and Conditions, the provider
must contact HHS within 30 days of receipt of
payment and then remit the full payment to HHS as
instructed.
$100 Billion Dollars
Remaining $70 Billion
Priorities for the remaining $70 billion
The Administration indicated that in the future there will
be targeted distributions that will focus on providers
• in areas particularly impacted by the COVID-19
outbreak,
• rural providers,
• providers of services with lower shares of Medicare
reimbursement or who predominantly serve the
Medicaid population,and
• providers requesting reimbursement for the
treatment of uninsured Americans.
Additional $20 Billion Infusion
On April 22, 2020, HHS Announced Additional Allocations of
CARES Act Provider Relief Fund:
HHS will begin distribution of another $20 billion of the general
distribution for a total of $50 billion allocated proportional to
providers' share of 2018 net patient revenue.
On April 24, a portion of providers will automatically be sent an
advance payment based off the revenue data they submit in
CMS cost reports. Providers without adequate cost report data
on file will need to submit their revenue information to a portal
opening this week at https://www.hhs.gov/providerrelief for these
additional general distribution funds.
Additional $20 Billion Infusion
Providers who receive this money automatically will still need to
submit their revenue information so that it can be verified.
Payments will go out weekly, on a rolling basis, as information is
validated, with the first wave being delivered at the end of this
week (April 24, 2020).
Providers who receive funds will also have to sign an attestation
confirming receipt of funds and agree to the terms and
conditions of payment and confirm the CMS cost report.
Note there are additional terms and conditions applicable to the
$20 billion general distribution tranche relating to 2018 revenue
data.
Targeted Allocations
• HHS announced that a portion of the $100 Billion will be used
for the following TARGETED ALLOCATIONS :
• ALLOCATION FOR COVID-19 HIGH IMPACT AREAS
• $10 billion will be allocated for a targeted distribution to
hospitals in areas that have been particularly impacted by the
COVID-19 outbreak. Hospitals serving COVID-19 patients in
New York, which has a high percentage of total confirmed
COVID-19 cases, are expected to receive a large share of the
funds.
• HHS directed Hospitals to apply for a portion of the funds by
providing the required information via an authentication portal
before midnight PT, Thursday April 23. This portal is live, and
hospitals have already been contacted directly to provide this
information.
Additional Allocations
• ALLOCATION FOR TREATMENT OF THE UNINSURED
• Every health care provider who has provided treatment
for uninsured COVID-19 patients on or after February 4,
2020, can request claims reimbursement through the
program and will be reimbursed at Medicare rates,
subject to available funding.
• Steps will involve: enrolling as a provider participant,
checking patient eligibility and benefits, submitting
patient information, submitting claims, and receiving
payment via direct deposit.
• Providers can register for the program on April 27, 2020,
and begin submitting claims in early May 2020. For more
information, visit coviduninsuredclaim.hrsa.gov.
Additional Allocations
• ALLOCATION FOR RURAL PROVIDERS
• $10 billion will be allocated for rural health clinics and
hospitals.
• ALLOCATION FOR INDIAN HEALTH SERVICE
• $400 million will be allocated for Indian Health Service
facilities, distributed on the basis of operating expenses.
Indian Country is also being impacted by COVID-19.
Please Stay Tuned…
FUTURE ALLOCATIONS
HHS guidance states that there are some providers who
will receive further, separate funding, including:
• skilled nursing facilities
• dentists, and
• providers that solely take Medicaid
HHS Resources
• Monitor HHS website for forms and updated information:
http://www.hhs.gov/providerrelief
• https://www.cms.gov/newsroom/press-releases/cms-approves-
approximately-34-billion-providers-acceleratedadvance-
payment-program-medicare
• https://www.hhs.gov/about/news/2020/04/10/hhs-to-begin-
immediate-delivery-of-initial-30-billion-of-cares-act-provider-
relief-funding.html
• Relief Fund Hotline. HHS contracted with UHG to facilitate the
delivery of the funds, including attestations. According to HHS,
Recipients may contact UHG at 866-569-3522 with questions
including, but not limited to, use of funds, the terms and conditions,
and the attestation process.
Q&A
• For additional questions: Email [email protected]
• Visit Sax’s COVID-19 Resource Center found on Saxllp.com to
register for webinars and for on-going information and resources.
Upcoming Webinars
• Wednesday, April 29 @ 4PM – Wealth Management – Staying the
Course Through COVID-19
• Thursday, April 30 @ 10AM - Preparing for Forgiveness – Updates
on Loan Options & Forgiveness Strategies
