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March 30, 2020

Friday March 27, 2020 marks the passing of the CARES Act. The act contains three pieces of legislation that will have direct impact on physician groups. The act allots for a $100 billion fund for all healthcare facilities enrolled in Medicare or Medicaid, a new SBA loan program and additional provisions surrounding the treatment and testing of COVID-19. 

Small Business Administrations Loan Program

The CARES Act also includes a new loan program to help provide small businesses including physician practices, with a much-needed influx of cash to keep their doors open caring for patients. There are parameters practices need to meet in order to qualify for an SBA loan. In addition, there are stipulations on how the funding is allocated. 

Provisions for 7(a) SBA Loans and Loan Forgiveness:

  • Medical and outpatient clinics are eligible for the SBA program, provided they employ less than 500 employees.
  • The maximum available loan is $10 million.
  • The loan may be used for payroll support, paid sick or medical leave, employee salaries, mortgage, and other debt obligations.
  • There are loan forgiveness programs for certain payroll costs, mortgages, rent, and utilities.
  • Loan forgiveness procedures are as follows:
    • The loan is an amount equal to the payroll costs and costs related to payment of debts for the period of 3/1/20 through 6/30/20.
    • The amount of loan forgiveness will be reduced by the number of employees laid off during the period of 3/1/20 through 6/30/20.
    • The amount of loan forgiveness will be reduced by the amount of any reduction in total salary or wages of employees during the covered period that is in excess of 25%.  There is relief from the forgiveness reduction if the employee’s wage reduction is caught up by June 30, 2020.
    • For determining forgiveness, payroll costs must exclude those employees who earn =/> $100K annual compensation; however, the loan forgiveness should apply to the first $100K of that compensation, but not to any payroll costs in excess of $100K per employee.
    • Forgiveness amounts will not be included in taxable income.

Public Health and Human Services Fund

In addition to providing greater access to SBA loans, the CARES act includes a $100 billion dollar fund deemed the Public Health and Human Services Fund. The fund is designated to provide funding relief to healthcare providers and facilities including medical practices, for expenses, cost and losses related to the COVID-19 pandemic. 

Examples of expenses, loss and costs:

  • Shortfalls— an example being, patients who cancel for fear of contracting COVID-19 leading to a revenue and number of patients short falling.
  • Incurred costs on quarantined and sick physicians
  • Additional staffing expenses for surge capacity.
  • Temporary structures and presumably staffing for these structures, (e.g., COVID-19 screening in an external tent or building outside the hospital);
  • Medical supplies and equipment including PPE
  • COVID-19 testing costs and supplies.
  • Increased workforce and training, (e.g., training APPs or other staff to perform COVID-19 screening and EMTALA mandated screenings in a tent or external building);
  • Emergency operations centers and retrofitting existing structures for COVID-19 testing and treatment.
  • Cancellation of elective and non-emergent procedures.

Provisions related to the treatment and testing of COVID-19

In addition to the new SBA loan program and the Public Health and Human Services Fund, the CARES Act also has created provisions related to reimbursement for the testing and treatment of COVID-19. The provisions are as follows:

  • Under the combined COVID-19 2.0 and 3.0 new laws, COVID-19 testing and treatment must be reimbursed by Medicare and Medicaid (including their managed care programs) and by commercial insurance at the full allowed amounts for testing and patient care—the patient cost sharing will be waived. 
  • Many major health plans—UHC, Anthem and CIGNA to name a few—are waiving patient cost sharing not only for COVID-19 testing and treatment in a doctor’s office, urgent care center, or ED but also via a telehealth service (video and audio; audio alone would not be sufficient), during the public health emergency (PHE).
  • The CARES Act has clarified that under the COVID-19 2.0 law that care for the uninsured will be reimbursed for testing AND treatment; these patients will be temporarily enrolled in Medicaid and the states will receive funding for administering claims for these patients—this is an important clarification of the Families First Act described above.
  • It is our present understanding that if no COVID-19 testing is available for the patient, then the claim for services would be adjudicated via the patient’s standard policy, including deductible and co-insurance—so patient cost sharing would not be waived for these patients.
  • Liability protection has been granted to volunteer healthcare professionals during the public health emergency; manufacturers of PPE will also have liability protection during the PHE.
  • Hospitals will receive a +20% add-on reimbursement from Medicare for inpatient services related to COVID-19 patients.
  • The -2% “sequester cuts” to Medicare that have been in place for many years will be temporarily lifted from May 1, 2020 through December 31, 2020.
  • The “geographic practice cost index” (GPCI) 1.0 floor has been extended through December 1, 2020.  This will especially help rural areas where the GPCI would according to the RBRVS formula usually float below 1.0.

This is a huge step that we believe will greatly impact physician groups across the country who’ve already felt the ramifications of the pandemic. In the coming days, we will continue to learn more surrounding the details of the bill. Coronis Health will continue to provide updates as it pertains to the CARES Bill and how it impacts practices. For questions, please contact us.

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