A Medical Practice’s Guide to the CARES Act and Other Financial Resources
On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Among other programs and incentives for businesses, the CARES Act provided for the creation or expansion of several programs that are designed to provide financial support to businesses in the US. In response to several questions from clients like you about which programs may be taken advantage of specifically by medical practices, we’ve put together this resource guide.
This guide has been updated as of April 16, 2020. Further updates will be made, as they are made available from the various sources, or as new programs are announced.
Public Health and Social Services Emergency Fund Payments
The CARES act appropriated $100 billion in financial support for hospitals, physician practices, and other health care providers. HHS announced, on April 10, 2020 that the first portion of this money, $30 billion, would be delivered to providers and hospitals as part of a payment package that would not have to be repaid.
Providers are eligible for these grants if:
- They received fee-for-service payments from Medicare in 2019;
- Currently provide diagnoses, testing or care for individuals with possible or actual COVID-19;
- Are not currently terminated or excluded from participation in Medicare, Medicaid or any other Federal health care program;
- You agree to not collect out-of-pocket payments from out-of-network COVID-19 patients that are greater than what that payment had provided if you or your providers were in-network.;
- You do not have to provide care specific to treating COVID-19, “HHS broadly views every patient as a possible case of COVID-19.”
- Other pre-conditions apply, please read the entire terms and conditions here.
Amount of Payment
Providers are eligible for their share of the $484 Billion that was paid to all providers from Medicare in 2019. To estimate you or your provider’s share, divide your 2019 FFS (excluding Medicare Advantage) payments by $484 Billion and multiply that by $30 billion.
How to Apply
How to receive your share of these grants:
- HHS will calculate how much you or your providers are eligible for and automatically begin making distributions on April 10th. The payments will come from ACH by Optum Bank with “HHSPAYMENT” as the description. If you normally receive paper checks in the mail, you will receive your within a few weeks.
- Within 30 days you or your providers must sign an attestation form, click here to begin the signature process.
- Signing the attestation form means your providers accept the terms and conditions of the program, available here.
- If you do not want to accept the terms and conditions, or do not otherwise want the funds, you must contact HHS and return the funds within 30 days, otherwise HHS will assume you have accepted the terms and conditions.
Expansion of the Medicare Accelerated Payments Program
The CARES Act expanded the existing accelerated payment policy for extraordinary circumstances in order to explicitly include providers who may be experiencing financial hardship due to the coronavirus outbreak. More information is available in the CMS fact sheet, available here.
Under the expanded program, providers are eligible if:
- They have submitted a claim to Medicare within the prior 180 days;
- Are not in bankruptcy;
- Are not under medical review or a program integrity investigation; and
- Do not have outstanding delinquent Medicare overpayments.
- If eligible, providers can apply to receive a Medicare payment advance up to 100% of their Medicare payments in the previous three month period. There is no clear guidance as to what 3-month period CMS is using to calculate this, but it appears as though they are using October through December 2019.
The repayment of these funds will work as follows:
- No repayment will be made until 120 days after the payment is issued.
- Providers have 210 days from the date of the payment to repay.
- Providers will continue to submit claims to Medicare as usual, full payment will be made by Medicare on claims issued during the 120 days after payment was made.
- After the 120 days, Medicare will recoup funds from each claim submitted to Medicare, until the entire advance payment balance is reduced to $0.
- The repayment process will work automatically, with no intervention required.
- There is no express guidance from CMS as to what the penalty is if providers are unable to repay the full amount via recoupment by the end of the 210-day period, but it appears as though several Medicare Administrative Contractors (MAC) are telling practices that interest may apply.
How to apply
The application process for this program is through the applicable MAC for your practice. Each MAC has their own application forms available and instructions on how to fill these forms out are available in the CMS fact sheet linked above.
MTBC and CareCloud can help
We will help eligible providers who are CareCloud Concierge or Enterprise clients apply for this program. If you are interested in having CareCloud help your practice apply for these advanced payments, please email us here.
If you ask us to help prepare these forms, we will pull the appropriate form(s) for the MAC(s) applicable to your practice/group’s main location.Depending on your MAC jurisdiction, we may require additional information from you to complete the form, in which case we will fill out as much information as is available to us, and send you the form for you to complete and submit.
Regardless, MTBC or CareCloud will not submit forms for you. We will provide you the partially/fully completed forms for your final review, signature (if applicable) and submission instructions. You must submit these forms on your own behalf.
SBA Loans and Other Programs
As part of the CARES Act, Congress appropriated additional funds for the SBA to accelerate several funding options for small businesses. Many of these are available to medical practices.
There are four programs that have been created/expanded under the SBA:
- Paycheck Protection Program: loans and loan forgiveness for retention of employees;
- Economic Injury Disaster Loan (EIDL) Emergency Advances: provides advances of up to $10,000 in economic relief for practices experiencing temporary difficulties due to COVID-19;
- SBA Express Bridge Loans: for practices with existing SBA loans allow those practices to access up to $25,000 quickly;
- SBA Debt Relief: for practices with current 7(a), 504 and microloans or those that receive these loans before September 27, 2020, the SBA will pay the principal, interest and fees on these loans. Under most SBA programs, your practice must meet the SBA’s small business size limits, which typically mean having fewer than 500 employees or otherwise meeting the SBA’s business size standards.
The PPP is a direct incentive for small businesses to keep workers on payroll. PPP loans, like many SBA lending options are provided through existing SBA 7(a) lenders that participate in SBA programs.
Although the PPP is a loan, the SBA mayforgive the loans if all employees are kept on payroll for eight consecutive weeks and the loan proceeds are used for payroll, rent, mortgage interest or utilities only.
No collateral or personal guarantees are required and lenders are prohibited from charging fees for applying to or receiving PPP loans.
For amounts not forgiven, the loans have the following terms: 2 year maturity, interest of 0.5% and loan payments deferred for 6 months.
The PPP will provide loans up to $10 million. The loan amount your practice may be eligible for is determined by calculating 2.5 times your average monthly payroll costs in 2019.
The PPP loans may be forgiven, if you spend the funds within eight weeks on payroll, mortgage interest, rent or utilities and at least 75% of the loan proceeds were used to cover payroll and related expenses.
- Forgiven amounts will be reduced if you reduce your employees (i.e. you terminate employees) or if you reduce any wages by more than 25%.
- PPP loans are available through June 30, 2020.
- Apply through any participating SBA lender or bank. Check with the bank you regularly do business with to see if they are offering PPP loans.
EIDL loans existed prior to the COVID-19 disaster.
- EIDL Loans are available up to $2 million, with interest rates of about 3.75% (2.75% for non-profits) and repayment terms up to 30 years. Interest is deferred for one year after the loan origination date.
- You may use EIDL funds for any financial obligation that could have been met, but for the disaster.
EIDL Loan Advances
- The CARES Act created the EIDL Loan Advance program to provide up to $10,000 in funds for small businesses that are applying for an EIDL loan.
- EIDL Loan Advances do not have to be repaid and funds are available within three days. Even if you are denied an EIDL loan, you still keep the loan advance.
- The amount advanced is equal to $1,000 per employee up to $10,000.
- A streamlined application process has been created to apply immediately, click here.
These loans are for small businesses that are currently applying for an EIDL loan with an SBA-approved lender. You can apply for EBL loans through an SBA-approved lender.
- You may request up to $25,000 quickly, structured as a term loan, with a 7-year repayment period.
- If you are approved for an EIDL or other disaster loan, your lender may require that the initial proceeds be used to pay the EBL loan immediately.
- Your lender will determine the interest rate on these EBL loans, up to 6.5%, paid
- No collateral is required for EBL loans.
The SBA Debt Relief program applies to all existing 7(a), 504 and microloans issued through the SBA or SBA-approved lenders and loans issued on/before September 27, 2020. Under this program, the SBA will pay principal, interest and fees for your SBA loans.
Prior SBA Serviced Disaster Loans:
- If you had a disaster loan from the SBA prior to March 1, 2020 and it was in “regular servicing” then the SBA will automatically defer principal and interest until December 31, 2020.
- Interest under these loans will still accrue and you continue to make regular payments on your loan if you wish.
The SBA continues to offer low-interest loans through its typical lending programs through participating financial institutions. For more information, click here.
Medicare Sequester Suspension
The CARES Act also implemented the suspension of the 2% Medicare sequester in May, to run through December 2020 (3709 of CARES Act):
- The annual 2% cut in Medicare payments to hospitals and providers that was set to take effect in 2020 was cancelled by the CARES act.
- The sequester was extended by one year to 2030 in order to offset the added expense.
Resrources unrelated to the CARES Act, but worth considering for your practice
Business interruption or other Commercial Insurance
Regardless of whether you carry business interruption insurance, it’s a good idea to check on whether any coverage is available from any of your commercial policies. We suggest you reach out to your commercial insurance broker and ask whether any of the policies you purchase have any coverage you can take advantage of.
However, even if you do have business interruption insurance, in most cases insurers and the industry are generally saying denying coverage because there is no direct physical loss to business property. Most business interruption policies require physical damage to your business in order to be triggered. Additionally, many policies have broad virus/disease policy exclusions attached to them.
Regardless, things continue to change daily, state by state, with some states trying to pass legislation to force insurers to pay, but so far many of these proposed bills seem to be politically motivated vs likely to pass.
Insurance companies price premiums based on statistical data…there was no model to price for a global pandemic, and as such coverage excluded by the contract. Kind of like flood insurance, and now terrorism insurance…infrequent and hard to predict, thus insurance for both of these are now backed by the government (and ultimately by you & me via taxes).
Disability insurance for providers
If you or carry short-term disability insurance for yourself as a sole provider, or for one or more of the providers in your group, you may be able to take advantage of the policy if a provider contracts COVID-19.
Short-term disability insurance may cover coronavirus infections if your illness requires medical quarantine or hospitalization that leaves you or one or more of your providers unable to practice.
Expense Relief / Reduction Programs
This short section contains a few additional financial resources that were either expanded or created by the CARES Act, or previously available and geared towards reducing your practice’s expenses during this crisis:
The CARES Act created a number of programs to provide tax relief for business during the COVID-19 outbreak. More information is available here.
- Payroll taxes: Your practice or you (if you are self-employed) may delay payment of the employer portion of payroll taxes that are due between March 27 and December 31, 2020. 50% of any payroll taxes deferred must be paid by December 31, 2021, with the remaining 50% paid by December 31, 2022.
- Employee retention credit: if your practice was partially/fully closed due to COVID-19 or your income was reduced by more than 50%, but you continued to pay employees, you may be eligible for a refundable quarterly payroll tax credit equal to 50% of qualified wages paid to an employee from March 13 through December 31, 2020. For purposes of the credit, up to $10,000 of qualified wages paid per employee during this period is taken into account.
- Credits for Coronavirus-related Leave: if you provided or are planning on providing COVID-19 related paid leave to care for themselves or family members, you may be eligible for reimburse you for keeping these employees on payroll and providing them with paid leave.
- Other Programs: click here for more information on these and other IRS COVID-19 resources and programs.
- Real Estate Relief
- Practices should begin exploring options related to avoiding expenses on owned or leased property used for their practice.
- MTBC’s GPO has entered into an agreement with global real estate advisory firm Newmark Knight Frank (NKF) to provide a suite of real estate services.
- NKF has not only published its Tenant Playbook, but has released a new suite of services designed to help GPO practices experiencing financial distress due to the coronavirus pandemic.
- Membership in the MTBC GPO is totally free, and requires no commitments or exclusivity, for more information or to sign-up, please visit the GPO portal here.
The information provided on in this guide does not, and is not intended to, constitute legal or financial advice; instead, all information and content are for general informational purposes only. Information in this guide may not constitute the most up-to-date legal or other information. This guide contains links to other third-party websites. Such links are only for the convenience of the reader, user or browser; CareCloud and its affiliates do not recommend or endorse the contents of the third-party sites.
Readers of this guide should contact their attorney to obtain advice with respect to any particular legal matter, and their financial or tax advisor with respect to any financial matter. Only your individual attorney or advisor can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation.