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BKD National Health Care Group

COVID-19 Tracking Insight & Best

Practices for CARES Act Funding

June 19, 2020

To Receive CPE Credit• Individuals

• Participate in entire webinar• Answer polls when they are provided

• Groups• Group leader is the person who registered & logged on to the webinar• Answer polls when they are provided• Complete group attendance form • Group leader sign bottom of form• Submit group attendance form to training@bkd.com within 24 hours of webinar

• If all eligibility requirements are met, each participant will be emailed their CPE certificate within 15 business days of webinar

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Presenters

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Michael Orr Director

Ryan O’GradySenior Manager

Agenda1

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Pandemic Funding Sources

COVID-19 Tracking Demo

Provider Relief Funds – Subject to Single Audit

Allowable Expenses & Lost Revenue Considerations

PPP Loan Considerations

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Pandemic Funding Sources

Partial Summary of Financial “Relief” for Healthcare Providers

Public Health & Social Services Emergency Fund (PHSSEF) administered by the U.S. Department of Health & Human Services (HHS)

Potential Business Interruption (BI) insurance coverage

Public Assistance Program administered by the Federal Emergency Management Agency (FEMA)

Expansion of the Accelerated & Advanced Payments (AAP) Program administered by the Centers for Medicare & Medicaid Services (CMS)

Paycheck Protection Program loans administered through the U.S. Small Business Administration (SBA)

COVID-19 Telehealth Program administered by the Federal Communications Commission (FCC)

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Reconcile receipt of funds to expected fundsReconcile receipt of funds to expected funds

Develop policy & procedures for financial accounting of fundsDevelop policy & procedures for financial accounting of funds

Identify & track expenses & supporting documentationIdentify & track expenses & supporting documentation

Identify & track “lost revenue” & supporting documentationIdentify & track “lost revenue” & supporting documentation

Develop reporting mechanismsDevelop reporting mechanisms

COVID-19 Funds Tracking Framework

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BKD COVID-19 Funds Tracker• Electronic tool for healthcare

entities• Provides the necessary

framework

• Serves as a repository of data for future reporting

• Customizable based on client needs

• BKD resources available to support

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COVID-19 Tracking Tool Demo

Provider Relief Funds –Subject to Single Audit

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Provider Relief Funds - Subject to Single Audit• Quarterly reporting required - As of last week

• First reports due July 10th (10 days after quarter end) – As of last week

• As of this week – “Providers are still required to submit any reports requested by the HHS Secretary that are necessary to allow HHS to ensure compliance with payment Terms and Conditions. As such, HHS will be requiring recipients to submit future reports relating to the recipient’s use of its emergency relief payments. HHS will notify recipients of the content and the due date(s) of such reports in the coming weeks.” – 06.16.2020 AHA Special Bulletin

• Differences from a regular audito SEFA report: Schedule of Expenditures of Federal Awards – Supplementary Informationo Opinion on Compliance under Uniform Guidance and Report on Internal Control Over Complianceo Significant deficiencies and material weaknesses are part of the report not just in the management letter as

they might be under a regular audit

o The report is available to the public

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Provider Relief Funds – Subject to Single Audit Requirements • Many of you may have never previously undergone

a Single Audit

• Uniform Guidance for expenses

• Very little guidance on lost revenue available yet• Gross revenue

• Net revenue

• Net income

• HRSA expected to provide additional guidance

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Save the date –July 14, 2020, BKD

webinar, “COVID-19

Funding Compliance:

Preparing for Your First Single Audit”

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Allowable Expenses & Lost Revenue Considerations

Per the June 2 FAQ – The Term “Healthcare-Related Expenses Attributable to Coronavirus” Includes

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Supplies used to provide healthcare services for possible or actual COVID-19 patients

Equipment used to provide healthcare services for possible or actual COVID-19 patients

Workforce training

Reporting COVID-19 test results to federal, state or local governments

Developing & staffing emergency operation centers

Building or constructing temporary structures to expand capacity for COVID-19 patient care or to provide healthcare services to non-COVID-19 patients in a separate area from where COVID-19 patients are being treated

Acquiring additional resources, including facilities, equipment, supplies, healthcare practices, staffing & technology to expand or preserve care delivery

*Per CARES Act Provider Relief Fund Frequently Asked Questions pdf 

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The Term “Lost Revenues that Are Attributable to Coronavirus” Means Any Revenue that You as a Healthcare Provider LOST Due to coronavirus. This May Include

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Revenue losses associated with fewer OP visits

Revenue losses due to cancellations of elective procedures/services

Increased uncompensated care

*Per CARES Act Provider Relief Fund Frequently Asked Questions pdf 

PPP Loan Considerations

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PPP Loan Considerations – Documentation Is Key for Audit Purposes

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All PPP loans are subject to audit & all PPP loans more than $2M are required to be audited

Remember EHR audits

• Some audits took years to happen• Key staff depart• “It is all in some binder”• Remember to think in terms of the auditor’s review

Required to keep documentation for six years (from the date the loan is forgiven)

Separate bank accounts could help

PPP Loan Considerations – Loan Forgiveness Covered PeriodXXXX Regional Medical Center

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Sunday Monday Tuesday Wednesday Thursday Friday Saturday3/29/2020 3/30/2020 3/31/2020 4/1/2020 4/2/2020 4/3/2020 4/4/2020

4/5/2020 4/6/2020 4/7/2020 4/8/2020 4/9/2020 4/10/2020 4/11/2020

4/12/2020 4/13/2020 4/14/2020 4/15/2020 4/16/2020 4/17/2020 4/18/20204/19/2020 4/20/2020 4/21/2020 4/22/2020 4/23/2020 4/24/2020 4/25/20204/26/2020 4/27/2020 4/28/2020 4/29/2020 4/30/2020 5/1/2020 5/2/2020

5/3/2020 5/4/2020 5/5/2020 5/6/2020 5/7/2020 5/8/2020 5/9/20205/10/2020 5/11/2020 5/12/2020 5/13/2020 5/14/2020 5/15/2020 5/16/20205/17/2020 5/18/2020 5/19/2020 5/20/2020 5/21/2020 5/22/2020 5/23/20205/24/2020 5/25/2020 5/26/2020 5/27/2020 5/28/2020 5/29/2020 5/30/20205/31/2020 6/1/2020 6/2/2020 6/3/2020 6/4/2020 6/5/2020 6/6/2020

6/7/2020 6/8/2020 6/9/2020 6/12/20206/26/2020

• Possible forgiveness range extended to 24 weeks• Loan dollars received 4/15/2020• 6/9/2020 is the last day of the 56-day covered period • 4/15/2020–6/19/2020 becomes the 56-day covered period • Loan forgiveness period includes 73 days, the full 4/17, 5/1,

5/15, 5/29, & 6/12 payrolls plus three days of the 6/26 payroll

PPP loan dollars received – First day of covered period

4/17 & 5/1 – First & second payrolls paid within 56-day covered

period

5/15 – Third payroll fully incurred & paid

within the 56-day covered period

5/29 – Fourth payroll fully incurred & paid

within the 56-day covered period

6/12 – Fifth payroll incurred within the

56-day covered period

Last day of 56-day covered

period

6/26 – Three days of sixth payroll incurred

within the 56-day covered period

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PPP Loan Considerations – Loan Forgiveness Alternative Payroll Covered Period (APCP) XXXX Regional Medical Center

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Sunday Monday Tuesday Wednesday Thursday Friday Saturday4/15/2020 4/16/2020 4/17/2020 4/18/2020

4/19/2020 4/20/2020 4/21/2020 4/22/2020 4/23/2020 4/24/2020 4/25/20204/26/2020 4/27/2020 4/28/2020 4/29/2020 4/30/2020 5/1/2020 5/2/2020

5/3/2020 5/4/2020 5/5/2020 5/6/2020 5/7/2020 5/8/2020 5/9/20205/10/2020 5/11/2020 5/12/2020 5/13/2020 5/14/2020 5/15/2020 5/16/20205/17/2020 5/18/2020 5/19/2020 5/20/2020 5/21/2020 5/22/2020 5/23/20205/24/2020 5/25/2020 5/26/2020 5/27/2020 5/28/2020 5/29/2020 5/30/20205/31/2020 6/1/2020 6/2/2020 6/3/2020 6/4/2020 6/5/2020 6/6/2020

6/7/2020 6/8/2020 6/9/2020 6/10/2020 6/11/2020 6/12/2020 6/13/20206/14/2020 6/15/2020 6/16/2020 6/17/2020 6/18/2020 6/19/2020 6/20/2020

6/26/2020• Possible forgiveness range extended to 24 weeks• Loan dollars received 4/15/2020• 4/26/2020 is the first day of the next pay period following receipt of the loan• 6/20/2020 is the last day of the 56-day alternative covered period• APCP includes the full 5/15, 5/29, 6/12 & 6/26 payrolls

First day of 56-day APCP

PPP loan dollars

received

5/15 – First payroll fully incurred &

paid within the 56-day APCP

5/29 – Second payroll fully incurred & paid within the 56-

day APCP

6/12 – Third payroll fully incurred &

paid within the 56-day APCP

6/20 – Last day of 56-day APCP

6/26 – Fourth pay period fully incurred

within the 56-day APCP

PPP Loan Considerations – FTE Reference Period

• Borrower must first select a reference period• 2/15/2019–6/30/2019• 1/1/2020–2/29/2020

• Seasonal employers may use either of the preceding periods or a consecutive 12-week period between 5/1/2019 & 9/15/2019

• Borrower’s forgiveness will not be reduced if an employee is fired for cause, voluntarily resigns or voluntarily requests a schedule reduction

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PPP Loan Considerations – Reference Period

Why is the reference period important?SBA example: If a borrower had 10.0 FTE employees during the reference period & this declined to 8.0 FTE employees during the covered period, the percentage of FTE employees declined by 20 percent & thus only 80 percent of otherwise eligible expenses are available for forgiveness

PPP Loan Considerations – FTE Alternatives

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FTE calculations• First, the borrower must divide the average number of hours paid for each employee per week by 40,

capping each at 1.0• Example: An employee that was paid 50 hours per week during the covered period would be

considered to be a 1.0 FTE

• Second, for employees that averaged less than 40 hours per week borrowers may choose one of two methods (see next slide)

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PPP Loan Considerations – FTE Alternatives• Under 40-hour average methods

• First option – the average number of hours a part-time employee was paid per week during the covered period. For example, if an employee was paid for 30 hours per week on average during the covered period, the employee would be considered 0.75 FTE

• Second option – borrower may select to use a full-time equivalency of 0.5 for each part-time employee. This is for administrative convenience & might not always yield the most advantageous option

Whichever method is chosen, it must be applied consistently

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PPP Loan Considerations – Salary Reduction Impacts

How is the loan forgiveness amount affected by a borrower’s reduction in employees’ salaries?A reduction in an employee’s salary or wages in excess of 25 percent will generally result in a reduction in the loan forgiveness amount – this reduction calculation is performed on a per employee basis, not in the aggregateThe 25 percent is measured on base salary & wages between 1/1/2020 & 3/31/2020 unless an exception applies – restore reduced wages or salaries by 12/31/2020

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PPP Loan Considerations – Salary Reduction Impacts• SBA example

• A borrower reduced a full-time employee’s weekly salary from $1,000 per week during the reference period to $700 per week during the covered period

• The employee continued to work on a full-time basis during the covered period as a 1.0 FTE

• In this case, the first $250 (25 percent of $1,000) is exempted from the reduction

• Borrowers seeking forgiveness would list $50 times the number of weeks in the covered period as the reduction for the employee

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Questions?

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Presenters

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Michael Orr morr@bkd.com

Ryan O’Gradyrogrady@bkd.com

Continuing Professional Education (CPE) Credit

BKD, LLP is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org

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The information contained in these slides is presented by professionals for your information only & is not to be considered as legal advice. Applying specific information to your situation requires careful consideration of facts & circumstances. Consult your BKD advisor or legal counsel before acting on any matters covered.

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CPE Credit

• CPE credit may be awarded upon verification of participant attendance

• For questions, concerns or comments regarding CPE credit, please email the BKD Learning & Development Department at training@bkd.com

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Discover Trusted Advice Amid a Crisis

Visit BKD's COVID-19 Resource Centerbkd.com/COVID-HC

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Thank You! @BKDHC