consolidated appropriations act hhs, ppp, and erc
TRANSCRIPT
Title of SlideNMGMA February 9, 2021
[email protected]
Consolidated Appropriations Act • CAA was signed into law 12/27/20
• Additional funding for Provider Relief Funds included, along with changes to reporting requirements
• PPP Loans – forgiveness simplification and a new round of loan funding (PPP2)
• Retroactive expansion of the Employee Retention Credit (ERC)
2
HHS Provider Relief Funding • $3 billion in additional Provider Relief Funding
(PRF) provided in CAA • $30 billion remains undistributed from Phase 3
General Distribution • As of today, no application for additional relief is
available on the HHS website • CAA: At least 85% of future allocations shall be for
any successor to the Phase 3 General Distribution allocation to make payments to eligible health care providers based on applications that consider financial losses and changes in operating expenses in Q3 or Q4 of 2020 or Q1 of 2021
3
• No reporting form available, no date projected for availability
• The 2/15/21 date has been extended. No announced deadline for registration or reporting.
• https://prfreporting.hrsa.gov/s/
4
Who is required to report?
• Any provider that received $10,000 or more must report on the portal when the reporting format is available (211,000 providers)
• Different reporting requirements for providers that received $500,000 or more
• Providers that received $750,000 or more are also subject to Single Audit Requirements (45 CFR 75.501)
5
• Calculation of 2020 unreimbursed expenses attributable to COVID
• If unreimbursed expenses are less than the total PRFs received, calculate 2020 lost revenue
Unanswered question – If the provider relies solely on lost revenue, are they required to also report expenses?
6
• Healthcare related expenses attributable to COVID (supplies, equipment, IT, facilities, other)
Under $500k in PRF, reporting can be by category. $500k or over, must report by expense category.
7
Calculating Unreimbursed Expenses – What Qualifies? Broadly – a range of items and services purchased to prevent, prepare for, and respond to COVID, including:
• Supplies used to provide healthcare services (PPE, sanitizer, screening supplies)
• Equipment used to provide services – clinical and IT (telehealth)
• Workforce training
• Building or constructing temporary structures to expand capacity (and related expenses)
• Reallocation of staff to screening function
• Acquiring additional resources, including facilities, equipment, supplies, staffing and technology to preserve care delivery.
Consideration: Directly related to a COVID response
8
Limitation on calculating expenses
Expenses must be reported net of other reimbursed sources (payments received from insurance and/or patients, and amounts received from federal, state, or local governments, etc.)
• Payer reimbursement – can’t count the cost of vaccine (reimbursed) but may use PRF funds for vaccine distribution (additional refrigerators, personnel cost to provide vaccinations)
• Amounts received from federal government – can’t double count staff included in PPP forgiveness calculations
9
Reporting Lost Revenue
Must report revenue calculated as net charges (gross charges less allowance for contractual adjustments and bad debt)
• Reported for the calendar year 2020
• Must be reported by quarter
• Must be reported by payer (Medicare, Medicare Advantage, Medicaid/CHIP, Commercial Insurance, Self Pay)
Revenue does not included
10
• Must be reported by quarter
• Must be reported by payer
Option 2:
• Comparison to budget (must have been approved by 3/27/20)
• Must provide an attestation from the reporting entities CEO that the budget was approved by 3/27/20
11
• Calculate lost revenues using the methodology
• Explanation as to why the methodology is reasonable
• Description establishing a connection between the methodology and loss due to COVID
• If HHS decides the alternate methodology is not reasonable, the entity has 30 days to refile using Option 1 or 2
• Increases possibility of an HHS audit
12
For each calendar quarter in 2020:
• Personnel metrics – total personnel by labor category (FT, PT, contract other), total rehires, total new hires, total personnel separations by category
• Patient metrics – total number of patient visits (in person and telehealth)
Changes in ownership
• If the reporting entity acquires or divests, include specific information regarding the transaction
Amount of interest earned on PRF funds
13
• Simplified reporting for loans $150,000 or less
• In CAA, Congress made clear that a forgiven PPP loan is completely tax-exempt and is not taxable income
• EIDL grants will not reduce PPP forgiveness and are not taxable
• Consideration should be given in completing the application for forgiveness regarding expenses that could be included in the HHS reporting. If the application has already been submitted and there were expenses in excess of the amount necessary for forgiveness, it is assumed that the excess can be applied to HHS reporting
14
• Borrowers of PPP1 loans have an opportunity to apply
• Financial institutions are able to accept applications 1/13/21 through 3/31/21
• Eligible employers cannot have over 300 employees
• Maximum PPP2 loan is the lesser of 2.5 times average monthly payroll costs or $2 million
Eligible applicants must have experienced a reduction of 25% or greater in 2020 relative to 2019 for one calendar quarter in 2020
• Quarterly gross receipts are compared quarter by quarter from 2020 to 2019. Gross receipts include all revenue in whatever form received or accrued with the borrower’s method of accounting. PPP1 loan proceeds are not included in gross revenue.
• Borrowers can elect to use annual testing as evidenced on filed tax returns.
• Special rules for acquisitions and dispositions during 2020
16
Employee Retention Credit - 2020
CAA provided that all businesses (including non-profits, but not governmental) are eligible for the Employee Retention Credit (ERC) even if they received a PPP Loan.
Eligibility is retroactive for 2020 (claimed on an amended 941)
Includes wages paid in a quarter in which:
• Operations were fully or partially suspended due to a government order related to COVID
• The business had a 50% or greater decline in revenue during a calendar quarter compared to 2019
17
• Date range – 3/24/2020 – 4/30/2020 – Non-emergency medical procedures. Applicable to physician practices that provide elective and non-emergency surgery (i.e. would not be applicable for a office-based practice with no surgical procedures)
• Date range – 3/24/2020 – 5/6/2020 – Dental procedures
• Executive Order #18 – 3/23/2020 - https://publications.tnsosfiles.com/pub/execorders/exec-orders-lee18.pdf
• Executive Order #25 –4/8/2020 - https://publications.tnsosfiles.com/pub/execorders/exec-orders-lee25.pdf
18
• All employee wages (including owners) paid to employees during the suspension period are eligible. Eligible wages include health care benefits.
• A full-time employee is an employee that averaged 30 hours per week
• Maximum credit – 50% of eligible wages (including health care benefits) not to exceed $10,000 per employee. Maximum credit is $5,000 per employee
19
Over 100 full time employees (based on 2019)
• All employee wages paid to employees not performing services while the government order is in place or during a significant decline in gross receipts.
• Includes health benefits paid for furloughed employees even though they did not receive wages.
• Excludes health benefits paid for employees providing services and amounts paid by employees with after-tax dollars
• Excludes pay for pre-existing time off
• All other calculations are the same as for less than 100 employees
20
Eligible employees:
• Admin employees paid that cannot work remotely
• Physician wages would be eligible if they did not work during the partial suspension. What about surgeons that only worked a limited clinic schedule but did not work during their surgery schedule? Pro-rate?
21
• Credit extended through 6/30/21
• Qualified wages extended to $10,000 per quarter
• Credit increased to 70% of qualified wages
• Significant decrease in gross receipts based on 20% of 2019 revenues
• All wages apply to employers with under 500 employees (vs. 100 employees in 2020)
22
HHS CARES Act Provider Relief Fund: FAQs https://www.hhs.gov/coronavirus/cares-act-provider-relief- fund/faqs/index.html
SBA website – Paycheck Protection Program & FAQs https://www.sba.gov/funding-programs/loans/coronavirus-relief- options/paycheck-protection-program
[email protected]
Consolidated Appropriations Act • CAA was signed into law 12/27/20
• Additional funding for Provider Relief Funds included, along with changes to reporting requirements
• PPP Loans – forgiveness simplification and a new round of loan funding (PPP2)
• Retroactive expansion of the Employee Retention Credit (ERC)
2
HHS Provider Relief Funding • $3 billion in additional Provider Relief Funding
(PRF) provided in CAA • $30 billion remains undistributed from Phase 3
General Distribution • As of today, no application for additional relief is
available on the HHS website • CAA: At least 85% of future allocations shall be for
any successor to the Phase 3 General Distribution allocation to make payments to eligible health care providers based on applications that consider financial losses and changes in operating expenses in Q3 or Q4 of 2020 or Q1 of 2021
3
• No reporting form available, no date projected for availability
• The 2/15/21 date has been extended. No announced deadline for registration or reporting.
• https://prfreporting.hrsa.gov/s/
4
Who is required to report?
• Any provider that received $10,000 or more must report on the portal when the reporting format is available (211,000 providers)
• Different reporting requirements for providers that received $500,000 or more
• Providers that received $750,000 or more are also subject to Single Audit Requirements (45 CFR 75.501)
5
• Calculation of 2020 unreimbursed expenses attributable to COVID
• If unreimbursed expenses are less than the total PRFs received, calculate 2020 lost revenue
Unanswered question – If the provider relies solely on lost revenue, are they required to also report expenses?
6
• Healthcare related expenses attributable to COVID (supplies, equipment, IT, facilities, other)
Under $500k in PRF, reporting can be by category. $500k or over, must report by expense category.
7
Calculating Unreimbursed Expenses – What Qualifies? Broadly – a range of items and services purchased to prevent, prepare for, and respond to COVID, including:
• Supplies used to provide healthcare services (PPE, sanitizer, screening supplies)
• Equipment used to provide services – clinical and IT (telehealth)
• Workforce training
• Building or constructing temporary structures to expand capacity (and related expenses)
• Reallocation of staff to screening function
• Acquiring additional resources, including facilities, equipment, supplies, staffing and technology to preserve care delivery.
Consideration: Directly related to a COVID response
8
Limitation on calculating expenses
Expenses must be reported net of other reimbursed sources (payments received from insurance and/or patients, and amounts received from federal, state, or local governments, etc.)
• Payer reimbursement – can’t count the cost of vaccine (reimbursed) but may use PRF funds for vaccine distribution (additional refrigerators, personnel cost to provide vaccinations)
• Amounts received from federal government – can’t double count staff included in PPP forgiveness calculations
9
Reporting Lost Revenue
Must report revenue calculated as net charges (gross charges less allowance for contractual adjustments and bad debt)
• Reported for the calendar year 2020
• Must be reported by quarter
• Must be reported by payer (Medicare, Medicare Advantage, Medicaid/CHIP, Commercial Insurance, Self Pay)
Revenue does not included
10
• Must be reported by quarter
• Must be reported by payer
Option 2:
• Comparison to budget (must have been approved by 3/27/20)
• Must provide an attestation from the reporting entities CEO that the budget was approved by 3/27/20
11
• Calculate lost revenues using the methodology
• Explanation as to why the methodology is reasonable
• Description establishing a connection between the methodology and loss due to COVID
• If HHS decides the alternate methodology is not reasonable, the entity has 30 days to refile using Option 1 or 2
• Increases possibility of an HHS audit
12
For each calendar quarter in 2020:
• Personnel metrics – total personnel by labor category (FT, PT, contract other), total rehires, total new hires, total personnel separations by category
• Patient metrics – total number of patient visits (in person and telehealth)
Changes in ownership
• If the reporting entity acquires or divests, include specific information regarding the transaction
Amount of interest earned on PRF funds
13
• Simplified reporting for loans $150,000 or less
• In CAA, Congress made clear that a forgiven PPP loan is completely tax-exempt and is not taxable income
• EIDL grants will not reduce PPP forgiveness and are not taxable
• Consideration should be given in completing the application for forgiveness regarding expenses that could be included in the HHS reporting. If the application has already been submitted and there were expenses in excess of the amount necessary for forgiveness, it is assumed that the excess can be applied to HHS reporting
14
• Borrowers of PPP1 loans have an opportunity to apply
• Financial institutions are able to accept applications 1/13/21 through 3/31/21
• Eligible employers cannot have over 300 employees
• Maximum PPP2 loan is the lesser of 2.5 times average monthly payroll costs or $2 million
Eligible applicants must have experienced a reduction of 25% or greater in 2020 relative to 2019 for one calendar quarter in 2020
• Quarterly gross receipts are compared quarter by quarter from 2020 to 2019. Gross receipts include all revenue in whatever form received or accrued with the borrower’s method of accounting. PPP1 loan proceeds are not included in gross revenue.
• Borrowers can elect to use annual testing as evidenced on filed tax returns.
• Special rules for acquisitions and dispositions during 2020
16
Employee Retention Credit - 2020
CAA provided that all businesses (including non-profits, but not governmental) are eligible for the Employee Retention Credit (ERC) even if they received a PPP Loan.
Eligibility is retroactive for 2020 (claimed on an amended 941)
Includes wages paid in a quarter in which:
• Operations were fully or partially suspended due to a government order related to COVID
• The business had a 50% or greater decline in revenue during a calendar quarter compared to 2019
17
• Date range – 3/24/2020 – 4/30/2020 – Non-emergency medical procedures. Applicable to physician practices that provide elective and non-emergency surgery (i.e. would not be applicable for a office-based practice with no surgical procedures)
• Date range – 3/24/2020 – 5/6/2020 – Dental procedures
• Executive Order #18 – 3/23/2020 - https://publications.tnsosfiles.com/pub/execorders/exec-orders-lee18.pdf
• Executive Order #25 –4/8/2020 - https://publications.tnsosfiles.com/pub/execorders/exec-orders-lee25.pdf
18
• All employee wages (including owners) paid to employees during the suspension period are eligible. Eligible wages include health care benefits.
• A full-time employee is an employee that averaged 30 hours per week
• Maximum credit – 50% of eligible wages (including health care benefits) not to exceed $10,000 per employee. Maximum credit is $5,000 per employee
19
Over 100 full time employees (based on 2019)
• All employee wages paid to employees not performing services while the government order is in place or during a significant decline in gross receipts.
• Includes health benefits paid for furloughed employees even though they did not receive wages.
• Excludes health benefits paid for employees providing services and amounts paid by employees with after-tax dollars
• Excludes pay for pre-existing time off
• All other calculations are the same as for less than 100 employees
20
Eligible employees:
• Admin employees paid that cannot work remotely
• Physician wages would be eligible if they did not work during the partial suspension. What about surgeons that only worked a limited clinic schedule but did not work during their surgery schedule? Pro-rate?
21
• Credit extended through 6/30/21
• Qualified wages extended to $10,000 per quarter
• Credit increased to 70% of qualified wages
• Significant decrease in gross receipts based on 20% of 2019 revenues
• All wages apply to employers with under 500 employees (vs. 100 employees in 2020)
22
HHS CARES Act Provider Relief Fund: FAQs https://www.hhs.gov/coronavirus/cares-act-provider-relief- fund/faqs/index.html
SBA website – Paycheck Protection Program & FAQs https://www.sba.gov/funding-programs/loans/coronavirus-relief- options/paycheck-protection-program