RHEUMATOLOGY PRACTICES & THE CARES ACT FINANCIAL ASSISTANCE & RECOVERY OPTIONS FOR PHYSICIAN PRACTICES APRIL 22, 2020
Please note this presentation contains general information which may not be applicable to all facilities, communities and circumstances. We believe this is the most up-to-date information available currently but is subject to change as circumstances warrant. We are not providing legal or accounting advice to any participant. We encourage you to review your practice’s situation with your lawyer or accountant.
Moderator Ray Waldrup is the CEO of Articularis Healthcare Group, Inc (AHG) and American Rheumatology Network (ARN) with more than 25 years of experience in healthcare. AHG is the largest rheumatology practice in the country with 41 physicians, 14 advanced practice providers throughout Florida, Georgia, South Carolina, & Tennessee. ARN is a physician led and owned organization committed to improving healthcare by empowering independent rheumatology practices across the nation. Through our network physicians and practice administrators have access to best business practices, innovative practice performance technology, and value-based treatment pathways. Ray Waldrup
Presenters Tim Hewson, J.D. Cody Paul, CPA
Featured Panel Members JJ Littrell, CPA James R. Willey, J.D. Director with Elliott Davis Attorney with Hall Render jj.littrell@elliottdavis.com jwilley@hallrender.com
o Federal financial resources for physician practices affected by the coronavirus public health emergency Webinar o Highlight compliance concerns associated with the use of Payroll Protection Program Loans & Outline Relief Fund Awards o Review accounting & documentation processes o Panel discussion with question & answer session
Available Federal Coronavirus Financial Assistance Options o Employment Retention Credit o Delay of Payment of Employer Payroll Taxes o Families First Coronavirus Response Act (FFCRA) o Emergency Economic Injury Disaster Loans (EIDL) o Accelerated Advanced Medicare Payment Program o Paycheck Protection Program (PPP) o Health & Human Services (HHS) CARES Act Provider Relief Fund
Employment Retention Credit o Eligibility limited to practices whose gross receipts have dropped by 50% compared to average gross receipts o After gross receipts reach 80%, eligibility ends on the first day of the next quarter o Refundable tax credit equal to 50% of all wages o Maximum of $5,000 per employee o Refunded by offsetting employer tax through payroll o Qualified Wages: o >100 employees: only employees who did not work due to suspended operations or lost revenue o <100 employees: all employees *Not available for PPP applicants
Delay of Payment of Employer Payroll Taxes o Defer employer’s social security tax (6.2%) o March 27-December 31, 2020 o Payment for taxes: o 50% due on December 31, 2021 o Remaining 50% due by December 31, 2022 o To defer tax payments: o Work with your payroll company for best course of action o IRS will provide future instructions on how to report deferred payments *New IRS Guidance: PPP eligible until lender forgives loan
Families First Coronavirus Response Act (FFCRA) o Expanded paid sick leave (2 weeks) & expanded FMLA (12 weeks total, 2 unpaid plus 10 paid) o U.S. Department of Labor permits employers to exclude healthcare providers or emergency responders from expanded sick leave or expanded family leave. o Healthcare provider includes “anyone employed at any doctor’s office” o If expanded benefits are offered & paid, the following are reimbursable in whole or in part: o Tax credits from Federal income taxes o Social Security and Medicare taxes for employer & employee *No PPP restrictions
Emergency Economic Injury Disaster Loans (EIDL) o Repayable loan for businesses less than 500 employees and experiencing “substantial economic injury” due to COVID-19 o Directions to apply through the Small Business Association (SBA) o Up to $2 million with a maximum term of 30 years o Interest rate: 3.75% o Personal Guarantee not required if loan is less than $200,000 o $10,000 forgivable Emergency Loan Advance *No PPP restrictions
Accelerated Advanced Medicare Payment Program o Medicare Administrative Contractor (MAC) calculates payments based on 100% of Medicare payments for prior 3-month period o Provider submits claims as usual after issuance o CMS begins collection 120 days after the date of issuance o The recoupment will offset from new claims to repay advanced payment o Apply directly on each individual MAC’s website
Paycheck Protection Program (PPP) o Funds are currently exhausted, however, additional funding of $310 billion is waiting for House approval. o This loan is forgivable if you meet certain conditions o Funds must be used over 8-week period o All unforgiven amounts accrue interest at a 1% fixed rate and the loan is due in two years o All payments are deferred for 6 months, interest will accrue during that period. o To calculate loan amount: 2.5 x Average monthly “payroll costs” o Any amount forgiven is not taxed
PPP continued o You may spend PPP money in 4 categories: o Payroll costs include: o Wages o Health insurance o Retirement benefits o State taxes o Rent o Mortgage Interest (if practice owns its building) o Utilities
PPP Loan Forgiveness Reduction o The Forgiveness Amount is reduced if there is a reduction in the number of employees: o $$ forgiven x (FTE for 8-week period/ FTE Jan 1, 2020 through Feb 29, 2020) o Reduction can be eliminated if FTEs/wages restored by June 30, 2020 o Or, a reduction of greater than 25% in wages paid to employees (making under $100k) o SBA will only forgive 25% of loan proceeds used for non-payroll expenses o Uncertainty continues over consequences of not using at least 75% of the loan proceeds on payroll The Treasury Department has indicated an intent to clarify these rules through further guidelines.
Lender Request List o IRS payroll tax forms: o IRS Form 940 o IRS Form 941 o W-3 o Monthly health insurance invoices o Employer contribution to retirement/401k
PPP Application Process & Calculating your Loan Sample bank loan calculator:
PPP Record Keeping Considerations o Keep a separate bank account o Only make distributions or payments from the new account that directly tie to your payroll, rent and utilities o Create a budget and plan out the next 8 weeks of payroll costs, rent, and utilities o To get maximum amount forgiven, use at least 75% of loan proceeds on payroll
Borrower Certifications o Uncertainty of current economic conditions makes it necessary for the loan request to support ongoing operations o Loan proceeds will be used to: (a) retain workers and maintain payroll; or (b) to make mortgage, lease, and utility payments o Good faith standard
HHS CARES Act Provider Relief Fund Grant Program o Public relations messaging: o HHS Secretary Verma: “No strings attached.” o HHS Announcement: “These are payments, not loans, and will not need to be repaid.” o Terms & Conditions: o Significant strings attached o Clawback if all terms & conditions are not met o Legal risks o Attestation could be false claim o Retention could violate reverse False Claims Act o Up to $21,916/claim plus treble damages
Outline of Terms & Conditions o Good standing with Medicare o Use Restrictions: o Expenses or losses reimbursed or reimbursable from “other sources” o HHS has not said what that means o Reporting o Agree to any report & all documentation later developed by HHS o Risk of agreeing to a future undefined event o Documentation o Maintain “appropriate” records & cost documentation
Attestation o Attestation Form (as of 4/16/2020) o No clarity on terms & conditions o Clawbacks for non-compliance o Adjustments possible o Must provide HHS with “all information” related to disposition & use of funds o Review process/mandatory participation o HHS does not define review process o What if you keep the money but fail to attest within 30 days? o Implied attestation & acceptance of all terms & conditions
Possible Qualifying Expenses o Overtime o Remote work software & hardware, supplies, etc. o Outside advisory fees o Accountants o Lawyers o Consultants (IT, business) o Additional PPE o Additional cleaning costs to maintain safe work environment o Signage/advertising; telehealth
Possible Lost Revenues Documentation o Compare to budgeted revenue o Compare to prior year’s revenue o Increase baseline if prior 2020 revenues increased o Should baseline be decreased if prior 2020 decrease? o Consider the following: o Cancelled patient visits o Cancelled infusion visits
Accounting & Documentation Processes for Relief Grant o Terms & conditions require all recipients maintain appropriate records & cost documentation o Robust accounting & documentation recommended to show HHS grant is used for purposes that do not overlap with other programs, third party payor reimbursement or insurance proceeds o Show your work o List all assumptions
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