Healthcare providers may find an unexpected payment in their bank accounts today, after the U.S. Department of Health and Human Services (HHS) launched the first wave of distributions from the new $100 billion provider relief fund created through the Coronavirus Aid, Relief and Economic Security (CARES) Act. What do providers need to understand about these payments? Read on for common inquiries and action items.
What are these payments?
The payments distributed on April 10 are part of the initial $30 billion tranche of provider relief. A total of $100 billion was appropriated under the CARES Act to support healthcare providers. These funds are intended to help providers on two fronts: those on the front lines of the coronavirus pandemic and those who face financial struggles due to cancelled elective services and delayed care.
Who is receiving funds?
According to HHS, all facilities and providers that received Medicare fee-for-service (FFS) reimbursements in 2019 will receive a relief payment. If your practice is part of a larger medical group, the relief payment will be sent to the group’s central billing office. HHS is making payments to billing organization according to Taxpayer Identification Number.
On April 16, 2020, HHS updated its stimulus payment webpage to add the following information regarding eligibility: “If you ceased operation as a result of the COVID-19 pandemic, you are still eligible to receive funds so long as you provided diagnoses, testing, or care for individuals with possible or actual cases of COVID-19. Care does not have to be specific to treating COVID-19. HHS broadly views every patient as a possible case of COVID-19.”
How much will I receive?
The payments are calculated based on the provider’s share of total Medicare FFS reimbursements (excluding Medicare Advantage) in 2019, which totaled approximately $484 billion. To estimate payment amount, providers should divide their 2019 Medicare FFS payments (which can be found in their revenue management system) by $484 billion and then multiply that figure by $30 billion. Here’s an example from HHS to demonstrate the calculation:
A community hospital billed Medicare FFS $121 million in 2019. To determine how much they would receive, use this equation: $121,000,000/$484,000,000,000 x $30,000,000,000 = $7,500,000
Does this also include payments for Medicaid patients?
No, the first wave of relief payments does not cover Medicaid patients. However, HHS indicates that who predominantly serve the Medicaid population will be included in future distributions from the provider relief fund. Also, as part of the Families First Coronavirus Response Act, signed into law on March 18, 2020, the federal government raised its Medicaid matching funds for states by 6.2 percent.
Is this a loan?
No. It appears these funds are advanced payments for service to enable healthcare providers to care for the uninsured. Those uninsured individuals are also spared the costs of services received under other federal coronavirus relief legislative provisions.
How will this affect PPP?
This payment does not affect the amount of PPP applied for and/or received. Any impact on PPP loan forgiveness is not addressed in current guidance. It remains to be seen whether providers who receive a payment but then fail to see enough patients to match the advance amount would have to return excess or offset against PPP. RKL’s medical practice advisors continue to monitor guidance from HHS and will update this post as more information becomes available.
What must providers do when they receive a payment?
Read the full terms and conditions document. On April 16, 2020, HHS changed the second provision of the terms and conditions to remove the requirement that providers are “currently” treating COVID-19 patients; now, any COVID-19 patient treatment after January 31, 2020 is required.
Familiarity with the terms and conditions is key not only to providers’ understanding of the program, but also necessary for the required attestation. Within 30 days of payment receipt, providers must sign an attestation to confirm receipt and agree to the terms and conditions. The CARES Act Provider Relief Fund Payment Attestation Portal is now open for use by providers.
What are the conditions of this payment?
According to HHS, “as a condition to receiving these funds, providers must agree not to seek collection of out-of-pocket payments from a COVID-19 patient that are greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network provider.”
When will the remaining relief be distributed?bu
The next waves of distributions are currently in the works and, according to HHS, “will focus on providers in areas particularly impacted by the COVID-19 outbreak, rural providers, providers of services with lower shares of Medicare reimbursement or who predominantly serve the Medicaid population, and providers requesting reimbursement for the treatment of uninsured Americans.”
How can RKL help?
Your RKL advisor is available to answer provider questions related to these and other relief measures, to the extent that regulatory guidance is available. RKL is also available to help providers with a number of business continuity, financial projection and workforce management issues in response to the coronavirus pandemic.