Other Coronavirus Relief Measures for Physician Practices

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Last Updated: May 17th, 4:20 pm: If you’ve applied for the loan under the Paycheck Protection Program of the CARES Act, then it is time to look into what other Coronavirus relief measures are in place for your physician practice.

I will continue to update this post as new information becomes available or I detect errors here.

CARES Act Provider Relief Fund: Part 1

Announced on April 7, 2020 by CMS
The first round of funds showed up in practice bank accounts on April 10, 2020. The second round came in on April 17.
$30 billion from the CARES Act has been allocated to Department of Health and Human Services for this purpose
Grants will be provided to healthcare providers enrolled in Medicare Fee-for-Service Reimbursement in 2019
Deposited funds are commensurate with 6.25% of 2019 Medicare payments for a particular TIN (yearly Medicare payment for 2019 x $30 billion (total funds)/$484 billion (total CMS payment for FFS in 2019)
Funds are automatically deposited by Automated Clearing House and show up as “HHSPAYMENT” via UnitedHealthCare Group/Optum since HHS is partnering with them to distribute funds
Payments may also go to your central billing office
Within 30 days of receiving the payment, you have to sign an attestation confirming receipt and agreeing to the Terms and Conditions of the payment
Portal to sign the attestation is here
Employed physicians and Independent Contractors who do not directly bill Medicare under their own TIN will not receive the grant

CARES Act Provider Relief Fund: Part 2

Announced on April 23, 2020, this describes allocation of an additional $20 Billion from the HHS Stimulus package.
Together these $50 Billion are labeled “General Distribution” from the Provider Relief Fund
Currently, it applies only to those who received monies from Part 1 of the HHS Provider Relief Fund by April 23, 2020 and have signed to attest to the Terms and Conditions set by HHS.
Unlike Part 1, which was an automatic disbursal for all Medicare providers, most practices have to apply to receive this payment.
Some providers have received this second round of funding automatically on April 24, 2020 (if HHS has their Medicare Cost Report) but they, too, must follow the same application process so their information can be verified.
Eligible practices are those who have (1) billed Medicare in 2019 and (2) are providing care to any patient with possible/confirmed COVID on/after Jan 31, 2020. HHS broadly views every patient as a possible case of COVID-19.
The Provider Relief Fund Application Portal has been set up to apply for these funds.
4 basic pieces of information is required to apply: (1) “Gross Receipts or Sales” or “Program Service Revenue” as submitted on the business federal income tax return (2) estimated revenue losses in March and April 2020 due to COVID-19 (3) the most recently filed federal income tax return (2017, 2018 or 2019) and (4) a list of TINs of any subsidiary organizations of the same provider that have received relief funds but that DO NOT file separate tax returns.
For verification of payment received under the first part of the Relief Fund, the application asks you for ACH Account Number or the Check Number from HHS/UnitedHealth Group.
To estimate revenue losses in March and April 2020, you can compare year-over-year revenue or actual revenue to budgeted revenue. Since April is not over yet, you can extrapolate from the first part of April or from March.
Every Medicare provider who meets eligibility will receive payment. It is not on first come, first served basis.
Applications will be reviewed every Wednesday.
A yes or no decision on your application and funding is expected within 10 business days of receipt of application
Provided Terms and Conditions are met, this is a grant and repayment is not required.
The Application Portal is here and FAQs are addressed here.
If you have received more than $150,000 in all from the HHS Stimulus packages, you have to submit a quarterly report to demonstrate compliance with the rules.
There is additional funding for “Targeted Distribution”- the rest of the $50 Billion that HHS has received from the CARES Act. This includes Medicaid providers, dentists, those who treat the uninsured and those in COVID hot-spots.

HHS Stimulus Grant Amount

Total payment amount from HHS General Distribution (including both Parts 1 and Part 2) amount to 2% of a practice’s Net Revenue in 2018.

Since Total revenue of Medicare facilities and providers for 2018 was $2.5 Trillion and the General Distribution Fund is $50 Billion, a provider should expect to receive (Total Revenue in 2018/$2.5 Trillion x $50 Billion) in Expected Combined General Distribution.

Hence, Part 2 payment will be the difference between this amount and what was received as Part 1 HHS Stimulus grant.

Here is a public list of practices that have received HHS Stimulus grants here.

Medicare Advance Payments

Update: As of April 26, 2020, CMS is not taking any new applications for the Advance Payment program. It is unclear whether there will be additional funding available to resume this program at a later date.

CARES Act dictates that CMS provide accelerated and Advance Payments to any physician during this national emergency who meets the following criteria:

Physician has billed Medicare in the 180 days immediately prior to the request
You apply through your Medicare Administrative Contractor (MAC)
Physician is not in bankrupcy
Physician has no delinquent Medicare overpayments
Physician is not under active medical review or program integrity investigation

Details of the program:

Physician practices make the request online at their MAC’s website
Reason for request as per CMS Fact Sheet (i) Please check box 2 (“Delay in provider/supplier billing process of an isolated temporary nature beyond the provider’s/supplier’s normal billing cycle and not attributable to other third party payers or private patients.”); and (ii) State that the request is for an accelerated/advance payment due to the COVID19 pandemic.
Financial questions on some forms (which have not been updated)- such as questions about anticipated receipts, expenditures or cash positions- do not have to be answered.
Application is at the level of each individual physician’s PTAN/NPI, not by each practice’s TIN.
You do not have to specify a dollar amount, CMS will compute the maximum you are eligible to receive based on charges during the 3 month period from October to December, 2019.
Payments are expected to be received in one week of the request being approved
Recoupment of the advance payment begins 120 days after the date of issuance of the payment and repayment must be complete 210 days after you received the funds.
Physicians continue to submit claims, as usual, to Medicare
They receive full payment for their claims for the first 120 days following receipt of the advance payment
After 120 days, each new claim submitted is used to offset the outstanding balance on the advance payment- so physicians will not receive payments for those claims until repayment is complete or 210 days are up
If repayment within 210 days is difficult, you may request an extension of repayment but at an interest rate of 10.25%
Practices may choose to directly repay CMS for the loan rather than have it be recouped as described above.

Kid's haircut at home — Pandemic Diaries: When you screw up her haircut, a little bribe goes a long way

Medical Malpractice Premiums

My Medical Malpractice insurer is sending out frequent emails with relief measures. Initially, they allowed a 9 month delay of premium payment to help with current cash flows. Today they introduced a discount on the next three renewals for a policyholder depending on the decrease in your billings compared to prior.

Ask your malpractice agent for any reprieve your insurance company is giving. Or visit your carrier’s website for details.

Employee Retention Tax Credit

This is a small business tax provision under the CARES Act applicable only if you have NOT applied for the Small Business Interruption Loan under the Paycheck Protection Program. So read on if you are one of those.

A business who applies for tax credit under FFCRA may use the Employee Retention Credit, too- but NOT for the same wages.

This is a fully refundable tax credit for Employers
Eligible Employers: those who completely or partially suspend operations during any quarter of 2020 due to the pandemic, or, have a significant decline in gross receipts (at least 50% decline from gross receipts same quarter last year)

Many physician practices will meet eligibility since many of them are only doing televisits (partially suspended operations) and/or are likely to meet criteria for significant decline in gross receipts due to severe drop in patient volume.

An employer can receive up to 50% of the qualified wages (including healthcare premiums) it pays an employee in a calendar quarter, up to $10,000. So, the maximum credit an employer can get towards one employee’s wages is $5000 for a quarter.
Eligible wages paid from March 13, 2020 to December 31, 2020 qualify.
The refundable credit goes towards Employer portion of Social Security taxes.
Employer will report their qualified wages and related credits for each quarter when they file their Quarterly Employment Tax Returns, usually on Form 941.

Deferral of Employer Payroll Taxes

For wages accrued from March 27, 2020 till the end of the year, employers may defer payment of their portion of Social Security Taxes
The deferred taxes then need to be repaid in two installments: half of it is due by December 31, 2021 and the other half by December 31, 2021.

Employers who participate in the Paycheck Protection Program Loans are eligible to defer payment of Payroll Taxes until such time as they receive funding from the PPP loan. They may defer taxes and repay them as per the deadlines above. Once the PPP loan funds hit their account, they may not defer payroll taxes any more.

Expanded Unemployment Assistance

The CARES Act expands on available Unemployment benefits from states and makes them available to workers usually excluded from Unemployment Assistance. There are several programs under the umbrella of Expanded Unemployment Benefits and differ from state to state depending on how each state chooses to implement the CARES Act.

Employees who are furloughed are eligible for unemployment benefits, thereby letting them keep benefits and healthcare coverage.
Pandemic Unemployment Assistance (PUA) is available for individuals who are normally not eligible for Unemployment Benefits, such as, Independent Contractors and Self Employed; part-time workers and those who lack a sufficient work history. PUA benefits are available from January 27, 2020 to December 31, 2020; are retroactive, and last for up to 39 weeks.
Pandemic Emergency Unemployment compensation (PEUC) extends the State’s available unemployment benefit by up to 13 weeks.
Federal Pandemic Unemployment Compensation program (FPUC) is a program to provide an additional $600/week to affected individuals, already getting some kind of unemployment benefit. This also varies by state, and the program ends by July 31, 2020.

Please check the Department of Labor’s overview and FAQs of Unemployment Insurance Relief During COVID-19 Outbreak here.

Retirement Plan Changes under CARES Act

Contribution deadlines for Individual 401(k), Traditional IRA and HSA delayed to Federal Tax Filing date July 15, 2020.

Retirement Plan Distributions

Distributions are available from 401(k), 403(b), governmental 457(b) plans and Traditional IRAs
To receive a distribution, an employee must self-certify that they are affected by Coronavirus
Employees are eligible to receive up to $100,000 in distribution any time this year, across all accounts (this max amount is per person, not per acount)
Distributions are not subject to 20% tax withholding or 10% early withdrawal penalty.
They are subject to ordinary income tax, spread out over 3 years. But the distribution may also be returned to the account within 3 years. And that does not count towards yearly contribution limits.
You may elect to pay all of, or at least a bulk of taxes this year, if due to a lower income, you are in a lower tax bracket.
If you have a mix of pre-tax and Roth contributions within your retirement account, the Pro-Rata rule applies. that is, if half of your contributions within the account are pre-tax, you pay tax on half your withdrawal.
You have 3 years to return the distribution (instead of the usual 60 days). You need to amend your tax returns to get refunded on the taxes paid towards the distribution.
Plans may be retroactively amended to allow for distributions until year 2022.
These provisions are in place until the end of 2020.

Retirement Plan Loans

401(k) and other Defined Contribution Plans may allow participant loans if they are affected by Coronavirus. If they do not already allow it, they may be amended by 2022 to retroactively allow such loans.
Loan amounts have been increased to $100,000 (or 100% of vested balance) from $50,000 (or 50% of balance) until September 23, 2020.
Participants with outstanding loans due between March 27, 2020 and December 31, 2020 have an additional year to repay them.
You have up to 5 years to repay the loan if you remain in the same job,
If you leave your job, you have until the next tax filing date, including extensions, to return the funds into your account or another qualified account.
Interest rates vary, depending on the plan, but is based on the prime rate.
Payments, including principal and interest, are due quarterly.
Your plan may not let you make fresh contributions while you have an outstanding loan. This means that you forego the employer match, if you have one.

You may choose to take out a loan from your 401(k) as well as a distribution- each to a maximum of $100,000. Some people are using these funds for real estate investments. It is not my cup of tea- I like to keep things simple.

I think, that unless absolutely necessary, it is best to not raid your Retirement Plans through distributions or loans. And it should not become absolutely necessary- that’s what Emergency funds are for. Here are some reasons why:

You may be selling at market lows and sealing in your losses
You will likely not be able to participate in the recovery of the market
You would have to pay ordinary income tax on the withdrawal
Loans have associated fees and interest rates
The interest on the loan is not tax deductible
You pay back the loans or withdrawals with after tax money and pay taxes on them again when you withdraw it in retirement. so, you get double-taxed on this amount. At the high brackets physicians are in, I think that’s a big downside.

Cash Balance Plans

For employers who have Cash Balance Plans as part of their group retirement benefits, you may choose to lower the credit formula for your plan or freeze it altogether for the current duration and then unfreeze it when things look better.

This is a good option for those who are experiencing decreased revenues (most of us) and the cash flow to put into the CBP may have dried up.

It also lets us not have to make extra large contributions to make up for market losses.

The plan will need to be amended to make these changes and that will be an additional cost. Talk to your Retirement Advisor and TPA for advice for your own situation.

Required Minimum Distributions

RMD have been waived for the year 2020 in order to avoid recipients having to liquidate their market holdings and solidifying their losses.
RMDs apply to anyone over 72 and those with inherited IRAs.
If you did take an RMD for 2020 already, you can return it to the account within 60 days and not have to pay taxes on it.

Student Loan Assistance

As an employer, you are able to pay up to $5250 tax-free towards student loans your employees may have (such as employed physicians) and it does not count as taxable income for the employee.
Physicians who have Federal Student Loans will see an automatic deferment of their payments and interest for 6 months
Those who are going for PSLF still have those 6 months counted towards their 120 payments (so they get 6 free months)
Same with income-driven repayment plans- these 6 months still count towards the required 20-25 year payment plan
Changes are retroactive, from March 13, 2020 to September 30, 2020- so if you made a payment after March 13th, you can get a refund
Keep an eye on your account for errors

Recovery Rebate Checks

$1200 per person and $500 for each child younger than 16 years
Most physicians do not qualify for the stimulus checks due to the income phaseout but trainees, lower income or part-time physicians and retirees may see them
Income is determined by Tax Filing Status for 2019 (if filed) or 2018
For Singles, Adjusted Gross Income (AGI) below $75,000 qualifies and is completely phased out by $99,000
For Married Filing Jointly, AGI below $150,000 qualifies and the phaseout is complete by $198,000
The stimulus check is not counted as taxable income
Technically, it is an advance of a new temporary tax credit for 2020 but it does not have to paid back and it does not affect your Tax Refund for 2020 (when filed in 2021)

Facebook Small Business Grants

Facebook is stepping up with grants to small businesses in the form of cash and advertising credits. They are spending $100 million on grants to up to 30,000 small businesses across 30 countries they have a presence in. So the likelihood of getting a grant is pretty small. They are going to decide who to give the grants to based on the community impact of your business.

References:

Thank you for reading. Thoughts? Comments?