As of today, the coronavirus has infected almost 2 million worldwide and caused the deaths of more than 125,000 people (Worldometer data as of 12:15 PM on April 14, 2020). In the United States, the relevant figures are more than 600,000 infected and north of 25,000 deceased. Without successful social distancing, those numbers could be dramatically worse.
And still, they are dwarfed by the massive numbers associated with the economic impact of the coronavirus and the illness it causes, COVID-19. In the space of just three weeks, applications for unemployment insurance in the United States skyrocketed from the low hundreds of thousands to more than 16 million.
To prop up the economy in the interim, the federal government initiated the Coronavirus Aid, Relief and Economic Security (CARES) Act, which pumps $2 trillion into the economy to achieve a number of objectives, among them make sure that healthcare providers can continue to function.
What does that mean to individual providers? It depends on the focus of your organization. Keep reading for an overview of what federal assistance means to each healthcare sector.
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Hospitals: Of the roughly $180 billion allocated for public services, hospitals will receive the lion’s share—about $100 billion—in the form of reimbursements for providing COVID-19-related care, e.g., building temporary structures, leasing properties, buying supplies, hiring and training additional workers and increasing surge capacity. Importantly, seeking reimbursement for items that are reimbursed by other sources will be considered fraud.
The reimbursement program is administered by the assistant secretary for preparedness and response in the Department of Health and Human Services (HHS). With the stroke of a pen, the assistant secretary went from managing a $2.6 billion budget to directing $100 billion in funds.
Applicants will, of course, have to fill out a form, and details on how to access the form and which organizations might receive priority—the $100 billion is probably too little, after all—are still tough to come by. Still, organizations will want to start lining up numbers now in anticipation of more information.
“The sooner your team can come up with a reliable calculation of the loss you are experiencing because of declining electives or lower ER volume, the better,” says Martie Ross of Kansas City accounting firm PYA, PC. “Also be prepared to quantify any additional expenses incurred due to the pandemic. You will want to have these numbers ready to plug into whatever formula they provide,” Ross says.
COVID-19 will also prove financially beneficial to hospitals in ways that are not directly related to the virus. As part of the CARES Act, Congress pledged to reverse scheduled cuts in Medicare and Medicaid reimbursements, effectively spreading an additional $11 billion across 3,000 hospitals.
Finally, the CARES Act also provides for accelerated payments through Medicare parts A and B. The Centers for Medicare and Medicaid Services (CMS) outlines how the program works in this fact sheet and this letter to providers. Qualified providers are those that have billed Medicare in the previous 180 days, are not in bankruptcy, are not in active medical review and don’t have any delinquent Medicare overpayments.
Clinics: With so much focus on treating COVID-19 patients in extreme distress, many ambulatory providers are finding themselves with time on their hands, which translates as decreased revenue. So dramatic has been the drop off in activity for clinic-based providers that many teeter on the edge of insolvency.
The decrease in business for clinics is similar to the experience of other types of businesses, e.g., restaurants, theaters, etc., even while the product is much more essential. For that reason, the CARES Act provides for $350 billion in loans made available through the Small Business Administration (SBA) for entities with fewer than 500 employees.
The money is disbursed through one of two different programs (side-by-side comparison here):
Paycheck Protection: The program offers up to $10 million to cover payroll and other expenses. The program has an incentive structure in which some or all of a loan may be forgiven if the company uses the money to retain workers or re-hire those it had to let go. Retain or quickly re-hire employees before the money arrives in an account and keep them for eight weeks and the loan is 100 percent forgiven. The application process is being managed by local banks, so contact a lender with whom you have a relationship; the application deadline is June 30.
Source: Hit Consultant