The U.S. Department of Health and Human Services (HHS), through the Health Resources and Services Administration (HRSA), is making $25.5 billion in new funding in COVID-19 relief available to healthcare providers. This funding includes $8.5 billion in American Rescue Plan (ARP) resources for providers who serve rural Medicaid, Children’s Health Insurance Program (CHIP), or Medicare patients, and an additional $17 billion for Provider Relief Fund (PRF) Phase 4 for a broad range of providers who can document revenue loss and expenses due to the pandemic.

Provider Relief Fund Phase 4 payments will be based on lost revenues and expenditures between July 1, 2020, and March 31, 2021. In line with a Biden-Harris Administration commitment to supporting providers with greater needs, the PRF Phase 4 funding will reimburse smaller providers for their lost revenues and COVID-19 expenses at a higher rate than larger providers. PRF Phase 4 will also include bonus payments for providers who serve Medicaid, CHIP, and/or Medicare patients. According to the HHS, these bonus payments will be issued at the generally higher Medicare rates “to ensure equity for those serving low-income children, pregnant women, people with disabilities, and seniors.”

Similarly, HRSA will make ARP rural payments to providers based on the amount of Medicaid, CHIP, and/or Medicare services they provide to patients who live in rural areas, HHS noted in its September 10 release.

“In order to expedite and streamline the application process and minimize administrative burdens, providers will apply for both programs in a single application,” the HHS release noted. “HRSA will use existing Medicaid, CHIP, and Medicare claims data in calculating payments. The application portal will open on September 29, 2021.”

In addition, HHS announced a “final” 60-day grace period for providers who fail to meet the September 30, 2021 deadline for the first PRF Reporting Time Period. While the deadlines to use funds and the Reporting Time Period do not change, “HHS will not initiate collection activities or similar enforcement actions for noncompliant providers during the grace period.”

“We are staying abreast of developments and keeping our clients up to date, even as we await more information from HHS on these newly announced relief measures,” noted Michael DeLuca, director of HBK Healthcare Solutions. “We have worked with our healthcare practices and facilities throughout the pandemic, on their Paycheck Protection Program applications and reporting, their Employee Retention Credits filings, their access to various HHS relief programs, and their daily operational and financial challenges that have been exacerbated by the pandemic. We will remain steadfast in our commitment to serving our healthcare clients as they address the unprecedented and ongoing pandemic-related challenges.”

The year 2020 might be behind us, but the pandemic rages on, as does the flurry of legislation aimed at providing relief for affected businesses, including and sometimes specifically for physician practices. As we embark on what hopefully proves a year characterized by a return to some degree of operations normalcy, consider these five keys to your 2021 financial performance:

1. Strong financial position. Through a combination of government relief funds and austerity measures, physician practices generally were able to survive 2020, rebounding in terms of patient counts and strengthening their balance sheets as the year came to an end. Now, maintaining a strong financial position will be key to having the flexibility to keep your practice on solid footing for the long-term. That will include staying abreast of any reimbursement changes, any new government relief programs, and prudent provider cash flow management.


2. Revenue cycle management. At the beginning of December 2020, the Centers for Medicare and Medicaid Services (CMS) cut the CY 2021 PFS conversion factor by over 10 percent and provided significant changes in reimbursements to E&M visit codes and telemedicine services, to name a couple. Then with the passage of the Consolidated Appropriations Act (CAA) on December 27, the conversion factor was increased 3.75 percent, sequestration was suspended through March 31, 2021, the Geographic Practice Cost Index floor was reinstated through CY 2023, and implementation of the complex add-on E&M service code was delayed until CY 2024. Given the flutter of substantial changes in such a short period of time, now may be a good time to conduct a full coding review of your practice. Such a review is a good starting point for heightening your attention to detail with emphasis on your RCM operations and ensuring your coding, billing, and collection processes result in efficient and maximum reimbursement.


3. PPP: rounds one and two. Practices that received the Paycheck Protection Program (PPP) loans in 2020 and have not yet applied for loan forgiveness should work with their financial institutions to do so as soon as possible. Filing should be less cumbersome now as the thresholds for qualifying for the simplified forgiveness process have been raised to loans of up to $150,000. Most notably with the passage of the CAA, expenses incurred on forgiven amounts are now tax-deductible—with no basis consequences to shareholders or partners.
   
   To qualify for a second round Payment Protection Program loan, you have to have received and used—or will use—the funds from a first-round loan. As well, the business must have no more than 300 employees, down from 500 for the first round, and have gross receipts in any 2020 quarter of at least 25 percent less than the corresponding 2019 quarter. We still await potential further guidance on how funds received from other programs, like the Health and Human Services Provider Relief Fund, will affect your ability to qualify for a second PPP loan, but we are advising practices that may have suffered a 25 percent decrease in receipts in a 2020 quarter to reach out to your professional advisor for guidance.


4. Reporting requirements around HHS Provider Relief Funds. During 2020, most providers received an HHS Provider Relief Fund (PRF) payment through one or more of the agency’s General Distribution phases. Now, practices are required to submit a report on how those funds were used. Practices will need to substantiate how the PRF they received covered increased expenditures attributable to the coronavirus and related lost revenues during 2020. If a practice received a payment, or combined payments, in excess of $10,000, the practice must submit the initial report covering the 2020 year through the HHS portal between January 15 and February 15, 2021. Note that the funds are considered taxable income. Providers receiving the funds will be issued 1099-MISC for 2020, and a single audit will be required for providers who received more than $750,000.


5. Professional relationships. Practice leaders and administrators relied heavily on their professional advisors in 2020. You will continue to need the counsel of your financial advisors, lawyers, bankers, and others as we make our way through 2021. It is especially important that practices form and secure their relationships with advisors who have deep expertise in serving physician practices and who work with multiple practices and practice specialties and understand the complex needs of each..

We invite you to call us with your questions and concerns at 239-482-5522. Or email us at mdeluca@hbkcpa.com or jzarlenga@hbkcpa.com. HBK Healthcare Solutions is a dedicated team of healthcare provider subject matter experts within HBK CPAs & Consultants. Among more than 800 clients in the healthcare and social assistance businesses, we serve more than 300 private physician and dental practices. Our unique depth and breadth of experience in medical verticals manifests itself in a full complement of compliance and consulting services, a holistic financial solution.

On October 22, the Department of Health and Human Services (HHS) amended its Provider Relief Fund (PRF) General and Targeted Allocation, extending the Phase 3 distribution that ends November 6 to more providers and permitting recipients to apply for PRF payments for all lost revenues without limitation. Previously payments were to be capped at lost revenues defined as a negative change in year-over-year net patient care operating income.

The updated list of eligible providers includes:

• Behavioral Health Providers
• Allopathic & Osteopathic Physicians
• Dental Providers
• Assisted Living Facilities
• Chiropractors
• Nursing Service and Related Providers
• Hospice Providers
• Respiratory, Developmental, Rehabilitative and Restorative Service Providers
• Emergency Medical Service Providers
• Hospital Units
• Residential Treatment Facilities
• Laboratories
• Ambulatory Health Care Facilities
• Eye and Vision Services Providers
• Physician Assistants & Advanced Practice Nursing Providers
• Nursing & Custodial Care Facilities
• Podiatric Medicine & Surgery Service Providers

If your practice or business meets the extended provider types above, and you believe you are eligible for Phase 3 provider funds, we encourage you to apply prior to the November 6 deadline.

Should you have any questions on this round of PRF funding or any previous rounds, please do not hesitate to contact your HBK professional. You may contact also contact the national director of the HBK Healthcare Solutions, Michael DeLuca, at MDeLuca@hbkcpa.com