In October 2022, President Biden asked “the Secretary of Health and Human Services (HHS) and the Attorney General to initiate the administrative process to review expeditiously how marijuana is scheduled under federal law.” On August 29, 2023, the HHS made its recommendation to the U.S. Drug Enforcement Agency (DEA) to reschedule cannabis to Schedule III, a category assigned to drugs having low to moderate potential for abuse and/or addiction, and less dangerous than Schedule I or II. It is now up to the DEA, which has final authority on scheduling or rescheduling drugs under the Controlled Substances Act.

If the DEA reschedules cannabis, it will still be an illegal substance, but a little “less illegal.” Cannabis will remain subject to the regulations of the Food and Drug Administration and there will still be a difference between legal status at the state and federal levels for those states that legalize cannabis for adult recreational use.

The impact of rescheduling on banking and financial services is unknown. Perhaps most significantly, businesses in the cannabis industry will pay less taxes because rescheduling to Schedule III eliminates the tax burdens of Internal Revenue Code Section 280E.

An August 30 Politico article called the move “potentially the biggest change in federal drug policy in decades.”

Until the DEA completes its review, there will be a lot of speculation. Let’s just hope good things come to those who wait.

The U.S. Department of Health and Human Services (HHS) has announced an additional $413 million in Phase 4 Provider Relief Fund (PRF) payments to be distributed to more than 3,600 healthcare providers. The timing of the distribution was not announced, but HHS said that the new release means that approximately 89 percent of Phase 4 applications have been processed.

The announcement follows nearly $9 billion released by HHS in December 2021 and another $560 million to COVID-impacted providers in February 2022. Overall, the Department said, it has distributed nearly $12 billion in Phase 4 payments to more than 82,000 healthcare providers since November 2021.

Provider Relief Fund payments are designed to help healthcare providers whose operations have been negatively impacted by the variants of the COVID-19 pandemic. According to the agency, the funds are intended to help providers “to remain in operation and to continue supporting patient care by covering a variety of costs including personnel, recruitment and retention initiatives, medical supplies, information technology, and many other functions.” The agency also noted that Phase 4 payments are intended to reimburse Medicare and Medicaid providers for lost revenues and increased expenses at a higher rate compared to larger providers.

The U.S. Department of Health and Human Services (HHS) has announced an additional $2 billion in Phase 4 Provider Relief Fund (PRF) payments will be distributed to more than 7,600 U.S. providers. The distribution follows nearly $9 billion released by HHS in December 2021 and brings the total funding to providers through the PRF and American Rescue Plan to more than $18 billion over the past three months.

In its January 25 release, the HHS characterized its Phase 4 payments as “reimbursing a higher percentage of losses for smaller providers and incorporating ‘bonus’ payments for providers who serve Medicaid, Children’s Health Insurance Program (CHIP), and Medicare beneficiaries,” adding that “approximately 82 percent of all Phase 4 applications have now been processed.” Provider Relief Fund payments are designed to help healthcare providers whose operations have been negatively impacted by the variants of the COVID-19 pandemic. The funds are intended to help providers “to remain in operation and to continue supporting patient care by covering a variety of costs including personnel, recruitment and retention initiatives, medical supplies, information technology, and many other functions,” noted the HHS release.

“Provider Relief Fund payments have served as a lifeline for our nation’s heroic health care providers throughout the pandemic, helping them to continue to recruit and retain staff and deliver care to their communities,” noted HHS Secretary Xavier Becerra. “This funding is just the latest example of the Biden-Harris administration’s dedication to ensuring that providers continue to have the resources they need to meet the evolving challenges presented by COVID-19 and keep providing critical services to the American people.”

For more information on the Phase 4 funding or 0ther provider relief funding, call HBK Healthcare Solutions at (330) 758-8613 or contact us by email at jzarlenga@hbkcpa.com

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.”

Recording and presentation materials available for:

HHS Provider Relief Funds – Reporting Requirements

On June 11, 2021, the Department of Health and Human Services (HHS) issued the revised post-payment notice of reporting requirements that supersedes all prior versions of the notice. The updated requirements reflect the Health Resources and Services Administration’s focus on giving providers equitable amounts of time for use of these funds, maintaining effective safeguards for taxpayer dollars, and incorporating feedback from providers requesting more flexibility and clarity about PRF reporting. HBK Healthcare Solutions provides an update on the revised reporting requirements.

Download the materials.

The year 2020 might be behind us, but the pandemic rages on, as does the burst of stimulus-boosting legislation aimed at assisting businesses, including and sometimes specifically for long-term care facilities. As we take a deep breath and let the dust settle, consider these four elements when preparing and planning for upcoming tax reporting:

1. PPP: rounds one and two. Facilities that received the Paycheck Protection Program (PPP) loans in 2020 and have not yet applied for loan forgiveness should consider the best timing to apply for forgiveness, based on their individual situation. For Borrowers with loans up to $150,000, filing for forgiveness should be less cumbersome, due to the revised 3508S application; however, Borrowers, should carefully review the application requirements and watch for their lenders to update their PPP forgiveness portals to accommodate the revisions.

   To qualify for a second round Payment Protection Program loan, you must 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 facilities that may have suffered a 25 percent decrease in receipts in a 2020 quarter to reach out to your professional advisor for guidance.

   Most notably with the passage of the Consolidated Appropriations Act (CAA), expenses incurred on forgiven amounts are now tax-deductible.

2. HHS Provider Relief Funds. During 2020, most facilities received an HHS Provider Relief Fund (PRF) payment through one or more of the agency’s General Distribution phases. Now, facilities are required to submit a report on how those funds were used. Facilities will need to substantiate how the PRF they received covered increased expenditures attributable to the coronavirus and related lost revenues during 2020. Funds reimbursed by other sources, such as the PPP, cannot be used when reporting the usage of the HHS PRF. If a facility received a payment, or combined payments, more than $10,000, the facility must submit the initial report covering the 2020 year through the HHS portal. The portal was set to be open between January 15 and February 15, 2021, but has since been postponed absent of guidance on an opening date. Facilities expending more than $750,000 in federal financial assistance during their fiscal year should plan to receive a single audit and begin contacting a qualified CPA to ensure they can meet the required reporting.

   Note that the funds are considered taxable income. Providers receiving the funds will be issued 1099-MISC for 2020.

3. Work Opportunity Tax Credit. The Work Opportunity Tax Credit (WOTC) was created in 1996 to allow for-profit employers to claim a tax credit against their federal income tax liabilities for hiring members of certain groups who have historically faced significant hurdles to employment. The CAA extends this credit through December 31, 2025.

   To take full advantage of the WOTC, it is necessary that facilities not “double-dip” on expenditures when supporting for other sources or tax credits, such as the PPP forgiveness or the Employer Retention Credit. Entities should consult with your professional advisor to maximize available tax credits, while remaining compliant with other reporting requirements.

4. Employee Retention Credit. The Employer Retention Credit (ERC) was created in 2020 by the CARES Act to encourage employers to keep employees on the payroll and continue offering health benefits during the coronavirus pandemic. The ERC is a 50 percent refundable payroll tax credit for eligible employers on up to $10,000 of qualified wages paid to employees between March 12 and December 31. The program was extended through June 30, 2021, with a 70 refundable payroll tax credit for eligible employers on up to $10,000 of qualified wages paid to employees per quarter. Employer eligibility is achieved when the entity’s operations are suspended through governmental orders or there is a significant decline in gross receipts, which is assessed on a quarterly basis (current year vs. 2019). Significant declines are defined as 50 percent or more for 2020 and 20 percent or more for 2021.

   While long-term care facilities did not, by and large, face governmental shutdowns, some may have found light in the second eligibility criteria. Standard turnover, coupled with fewer elective surgeries, which ravaged the skilled nursing sector, and families hesitating to move loved ones into assisted and independent living communities, have created a dwindling in-patient/resident census. When analyzing decreases in gross receipts one may consider factoring in funding from sources like HHS or other state-sponsored efforts. At this time current regulations are unclear on the matter. A requirement to factor such funding may diminish the likelihood of qualifying for the ERC.

   For those who qualify, facilities claiming the ERC cannot “double-dip” on expenditures when reporting for other sources or tax credits, like the WOTC, or other COVID-19 relief programs such as the PPP. More guidance is expected soon on the coordination of the PPP and ERC.

With correct balancing, the above elements create the opportunity to minimize tax liability while maintaining compliance with applicable laws and regulation. We invite you to call us with your questions and concerns at 330-758-8613. Or email us at kcrouthamel@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 facilities. 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.

The Health & Human Services Department announced Friday, January 15 that it is pushing back the date for Provider Relief Fund Program (PRF) recipients to begin submitting their reporting on their use of PRF funds. Instead, PRF recipients can begin registering today for gateway access to the Reporting Portal where they will ultimately submit their information in compliance with the new HHS reporting requirements.

HHS previously planned to open the Reporting Portal by January 15, with the first deadline for submissions being February 15, 2021. However, the Coronavirus Response and Relief Supplemental Appropriations Act passed in December adding another $3 billion to the $175 billion in the Provider Relief Fund section of the CARES Act included language specific to reporting requirements. The HHS reporting timeline change is the department’s effort to “give recipients ample time to familiarize themselves with the updated reporting requirements well in advance of required submission deadlines.”

HHS said it is “encouraging all PRF recipients that have received aggregate PRF payments that exceed $10,000 to establish a reporting account by registering at the newly enabled PRF reporting website.” While it did not set a new timeline for providers to establish a reporting account in the Reporting Portal, it does require providers to complete the step to “advance and fulfill their reporting requirements once HHS announces the new deadline to do so.”

To access the Reporting Portal, go to: https://prfreporting.hrsa.gov/s/

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

The federal government has announced an additional tranche of $20 billion in COVID relief funding for certain medical providers as part of a Phase 3 General Distributions. The Department of Health and Human Services (HHS) is encouraging all providers who believe they are eligible for the funds to apply as soon as possible to expedite their review and payments.

Phase 3 is targeted for providers who may have already received CARES Act Provider Relief Fund (PRF) payments and are looking to supplement the approximately 2 percent of revenues they have already received in anticipation of further revenue declines.

At this time it is our understanding the funding will not be distributed until after the application deadline of November 6 and HHS has the opportunity to review applications and calculate payments. Any funds not used to bring providers up to a 2 percent of revenue level will then be distributed in the form of an “equitable add-on payment” based on:

• A provider’s or practice’s decrease in patient care revenues
• A provider’s or practice’s increase in operating expenses from patient care (includes expenses incurred related to COVID)
• Payments received through the previous PRF funding rounds

Depending on geography, various private physician practices and dentists continue to see declined volumes and depressed financials. As well, facility and living assistance providers continue to encounter decreased censuses and revenue. While the deadline for applications is November 6, we are encouraging providers who continue to see decreases in patient-related revenue or increases in patient-related expenses to consider applying for the additional relief as soon as possible.

Should you have any questions on this round of PRF funding or previous rounds, please do not hesitate to reach out to a member of our HBK Healthcare Solutions team.