The Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law in March, has provided a lifeline for many businesses — including healthcare organizations. Amid the grim reality of medical equipment shortages and limited hospital beds, the CARES Act provides the healthcare industry much-needed relief.
Considering a significant number of practices are struggling to keep their doors open, and hospitals have experienced significant revenue loss from elective procedures being cancelled or postponed, the act has been pivotal in providing critical aid.
However, at over 800 pages, understanding the full impact of the act can be challenging. Below, I’m sharing how the CARES Act can benefit healthcare providers, as well as additional steps medical practices can take today to ensure the financial security of their organizations.
What You Need to Know About the PPP
By now, the Paycheck Protection Program (PPP) has been in place for a few weeks, and many healthcare practices with fewer than 500 employees have likely already submitted their applications. Whether you’ve already applied for the PPP or are weighing your options, here is some need-to-know information to consider.
At its core, the PPP gives businesses an incentive to keep their staff employed. Funds dispersed from this program can be used to cover up to eight weeks of payroll costs and other eligible expenses, such as rent, utilities and mortgage interest. This loan can provide practices with the necessary funds they need to keep their staff employed and continue serving their communities.
While the initial funding for the PPP from the CARES Act quickly ran out, another law passed in April 2020 provided another welcome injection of funding in the program.
The Centers for Medicare & Medicaid Services (CMS) has delivered near $34 billion in the past week to the healthcare providers on the frontlines battling the 2019 Novel Coronavirus (COVID-19). The funds have been provided through the expansion of the Accelerated and Advance Payment Program to ensure providers and suppliers have the resources needed to combat the pandemic.
“Healthcare providers are making massive financial sacrifices to care for the influx of coronavirus patients,” said CMS Administrator Seema Verma. “Many are rightly complying with federal recommendations to delay non-essential elective surgeries to preserve capacity and personal protective equipment. They shouldn’t be penalized for doing the right thing. Amid a public health storm of unprecedented fury, these payments are helping providers and suppliers – so critical to defeating this terrible virus – stay afloat.”
The streamlined process implemented by CMS for COVID-19 has reduced processing times for a request of an accelerated or advance payment to between four to six days, down from the previous timeframe of three to four weeks. In a little over a week, CMS has received over 25,000 requests from health care providers and suppliers for accelerated and advance payments and have already approved over 17,000 of those requests in the last week. Prior to COVID-19, CMS had approved just over 100 total requests in the past five years, with most being tied to natural disasters such as hurricanes.
The payments are available to Part A providers, including hospitals, and Part B suppliers, including doctors, non-physician practitioners and durable medical equipment (DME) suppliers. While most of these providers and suppliers can receive three months of their Medicare reimbursements, certain providers can receive up to six months.
The CMS Accelerated and Advance Payment Program is funded from the Hospital Insurance (Part A) and Supplementary Medical Insurance (Part B) trust funds, which are the same fund used to pay out Medicare claims each day. The advance and accelerated payments are a loan that providers must pay back. CMS will begin to apply claims payments to offset the accelerated/advance payments 120 days after disbursement.
The majority of hospitals including inpatient acute care hospitals, children’s hospitals, certain cancer hospitals, and critical access hospitals will have up to one year from the date the accelerated payment was made to repay the balance. All other Part A providers and Part B suppliers will have up to 210 days to complete repayment of accelerated and advance payments, respectively.
In a new survey conducted by Kareo, independent medical practices and billing companies shared the unprecedented challenges created for them and their patients by the coronavirus pandemic. More than 600 medical practices and 140 medical billing companies were interviewed by Kareo in late March.
The research uncovered the immediate actions medical practices and clinics are taking to ensure patient access to care through telemedicine solutions with 75% reporting either a current telemedicine option or the intent to deploy one soon. The survey also highlighted the risks to patients and independent medical practices with 9% of respondents reporting practice closures with many more concerned about potential practice closures as patient office visits plummet due to “stay at home” orders and other concerns. As Kareo was publishing these survey results, the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law, potentially providing a lifeline to the most severely impacted medical practices.
By mid-March, independent healthcare professionals were already facing the practice and personal impacts of the coronavirus pandemic, with 28% of practices only offering telemedicine visits and 9% of practices already closed, with many more concerned about the risk of future closure. While 63% of practices were still delivering on-site care, most of these practices were exploring options to move to hybrid or exclusively telemedicine-based care.
Kareo’s ongoing analysis of actual patient encounters across over 50,000 medical providers, found that by late March independent medical practices has experienced an approximately 35% decline in patient volume, raising alarm around both the apparent inability for patients to access care and the operational viability of medical practices if this trend continues.
Kareo’s research also highlighted the impact felt by the more than 5,000 medical billing companies across the country, with these service providers reporting immediate impacts on their businesses due to precipitous decline in medical practice patient volume. These companies play a critical role in the healthcare ecosystem by providing medical billing expertise that is essential for the financial viability of many independent medical practices. Financial risk to these service providers creates another risk for medical practices to manage as practice volumes ultimately return to normal.
To address “stay at home” orders and patient concerns about face-to-face medical encounters, healthcare professionals have rapidly turned to telemedicine solutions. By mid-March, fully 41% of independent medical practices reported offering telemedicine, up from 22% reported in Kareo’s State of the Independent Practice Report in late 2018.
An additional 34% reported current efforts to deploy telemedicine options, which ultimately will result in the vast majority (75%) of medical practices providing remote care solutions. In the third week of March, Kareo saw a 500% week-over-week increase in telemedicine visits while working to accommodate an over 3,000% increase in telemedicine adoption.
The easing of regulatory requirements related to telemedicine security and functionality allowed medical practices to access a broader set of possible telemedicine solutions, ranging from medically-specific options like Kareo Telemedicine that are HIPAA compliant and fully integrated with the broader patient engagement, electronic health record, and billing technology platform all the way to general video call technology such as Apple FaceTime. Easing Medicare, Medicaid and commercial insurance reimbursement requirements for telemedicine also supported the rapid pivot to virtual-care and are essential in supporting the financial viability of medical practices and their supporting medical billers.
“Independent medical practices stand as the cornerstone of the U.S. healthcare system and are responsible for more than two-thirds of annual patient visits,” said Dan Rodrigues, founder and CEO of Kareo. “Yet our research shows that even doctors are not immune to the economic impact of the coronavirus pandemic. Telemedicine and the CARES Act provide critical lifelines to ensure independent practices remain available to their patients through this crisis.”
There are several government programs that practices can take advantage of to ease financial burdens and maintain their current staff levels. Small business loans, tax relief, Medicare payment advances and grants are a few of the options currently available. In combination, these programs can help ensure that independent medical practices and clinics emerge from the COVID-19 pandemic with minimal damage to the long-term viability of their business.
The CARES Act expands eligibility for loans under Section 7(a) of the Small Business Act and authorizes the Small Business Administration to make $349 billion in Section 7(a) loans. The CARES Act also offers an employee retention tax credit (Employee Retention Credit) designed to encourage eligible employers to keep employees on their payroll. The Centers for Medicare & Medicaid Services (CMS) has expanded their current Accelerated and Advance Payment Program to a broader group of Medicare Part A providers and Part B suppliers. Details on the eligibility, and the request process are outlined in the Expansion of the Accelerated and Advance Payment Program fact sheet. The expansion of these programs is also only for the duration of the public health emergency. For more information on resources available to help with the COVID-19 crisis, visit Kareo.com/covid-19.