Part II: Financial Assistance for Healthcare Providers Affected by COVID-19

This article discusses the additional assistance programs that the Government has created to assist healthcare providers and entities who were injured by the COVID-19 pandemic.

Employee Retention Credit Program

The ERC program, which is administered by the U.S. Treasury Department and the Internal Revenue Services, gives eligible employers a refundable tax credit of 50 percent of the qualified wages which the employer pays on behalf of its employees between March 12, 2020 to January 1, 2021.

• Eligible employers can immediately access the credit by reducing the amount of payroll deposits that are withheld from the employees’ wages by the eligible tax credit amount. Alternatively, eligible employers can request an advance credit by completing Form 7200, Advance of Employer Credits Due To COVID-19 online.

• Eligible employers can receive up to $10,000 of refundable tax credit per employee.

• Eligibility:

  • Employers, including nonprofits, are eligible for the credit if they operate a trade or business during calendar year 2020 and have experienced: (a) the full or partial suspension of their business during any calendar quarter because of governmental orders limiting commerce, travel, or group meetings due to COVID-19, OR (b) a significant decrease in gross earnings. [3]

  • Employers cease to become eligible for the ERC once their business’ gross receipts exceed 80% of the gross receipts from the comparable 2019 quarter.

Employer Payroll Tax Deferral

The IRS permits employers to defer payment on their portion of the Social Security tax (6.2%) for employee wages paid from March 21, 2020 to December 31, 2020. Half of the deferred payment is due by December 31, 2021 and the remaining half is due by December 31, 2022. Employers who received loan forgiveness under the PPP are not eligible.

Hospital Preparedness Program

• The Hospital Preparedness Program is being coordinated by the HHS and the Office of the Assistant Secretary of Preparedness and Response (ASPR).

• At least $550 million with be distributed to hospitals nationwide.

• The first $50 million of the funding was distributed in early May

• Funds reimburse providers for health care-related expenses arising from COVID-19, including staff training, purchasing supplies and equipment, infection control, triage training, retrofitting specialized areas to treat individuals with suspected COVID-19 infections, implementing expanded telemedicine capabilities, and increasing bed capacity.

Capital Payments for Extraordinary Circumstances

The Capital Payments for Extraordinary Circumstances Program permits hospitals to request additional payments for unanticipated capital expenditures which are greater than $5 million (minus the proceeds from other payment sources) and caused by “extraordinary circumstances.”

• Hospitals must apply to their CMS Regional Office within 180 days of the extraordinary circumstance

• Sole Community Hospitals are reimbursed 100% of Medicare’s allowable capital-related costs attributable to the extraordinary circumstance

• All other hospitals are reimbursed based on a minimum amount of 85% for Medicare’s allowable capital-related costs attributable to the extraordinary circumstance

• Total exception payments are capped at 1% of the total capital prospective payments

Expanded Telehealth Reimbursement Program

• CMS will reimburse providers for providing telehealth services to Medicare beneficiaries regardless of where the patient is location or where the provider is located.

• The rules and regulations surrounding telehealth have been relaxed to permit telehealth sessions using a variety of telecommunication devices, including smart phones.

Federal Communications Commission Telehealth Fund

• The FCC Telehealth Fund covers offers providers complementary telecommunication services, information services, and telecommunication devices to enable them to provide telehealth services during the COVID-19 pandemic.

• Maximum award of $1 million per applicant

• In order to be eligible, the healthcare provider must be one of the following:

  •   Post-secondary educational institution offering healthcare instruction, teaching hospitals and medical schools;

  • Community health center or mental health center

  •   Local health department

  • Nonprofit hospital

  • Rural health clinic

  • Skilled nursing facility

  • Consortia of providers.

    The eligibility of each provider will be determined by the Universal Service Administrative Company.

Suspension of Medicare Sequestration  

The CARES Act suspended the Medicare sequester, which would have placed a 2% decrease on all Medicare fee-for-service payments to providers, from May 1, 2020 to December 2020. The applicability of the sequester to Medicare Advantage plans will depend on the specific contract terms of the provider’s enrollment.

20% Medicare Add-On Payment for Covid-19 Tests and Treatments

The CARES Act created a 20% add-on to diagnosis-related group payment rates for patients with a COVID-19 diagnosis. In other words, claims billed for COVID-19 will see an automatic 20% increase to the weighting factor which applies to the DRG to which the patient discharge is assigned. The add-on rate applies to hospital claims billed through the Inpatient Prospective Payment System (IPPS) and includes the following ICD-10 diagnosis codes:

• For discharges between January 27, 2020 to March 31, 2020: B97.29 (Other coronavirus as the cause of diseases classified elsewhere)

• For discharges on or after April 1, 2020: U07.1 (COVID-19)

The applicability of the sequester to Medicare Advantage plans will depend on the specific contract terms of the provider’s enrollment.

Federal Emergency Management Administration (FEMA) Public Assistance

The FEMA public assistance funds provides grants to private, nonprofit hospitals and related facilities, clinics, long-term care facilities, and outpatient facilities. Expense which are payable under the FEMA fund include emergency and inpatient clinical care for COVID-19 patients, the establishment and operation of alternative care sites, certain administrative costs,[2] and purchases of necessary equipment and materials, including PPE. To apply, providers should submit a request for public assistance (RPA) form through the FEMA grants portal.

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[1] The Employee Retention Credit refunds up to 50% of the employer’s portion of the Social Security tax (i.e., 6.2% of wages). An employer’s qualified wages are based on the average number of employees in 2019. For employers with less than 100 employees, the credit is based on wages paid to all employees, regardless of whether or not they had worked during the calendar quarter. For employers with more than 100 employees, the credit is based on wages paid to employees who did not work during the calendar quarter.

[2] This included overtime pay for salaried employees and hourly and overtime pay for non-salaried employees.  

[3] The starting date for calculating the decrease in gross receipts begins on the first day of the first calendar quarter of 2020 for which an employer’s gross receipts are less than 50% of its gross receipts for the same calendar quarter in 2019. The ending date for calculating the decrease in gross receipts ends on the first day of the first calendar quarter following the calendar quarter in which gross receipts are more than of 80% of its gross receipts for the same calendar quarter in 2019.