Health Care Providers & the CARES Act / HealthChoice

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hello and thank you for joining us for today's webinar health care providers and the cares Act and now I'll hand it over to one of your co presenters today national industry partner Danielle Sullivan thank you for joining us today i'm danielle solomon BK DS national industry partner and i'm excited to be with you today we're all overwhelmed by the volume of daily information yet likely frustrated or confused by the lack of clarity and guidance that's currently available we're also trying to

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keep ourselves and our family safe our goal today is to try to do our best to highlight some of the most relevant provisions for our healthcare providers and also provided some recent updates that we're hearing from item from washington and items for you to watch wanker is a managing director in our national office and he will be delivering the majority of the content however i would be remissed not to acknowledge many of my fellow bkt trusted advisors who did a great job of understanding and recert inserting

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aspects of the cares Act for this presentation and I'd like to thank each of them for their dedication and passion for this industry now before I jump into the agenda I also want to take this opportunity to thank all of you for all your tremendous efforts the organization's have taken to prepare or react to this pandemic as I talk to leaders across the country they all comment on the amazing and selfless acts of their team I've always thought that individuals that chose to work in health care truly are special and caring and

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now without a doubt everyone is seeing this firsthand so as I mentioned the main focus today will be on the cares Act and what we believe is relevant to the vast majority of our health care providers but we also wanted to provide an overview of legislation that has occurred to date will then move into some of the temporary relief that has already been defined and clarity exist before we move into other aspects of the cares Act around first the accelerated advance payment 100 billion of public health and social

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service emergency funding we'd also be remiss if we didn't discuss a little bit about FEMA as it's a relief option available as well despite it was a mechanism already in place before they cares Act NICs will go through a high-level discussion around the interim final rule that was released March 30th and it was really aimed at changing policy and processes to remove barriers around telehealth and other cares Act provisions now again I said this will be a high-level discussion because as more information comes out there will be additional thought ware and webinars on

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that for example tomorrow there's a webinar that goes deeper into the application for community health centers and we'll be doing a joint webinar with HF MA on April 27th that takes a deeper dive into the center and final rule the last item we chose to discuss was the SBA loans in the applicability as it stands today but also have some dialogue on current discussions that we're hearing we'll leave some time at the end for questions but we'll also send out a summary of FA cused all attendees so let's start with

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our first polling question to see who we have with us here today great thanks for your replies it's always helpful to know so we can tailor our comments all right well thanks Danielle and hello everyone so my name is Wayne Kerr and I'll be as Daniel mentioned taking us through a majority of the rest of this content I do want to mention that Danielle will be back to answer some questions share some final thoughts and RAK wrap things up at the end of this webinar so let's start

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with what we're trying to do in this webinar today Danielle mentioned this a little bit you know the corona virus pandemic and the laws that have been passed to address it have affected every part of our economy it can be confusing because there is so much information out there so what we're gonna try to do today is cut through some of that noise and focus on the information that is most relevant to health care providers let's briefly recap the Cova 19 relief packages that we've seen so far the date there have been three bills passed by

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Congress that addressed Cova 19 and its impact on the US public individuals and businesses the first bill was signed by the President on March 6 and provides approximately eight billion dollars for domestic and global prevention and preparedness to various agencies including the Centers for Disease Control the public health and social services emergency fund and the National Institutes of Health the funds allocated under this bill are primarily focused on supporting the development and acquisition of vaccines

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and medical equipment and supplies needed to combat the corona virus this bill also relaxed the rules related to telemedicine which we'll discuss later in this webinar the second bill was the family's first coronavirus response act this became law on March 18th and is much broader in scope and includes various funding provisions including increased F map funding to state Medicaid programs expanded Nutrition Assistance Programs employer tax credits expanded

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coronavirus emergency and sick leave for certain workers and expanded unemployment insurance assistance for the states that kicks us to the third bill which is the carers act and is the main focus of the rest of this presentation it was signed by the president on March 26 now as you know the situation remains fluid an additional relief is being discussed as we speak you can kind of breakdown the carers act around these three categories

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of relief which we're going to talk about on the rest of this presentation being loans to businesses direct aid and tax provisions now we're going to come to a flowchart that I know violates like every rule of what you're supposed to put on a PowerPoint presentation but I think you'll find it to be a helpful decision tree for organizing and navigating the potential options for as you look across the top here temporary

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cash flow relief that's the far left column in the form of deferred payments or accelerated cash receipts potentially forgivable cash flow relief meaning potential forgiveness that's the middle column and on the and then on the far right column permanent cash flow relief through grants and other mechanisms for context here and I'd almost you know this but as noted in the White House press briefing

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we just had earlier this week the impact on the health care system goes far beyond the frontline health care workers health care organizations across the nation are having increased expenses from Hamid is having to spend more on supplies such as PPE putting tents out in their parking lots for testing and screening and retrofitting ICU beds just as examples at the same time many organizations are not perform an elective services and our move into more telehealth all of which represents a

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substantial lost revenue so the combination of increasing costs and falling revenue means the government needed to find ways to inject some much-needed cash into the health care system and that's what these categories of relief are all about so far we're seeing many of our clients take advantage of the option to defer the employer portion of FICA through December 31st over the next two years if you if you look on this decision tree that's the second box from the top left

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we also see a lot of applications for accelerated payments for Medicare which is the next box down which we're going to talk a little bit more about in this webinar as well the middle section of this diagram focuses on entities with 500 or fewer employees and that are not governmental entities now this relief won't work for many of you the way it's currently written but there are still discussions around this and so more information and changes maybe kind so this is something to watch the far right

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column has the big box with the hundred billion dollars for public health and social services emergency funding which we'll discuss a little later in this presentation this is an area where currently we know a lot more about what it is then how it's actually going to work and as with so many of the other provisions were discussed today we'll keep you updated as new information comes out all right we're going to cover these relief options roughly in the order of the easiest cash

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to get to the hardest cash to get so we're gonna start with temporary relief along with some of the relief provisions we've mentioned additional relief comes in the form of payment changes and delays these include a temporary lift of the Medicare sequester and if we think about that that effectively adds 2% for Medicare services provided through December 31st 2020 this is estimated to

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total around 15 billion dollars also delayed ish reductions until December 1st 2020 which were estimated at about four billion dollars in Medicaid funding for disproportionate share hospitals which serve a large number of low-income and uninsured patients and increases in Medicare reimbursement ANCOVA 19 diagnosis related groups by 20% this additional reimbursement on the inpatient stay for kovat 19 patients is

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based on the estimated additional cost of care okay well dive into the next source of relief after our next polling question in Culina polling question number two does your organization need assistance with the accelerated and advanced payment program we've already completed the application we need assistance not sure or not applicable please take fifteen to twenty seconds to submit your response looks like we have several who have already completed the

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application many as well that are not sure so Wayne probably a good time to get them up to speed thanks Rachel right now the accelerated advance payments program appears to be the most widely used program it's easy to apply and the eligibility process is pretty straightforward so far over 35 billion has been issued based on about twenty five thousand requests more than 17,000 requests were approved

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just last week for context prior to Kovan 19 about 100 total requests were approved in the last five years mostly after natural disaster so things have really changed as you know the accelerated and advance payments are intended as emergency funding to address cash flow issues for Medicare providers and suppliers particularly during times of national emergencies or disasters the CMS has expanded this program to a

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broader group of Medicare Part A and Part B providers and suppliers for the duration of this public health emergency so who can participate in the accelerated and advanced payments program most Medicare Part A and Part B providers and suppliers can't participate to qualify a provider or supplier must have billed Medicare for claims within 180 days immediately prior to the date of the request not be in

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bankruptcy not be under active medical review or program integrity investigation and not have any outstanding delinquent Medicare overpayments most providers can request up to 100 percent of Medicare payment for a three-month period while inpatient acute care hospitals children's hospitals and certain cancer hospitals can ask for up to one hundred of the payment amount for a six-month period critical access hospitals can request up

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to a hundred and twenty-five percent of their payment amount for a six-month period so how does this work well each provider will have to submit an application that can be found the websites of their applicable Medicare administrative contractor and then each Medicare administrative contractor will attempt to review and issue payments within seven calendar days of receiving the request repayment will begin 120 days after the date the payment is

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issued inpatient acute care hospitals children's hospitals certain cancer hospitals and critical access hospitals have up to one year from the date of the accelerated payment was made to repay to balance all other providers and suppliers will have 210 days from the date of the payment is made to repay the balance and repayment will occur through offset of claims payments until the full amount of accelerated or advance payment is complete okay a couple of things to

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keep in mind about what we just said first these payments are not subject to interest unless there is still an amount owed after the recoupment period and the provider does not pay the balance second there continues to be some discussion in Congress about providing additional relief from the tight hundred and twenty day repayment window and the high interest rate if that kicks in and third you'll need to really have good cash flow projection and management during

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the recoupment period remember your organization won't receive any Medicare payments until the full amount of the accelerated or advance payment has been repaid all right transitioning to the Health and Social Services emergency funding this is the section that represents that permanent cash flow relief we referenced in the decision tree I mentioned earlier that details of exactly how this program will work are still being sorted out just this last

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Tuesday night CMS announced that they will be distributing thirty billion dollars in funds to providers based on Medicare revenue they went on to say that there will be a second round of funding where priority will be given to children's hospitals pediatricians nursing homes and other providers that typically receive much of their funding from other sources so we're starting to learn a little bit here but there is still a lot of uncertainty at this point and this is an area we'll need to continue to keep watching but let's go

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through what we do know about this program the 100 billion dollar fund is to remain available until it's expended to prevent prepare for and respond to the coronavirus amounts are to be paid to quote eligible healthcare providers to reimburse healthcare related expenses or lost revenue that are attributable to the coronavirus eligible healthcare providers include public entities

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Medicare or Medicaid enrolled suppliers and providers and any other for-profit and not-for-profit entities that the Secretary of Health and Human Services specifies funds will be distributed through grants or other mechanisms and we're still waiting for specific guidance on this although we know that there are options that are being kicked around and discussed so starting with the first circle on this slide funds cannot be used to reimburse expenses or

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losses from other sources or that other sources are obligated to reimburse until the secretary provides guidance it's gonna be difficult to provide specific information about what types of costs and revenues will be considered for reimbursement so you should consider establishing a control environment over accounting for Cova 19 related expenses and foregone revenue speaking just briefly about foregone revenue you might use techniques like volume changes over

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the prior year by elective procedure budgeted elective procedures or any other detailed information related to your specific operations expenses should also be tracked to detail so consider for example the federal procurement rules when determining the Cova 19 expenses incurred and we're gonna touch on those federal procurement rules a little later on when we go through the theme of stuff when premiums are paid due to high demands such as you know personal protective equipment maintain documentation of competitive pricing

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information or document the limitations associated with PPE acquisition some of the procurement rules may be relaxed during the health crisis period but as you know poor documentation is a common reason for denied payments from granting agencies consider that the secretary could distribute funds based on non detailed information to them such as bed size or provider type or some other criteria all right back to the slide going to this middle circle recipients of payments from the fund will be required

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to submit reports and maintain documentation as the secretary determines are necessary to maintain compliance the secretary has not provided guidance on the process to apply for payments under the Act and will review applications and make payments on a rolling basis now I want to point out before we leave the slide that what we just went through is the statute as it's written but hospitals have been pleading for a simpler approach and it eats like this hundred

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billion dollars is going to be released in tranches as we mentioned earlier there's just a lot of pressure on the secretary to simplify the methods of distribution all right now to some of the details applications must include a statement justifying need and a valid tax ID number funds are available for building or construction of temporary structures leasing of properties medical supplies and equipment increased workforce and trainings emergency

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operation centers retrofitting facilities and surge capacity lost revenues has not been defined by the secretary but consideration of lost revenues could come as a result of delaying and cancelling non-emergency procedures decrease in operating revenues and margins and losses tied to providing fee testing or screening as part of kovat 19 response efforts payment could be in the

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form of prepayment prospective payment or retrospective payment and payments should be made in the most efficient through the most efficient payment systems this last slide here just has some additional details about administration of this program the Office of Inspector General of the Department of Health and Human Services will submit a final report not later than three years after final payments are made to the committee's on

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Appropriations of the House of in the Senate the inspector general or the Comptroller General could conduct audits of interim payments at earlier dates not later than 60 days after the enactment the secretary will provide a report to committees on Appropriations of the House of Representatives in the Senate on obligations of funds summarized by state of the payment receipt and every 60 days thereafter until funds are expended all right hopefully that made a little sense out

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of that big 100 billion dollar bucket and in terms of what we know and what we don't so let's transition quickly to a discussion of FEMA eligibility now as we mentioned as Danielle mentioned right at the beginning this isn't part of the cares Act it's a funding relief option that's already been in place but since it's a relevant relief option we want to be sure and mention something to keep in mind here is that FEMA is a funder of

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last resort so they won't duplicate funding provided by other agencies of sources we aren't going to go into a lot of details here but let's hit some key points on the next few slides start with who is eligible state territorial tribal and local government entities are eligible and certain private nonprofit organizations which includes those that own and/or operate medical care facilities now private for-profit

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entities including for-profit hospitals are not eligible for assistance directly from FEMA but keep in mind that state territorial tribal and local government entities may contract with for-profit hospitals to carry out quote eligible emergency protective measures in these cases FEMA will reimburse the eligible applicant for the cost of the eligible work and the applicant will then pay the

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private for-profit entity for the provision of services as we just noted FEMA is not open to for-profit facilities and the thought is that the here's act with a funding associated with the carers Act an additional legislation will address the needs of those entities however FEMA is getting a lot of pressure right now about this and there is advocacy on this issue from the Hospital Association's so this is another topic that we're gonna continue to watch very closely the cost covered

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under these emergency protective measures have to be directly related to the emergency so cost covered include triage and medically necessary tests diagnosis and prescription costs emergency medical treatment and transport use or lease of necessary specialized medical equipment purchase of PPE DME and consumable medical supplies medical waste disposal related to eligible emergency care evacuations

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and sheltering and force account labor now when it comes to the cost not covered those include right at the beginning here lost revenue but you should you should continue to track this as it may be covered by other funding sources for example title 5 of the cares Act or business interruption insurance also not covered non-essential employee costs which include comp time overtime fringe benefits and meals and straight time or normal time now FEMA also

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doesn't cover business related costs that are typically indirect financial or bottom-line costs like emergency financial assistance managing liquidity issues or debt servicing so we get a lot of questions around labor costs and what's eligible and the short answer unfortunately is it depends for example generally FEMA does not cover regular time however there are exceptions including temporary workers contract

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workers and staff working outside their normal job titles a word on procurement under FEMA grants this this slide is here as sort of a heads-up because normally private nonprofit hospitals might not have to worry too much about federal procurement requirements but under FEMA they may have to comply with 2 CFR part 200 which is the federal procurement regulations

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so looking at the slide here state entities should procure under their existing procurement rules non-state entities will need to ensure their procurements comply with various sections of 2 CFR part 200 particularly those related to non-competitive procurement these federal procurement regulations may be unfamiliar to non-state entities as you know failure to follow federal contracting and procurement requirements puts non-state

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entities at risk of not receiving reimbursement or not being able to use FEMA grant funds that are otherwise eligible costs okay we could go into a lot more detail about federal procurement regulations as fascinating as those are but let's take a minute to talk about tracking those actual costs first of all eligible costs are retroactive to January 20th 2020 you should enter into mutual aid agreements if you are providing services outside of

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your immediate jurisdiction to cover loan staff overtime or loaned equipment but the overarching message here is that when you're accessing FEMA money you should have really good processes to track costs and retain all supporting documentation so this includes things like policies for overtime payments related to Cova 19 response a timekeeping system to capture time for salaried employees and/or contract staff and emergency specific cost codes for

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capital expenses equipment of supplies and contract cuffs and finally you should have a standardized process to track cost and retain and review all supporting documentation like invoices receipts etc you really want to track all of these costs diligently starting now FEMA eligible costs also include a 5 add on to cover indirect costs and the use of consultants all right with that let's go to polling question as your

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organization filled out a request for public assistant yes no not sure or not applicable please take fifteen to twenty seconds to submit your response looks like the majority of our attendees today have not filled out their RPA wait I'm gonna hand it back over to you thanks Rachel okay let's go through a brief overview of the CMS interim final rule for our next topic this rule was released on March

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30th now this rule is around 220 pages long and the CMS team had very little time after passage of the new legislation to draft what ended up being massive policy changes the overarching theme of these changes is to reduce barriers to remote care which has become an imperative during the public health event simply put we can't very well require an in-person visit in an era of social distancing the IFR achieves this

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objective by expanding the type of codes medicare providers and suppliers can build for telehealth services permitting greater flexibility with patient consent and clarifying and expanding telecommunication modalities and increasing reimbursement for certain services that are particularly important to the Cova 19 pandemic will briefly cover each of these at a high level but we won't really get into the details in this webinar stay tuned for future webinars and thought where on this topic

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including a joint webinar with the HF MA on April 27th focus solely on the interim final rule one more thing to mention before we get into a few specifics these policy changes are only applicable during the declared public health event and sunset at the conclusion of this crisis however you know given the recent state of change in our health care systems we might view these changes as a sort of indicator of things to come hopefully in some

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cases okay the expanded list of services referenced in the second bullet point on this slide includes emergency department visits initial and subsequent observation and observation discharge management initial hospital care and hospital discharge management initial nursing facility visits and discharge management critical care services home visits and therapy services the IFR expands the codes Medicare provider and suppliers can bill

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for telehealth services which now include emergency department visits observation inpatient hospital codes nursing facility codes home visits and intensive care services it also expands the modes of telecommunication I have to admit I thought this was a pretty interesting part of the IFR to read terms of how Medicare rules have evolved along with the function of what we used to call a telephone or hey think about what phones do today compared to phones

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20 years ago anyway practitioners may now use cell phones that as long as they provide two-way real-time interactive audio and video capabilities to furnish Medicare telehealth just earlier this week my daughter had a FaceTime call with her doctor and I got to tell you many of you can relate to this after years of getting myself and my kids the doctors this seemed like a pretty cool way to do this appointment an interesting side note though to these expanded modalities is the intersection with HIPPA the

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Office of Civil Rights announced previously it will exercise enforcement discretion with respect to HIPAA violations resulting from quote good-faith use of communication to provide telehealth during the pandemic now this exercise discretion applies to non-public facing technologies such as FaceTime or Skype and the OCR noted that public facing video communication technologies such as Facebook live

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twitch or tik-tok should not be used and frankly I just have to throw that last bit in because I got a kick out of thinking about my doctor trying to communicate with me on tick tock I'm not even sure how that would work all right but back to this life the ifr increases reimbursement for certain areas a couple of examples are lab increasing from $3 to $5 and now paying for travel cost as well as the physician evaluation and management televisions lastly on

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frequency prior to the Cova 19 public health emergency CMS limited certain telehealth services for subsequent inpatient hospital visits and on subsequent nursing facility visits to once every 30 days and critical care consultation to once per day those limitations have been eliminated during the public health event patients who are instructed to remain in their homes or are under self quarantine may be

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considered homebound for purposes of the Medicare homebound benefit allowing telemedicine and remote patient monitoring to provide services to beneficiaries as you would expect there are some important guidelines and restrictions related to the use of hook the home health agencies use of Technology which we won't get into the details in this webinar today the IFR also allows hospices to provide home care services via telehealth if it's feasible and appropriate to do so again the use of technology is subject to some

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restrictions here and the hospice physician or nurse practitioner can use telehealth to perform a face-to-face encounter also recognizing that rural health clinics are critical the IFR includes enhanced payment rates for telehealth services a few last points on the CMS ifr it reimburses travel costs for lab specimen collections that allows reimbursement for physician and nurse

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practitioner telephone visits with patients it allows resident FTE counts for GME to include residents furnishing services from home or the patient's home enough allows hospitals to furnish services to inpatients outside the hospital now that was a pretty condensed overview of the IFR so as I mentioned at the beginning of this section stay tuned for future webinars and thought where on this topic before we go to our last topic let's go

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to our last holdat question only question number four how familiar are you with the paycheck protection program very somewhat not at all not sure or not applicable please take fifteen to twenty seconds to submit your answer looks like the majority of our attendees today are somewhat familiar with the protection program so now I'll hand it over to Wayne thanks again as I mentioned the last topic we have in this webinar is SBA

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loans now I guess just as a warning this topic is pretty dense and as you'll see many healthcare systems won't qualify but we wanted to give you enough of an overview to know what this is all about and to know whether it's an option worth pursuing there are various SBA coronavirus relief options we'll briefly define each of these and then focus on the two that are the most relevant to health care entities first the paycheck protection

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program this is the program were referred to at the beginning of the webinar as potential forgivable cash flow relief this loan program provides loan forgiveness for retaining employees by temporarily expanding the traditional SBA 7a loan flow program when we prepared this webinar the Senate had announced they were likely to approve approximately a quarter trillion that's with the t accorded trillion in new relief for small businesses on top of the 349 billion all readily already

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appropriated and on April 8 which is just yesterday the Senate issued a draft amendment to increase the amount from 349 billion to 600 billion dollars the EEI DL or economic injury disaster loan advanced this loan advanced will provide up to ten thousand dollars of economic relief to businesses that are currently experiencing temporary difficulties there's another loan amount embedded in there that we'll get to when we go through it in a little detail but

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that ten thousand is a key portion because it's forgivable the SBA Express bridge loans enables small businesses who are currently or who currently have a business relationship with an SBA Express lender to access up to $25,000 quickly as in within 36 hours compared to the Paycheck protection program which could take several weeks to process and then we have the SBA debt relief the SBA is providing a financial reprieve to small businesses during the Cova 19

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pandemic who currently have SBA service disaster home and business loans regular service status loans on March 1st 2020 are automatically deferred through December 31st 2020 ok over the next several slides we're going to focus on the PPP and Eid L programs is there the most relevant for our audience today so the Paycheck protection program is a

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loan design designed to provide a direct incentive for small businesses to keep their workers on the payroll SBA will forgive the loans if all employees are kept on the payroll for 8 weeks and the money is used for payroll rent mortgage interest or utilities so who can qualify obviously businesses meaning the traditional rules qualify now qualifying businesses for PPP has been expanded under kovat legislation to include

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not-for-profit entities veterans organizations and tribal concerns but from here it gets just a little tricky because there's a point of confusion as to the size standards as they are referred to in the actual cares law PPP regulations and fa Q's versus what is on the SBA website the website is broader stating that size qualification can consider revenues if these newly covered entities have more

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than 500 employees however the law regulations and fa Q's state that these newly covered entities must not have more than 500 employees so this is another point to watch as more clarifying guidance becomes available speaking about the number of employees in determining a concerns number of employees the SBA counts all individuals employed on a full-time part-time or other basis this includes employees

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obtained from a temp agency professional employee organization or a leasing company where the size standard is number of employees the average number of employees is used based on the pay periods for the proceeding completed twelve calendar months part-time and temporary employees are counted the same as full-time employees now if you've been in business for less than 12 months the average number is used for each pay period during which you've been in business and there are also alternative time periods for new and seasonal

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businesses so what size standards has SBA identified by North American industry classification system codes the size standards themselves are expressed either in number of employees or annual receipts in millions of dollars unless otherwise specified the number of employees or annual receipts indicates the maximum allowed for a concern and its affiliates to be considered small we'll show you some example of these

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thresholds on the next couple of slides now we were hoping that per location rather than per entity counts of employees we're going to make the rule however this exception only applies to what are traditionally referred to as rooftop businesses like hotels and restaurants for other types of businesses affiliation rules must be considered when determining qualification under the size rules of employee count in that revenues and so we're gonna spend a little time talking about those affiliation rules as

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well first I mentioned that we show you a few examples of the size threshold for the Paycheck protection program on this slide you can see size limitations for hospitals at 41 and point five million nursing homes at sixteen point five nine now conceptually a for-profit hospital that has more than 500 employees and less than forty one point five million of revenue could qualify however it's not as clear in the case of a non-profit

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hospital as I mentioned the law regulations and FA Hughes would say no due to the verbage requiring less than 500 employees without the option of assessing revenues however the SBA website indicates otherwise so there's a lot of pressure being applied right now by Congress to broaden the text in the law and regulations but we haven't seen anything official to date all right these are just a few additional types of health care provider size limitations in terms of annual net

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revenues which you can peruse with your copy of the slides so how does SBA calculate annual receipts the language in the statute is all revenue in whatever form received or accrued from whatever source that's pretty broad and would include things like the sale of products or services interest dividends rents royalties fees and commissions these would be reduced by any returns

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and allowances and angular receipts do not include net capital gains or losses related related to that or related party transactions so how does the SBA determine affiliation I mentioned we would talk about this remember this is an important point for application of the size rules of employee count and net revenues we're gonna get just a little technical here as we talk through you know each of these bullet points but hopefully this contextualizes this idea

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of affiliation concerns and our affiliates of each other when one controls or has the power to control the other or a third party or parties controls or has the power to control both it doesn't matter whether control is actually exercised here so long as the power to control exists control can exist through ownership management relationships or contracts for determining affiliation based on equity ownership a concern is an affiliate if an individual concern or entity that

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owns or has the power to control more than 50% of the concerns voting equity if no individual concern or entity is found to control the SBA will deem the president or board or CEO to be in control of the concern affiliation also arises when the CEO president or others of the applicant controls the management of one or more other concerns or when the board of one concern also controls the board of other concerns affiliation also arises through a management

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agreement such as a larger system responsible for managing the operations of a rural hospital of which it has no ownership also keep in mind that in determining whether affiliation exists SBA will consider the totality of the circumstances and may find affiliation even though no single factor is sufficient to constitute affiliation so unfortunately considering the healthcare industry affiliations many healthcare systems would not qualify since the

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totality of the organization will need to be considered even when looking at the smaller pieces within the system okay we've talked a lot about qualifications for the Paycheck protection program so let's get into the details of what the loan and the opportunity for loan forgiveness actually is PPP is a loan that can be forgiven to cover eight weeks of payroll costs and interest in mortgage rent and utilities existing before February 15 2024 payroll costs most should use

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actual payroll data for the calendar year 2019 there are alternatives for seasonal and new businesses as filled out on the slide payroll cost for employees comp over $100,000 on an annual basis cannot be included but subject to that limitation you should use gross payroll lest the employer share of payroll tax as part of a PPP loan an e IDL originally made earlier this year can be refinanced as part of a PPP and principal interest and fees are deferred

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for six months and any Unforgiven debt has a maturity of two years with a 1% interest rate now in order for a PPP loan to be forgiven at least 75% of the forgiven amount must have been used for payroll this is to make sure that the core purpose of the statute is met and that program resources are devoted primarily to payroll forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels the amount of

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loan forgiveness will be reduced if full-time headcount declines or if salaries and wages decrease guidance on the specifics of loan forgiveness haven't haven't been issued yet it's important to note that participation in the PPP program Rekluse an organization from participating in employee retention credits and the employer tax deferral option and just to note bkd has a tool to help you quantify which of these options might be best for you various

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certifications will be required upon application and there are some pretty stiff penalties for knowingly making false statements and using funds for unauthorized purposes okay well we've spent most of this topic on SBA is talking about PPP loans so let's turn our attention to the economic injury disaster loan program and you'll be happy to know I only have one slide on this one in addition to working capital loans of up to two million dollars what you see up here on the top right small

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business owners are eligible to apply for an advance of up to $10,000 this advance is intended to provide economic relief to businesses currently experiencing a temporary loss of revenue the loan advance does not have to be repaid now there seems to be some confusion on who is eligible for this long that may be because there is no regulatory guidance however an SBA slide presentation and yes we're down to gleaning guidance from slide presentations showed that

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charitable organizations do not qualify which is odd because they are eligible under the PPP program governmental organizations are also ineligible the key difference between the e IDL and the PPP is that the e IDL is a loan at a higher rate of interest to be repaid and will not be forgiven an organization can be enrolled of both but they have to cover different cost and as I mentioned an existing idea can be refinanced into a PPP for eligible businesses okay that brings

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us back to where we started with this decision tree we've covered a lot of ground and hopefully these three categories of cash flow relief makes a little more sense now before I turn it back over to Danielle Solomon to wrap things up for us I just want to say thank you for your attention today be well and be safe and Danielle over to you thanks Wayne for navigating us through all that information and providing areas for what to watch impassable changes that are coming you know I also want to acknowledge eyes acknowledge excuse me that if you're

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confused or overwhelmed that's okay and kind of expected during this time please reach out to us with any questions clarification advice or help I'm been monitoring the questions here and we'll try to go through some of those and send some information out we also have the health care covered webpage that has guidance that I want to point out to everyone sign up for thought we're but really nothing really replaces the direct contact and don't hesitate to reach out to us because that's one aspect of our life that has really completely changed right now and if many

48:27

of you are like me that's really something that you're probably missing is that direct interaction so as a reminder our goal today was to help focus you on areas of relief so that you can continue your mission to provide care that are so critical right now as I talked to a large multi-state Health System in the middle of the country they were reflecting on how fortunate they feel right now to really have had time to prepare and adjust versus what the East and West

48:57

Coast experienced you know when the coasts saw the surges many were still performing elective surgery people were still moving around so accidents were occurring trauma cases were presenting so really the ability to postpone those elective surgeries and limit accidents and trauma cases has really allowed providers to free up capacity to prepare for the predicted surges but as we've talked about this also creates other issues around cash flow so a couple things that I just want to highlight again since information is coming out so

49:28

quickly that we mentioned was that Tuesday Seema Varma recognized Anna price a press conference Tuesday night the increased expenses and efforts that you're all taking and how this is having cash flow constraints on the organization she talked about in the past 10 days how they've received 25,000 requests for the accelerated payments and processed 70% in five days which totaled 34 billion and again how that information or how those are coming out and if you're actually getting the full

49:58

amount we're hearing from clients is kind of differing so if you have applied for if you haven't got all of the information you're not alone however she also reminded everyone you know that this is really just a loan and that they need to do a better job and so she talked about the 30 billion in grants it's part of the hundred billion in emergency funds that were discussed and how those are going to be distributed based on Medicare revenue her quote was with no strings attached

50:29

and the goal was to get the money distributed very in an easy simplified way through direct deposits and that should happen this week she also talked about the second phase of priority on organizations that Medicare isn't the largest funding source so in total they have infused 64 billion into the system hopefully by the end of this week you know another reminder on the loans was a letter that was just sent to the secretary yesterday regarding the timing of the Bri payments on the accelerated

51:00

advanced payment program but I want to make sure everyone's aware of they talked about the significant interest rates as well that are associated with this program the letter really stressed that for this program to be the most effective health care providers need to be assured that the large interest payments will not accrue and can be really delayed as long as possible during this public health emergency and economic crisis so the letter asked for two things the first was consideration on extending the current period period beyond the twelve

51:30

months until a time which the public health and economic circumstances have stabilized and the second was is if they had the authority to waive or modify these interest rate requirements so more to come no clarification on that and that was a letter that was just sent yesterday I've been offline off email for the hour that this presentation has been going on and I guarantee as soon as I log back in there will be updates of information coming through it's just the speed of changes and predictions and

52:02

information and we're doing our best to try to get that information out so we have a few minutes to go through a couple questions and these are questions that we're also getting from clients and prospects that were just sort of saying the first one is how should my organization estimate foregone revenue you know and we just talked about that guidance from the secretary hasn't been received and current information right now really does indicate a more simplified approach to distribute in these grant money however we also

52:33

recognize that it's better to be prepared and the one thing hospitals do have a lot of is data so a known number that we know is that hospitals you can get is the number of scheduled or canceled procedures as a starting point in addition you have a lot of historical information on the number of elective surgeries and visits that are usually performed during this timeframe in addition you can consider your budgeted elective procedures for this period as well as those professional fees that are associated because really as we know

53:02

that these are the most profitable revenues for health systems so well nothing's attached to guidance isn't out that's what we're we're recommending and seeing right now I'm other question came in saying which program should I pursue first you know and the answer here is really you should give consideration to any or all acknowledging that you really have to be careful how you spend your time and your resources however you know we're having a lot of adverse effects in the massive the massive effect on your health system

53:34

everything here helps so as we note throughout the presentation there are certain programs that preclude participation in others so that's why it's really taking a step back looking at what you're eligible for and taking time to go through those and figure out the best options is really important you know in that same lines we had a hospital ask you know if I have less than 500 employees and no affiliations should I apply for everything as the opportunity arises and this is where we say no really you should pause and make sure that one program doesn't preclude

54:06

you from from another program Leslie it looked like a lot of you have not done anything with the FEMA claims yet with the RPA application and I know it's a fairly easy process and they've lifted the 30-day requirement right now but there's one question around that that I thought it would be beneficial for this groups and it's if you if you have a if you have a you have to file in every state if you have a multi-system health system and the answer there is you do need a profile and every state however

54:39

one application in the state should suffice for all your facilities in that state so I think we're coming up here on the end so in closing I just want to remind everyone that guidance is fluid you know the government's looking for ways to get money into the system however we also need to remind ourselves it's nothing is free and you can only get reimbursed from one source for an expense and this documentation and support is easier to capture now rather than later and I don't intend for that

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to sound negative but really just kind of want to be more realistic and encouraging everyone to track and support their expenses now to avoid any surprises later so stay safe and again thank you for all you're doing to keep us safe and I think I'll turn it over for some closing administrative items Thank You Danielle and thank you again to Wayne as well as well as all of our presentation contributors for today thanks again for

55:41

tuning our webinar have a great day and stay well

Health Care Providers & the CARES Act

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