Assurance Services • Published 4/16/2020 Funding Options for Healthcare Organizations

This article was last updated: 5/8/2020

As discussed in a previous P&N article, healthcare facilities are at the forefront of the current COVID-19 pandemic in the United States, in multiple ways. With most organizations cancelling elective procedures and facing declines in revenue, healthcare financial teams have been closely managing cash flow projections. There are currently two immediate cash-infusion options available from the federal government that healthcare organizations should take into consideration.

Expansion of the Accelerated and Advance Payment Program

The Centers for Medicare and Medicaid Services (CMS) has expanded the Accelerated and Advance Payment Program for the duration of the COVID-19 public health emergency. While these payments are usually offered to providers when there is a delay in claims submission or processing, they can also be offered during national emergencies or disasters. During the current emergency, CMS has been authorized to provide accelerated or advance payments to any Medicare provider/supplier who meets required qualifications and submits a request through the appropriate Medicare Administrative Contractor. The application process usually takes several weeks, but CMS has been able to streamline the process to less than a week – allowing for immediate cash assistance. Most providers and suppliers are able to receive three months of their Medicare reimbursements, and some can receive up to six months of advance payments. However, it is important to note that these are advanced and accelerated payments that are a loan that providers/suppliers must pay back.

CMS’s current plan is to apply claims payments to offset the accelerated and advanced payments 120 days after initial disbursement. Depending on the type of entity, providers and suppliers will have between 210 days and one year to complete repayment of the funds received. These funds are not included in the CARES Act. Here is a link to the CMS fact sheet on the accelerated and advanced payment program, including qualification and application details.

Coronavirus Aid, Relief, and Economic Security (CARES) Act Funding

The CARES Act provides $100 billion for direct relief to hospitals and other frontline providers, supporting health-care related expenses or lost revenue attributable to COVID-19 and to help Americans get testing and treatment for COVID-19. The Department of Health and Human Services (HHS) announced on April 10, 2020, the immediate release of $30 billion of this funding into the healthcare system.

All facilities that received Medicare fee-for-services (FFS) reimbursements in 2019 are eligible for this initial release of funding. These payments will be distributed to entities based on their share of total Medicare FFS reimbursements in 2019. HHS released data indicating that total FFS payments were approximately $484,000,000,000 in 2019, thus allowing healthcare entities to estimate their portion of the initial $30 billion to be distributed. These payments will be disbursed quickly by CMS, including through electronic payment. Within 45 days of receipt of the payment, providers must sign an attestation confirming receipt of the funds and agreeing to the terms and conditions of the payment.

Providers not agreeing to the terms and conditions must return funds to HHS within 45 days of receipt. Entities should review these terms and conditions now, to determine whether the funds will be accepted, and if so, consider how the entity’s operations should to be tweaked in order to ensure compliance.

On April 22, 2020, the Department of Health & Human Services (HHS) announced additional allocation of Coronavirus Aid, Relief, and Economic Security (CARES) Act relief for healthcare providers. In addition to the prior release of funds into the healthcare system, the following summarizes the most recent allocation of funds:

• Roughly $20 billion of the remaining $50 billion for general distribution to Medicare facilities and providers impacted by COVID-19, based on eligible providers’ 2018 net patient revenue. 
• $10 billion to be distributed to hospitals in high-impact areas.
• $10 billion to be allocated to rural health clinics and hospitals distributed on the basis of operating expenses.
• $400 million to be allocated for Indian Health Service facilities distributed on the basis of operating expenses.
• A portion of the Provider Relief Fund will be used to reimburse healthcare providers, at Medicare rates, for COVID-related treatment of the uninsured. Registration for the program opened on April 27, 2020.  
• Additional allocations to some providers through further, separate funding, including skilled nursing facilities, dentists, and providers that solely take Medicaid.

How P&N Can Help

Our experienced team of healthcare business advisors can help provide realistic projections of activity, resulting revenues, potential cost reductions, and liquidity concerns, while assisting in evaluating funding options that are available to your organization. Once an entity decides to accept federal funding, additional operational steps must be implemented to track operational measures, costs, and compliance with terms and conditions. Our P&N team can assist in developing strategies to help your organization maintain compliance while your teams focus on providing high-level patient care. Reach out to our P&N team today to discuss how we can help.