Accounting and Financial Reporting

Amid looming deadline, physician practices begin to receive federal coronavirus funding

June 2, 2020 8:31 pm
  • Some large physician practices are beginning to receive federal grants for which they applied in April.
  • Some practices have not been paid, and others, such as pediatric practices, remain ineligible.
  • Any others seeking assistance must apply by June 3.

Many physician practices have started to receive expected federal assistance for which they applied in late April, while others continue to wait. And time will run out this week for any others that want to apply.

Large practices and those owned by health systems reported that HHS last week suddenly released a large amount of funding appropriated to a provider relief fund by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Paycheck Protection Program and Health Care Enhancement Act.

“They got the money last week, and they also got the amount that was expected,” said Chet Speed, JD, chief policy officer for the American Medical Group Association. Payments were set at 2% of a provider’s net patient revenue.

The distribution followed weeks of delays after practices applied in late April for the “general distribution” funding and were told they would be paid within 10 business days.

Asked about the delay, a spokesperson for the Health Resources and Services Administration (HRSA) said, “Payments will go out on a rolling basis as information is validated. HHS may seek additional information from providers as necessary to complete its review.”

The funding came from a $20 billion second round of “general distribution” payments to support providers amid the coronavirus pandemic. Although Congress appropriated the funds, it left HHS to decide how to distribute them. So far, HHS has announced how it will distribute about $80 billion (including $50 billion in the general distribution) of the $175 billion appropriated by the two laws.

Speed said he believes the remaining disbursement of the $20 billion tranche will occur this week.

But some practices that are members of the Medical Group Management Association (MGMA), which includes a wider range of practice sizes than does AMGA, are still awaiting any payment from the provider fund, said Anders Gilberg, senior vice president for government affairs at MGMA.

Most MGMA-member physician practices immediately applied when HHS started accepting applications in late April, but “more than a few” have received little since.

“It’s been random in appearance in terms of who’s getting the money and who’s not, and we still have some outstanding,” Gilberg said.

The unpaid practices tend to be those with the lowest Medicare payments. The ineligibility of pediatric practices for any of the $50 billion general distribution because they’re not registered with Medicare is another issue MGMA has raised with HHS. Any other practices that don’t participate in Medicare also are ineligible.

And those that haven’t received the federal assistance are hurting, Gilberg said. An MGMA COVID-19 financial impact report found that practices reported an average 55% decrease in revenue and 60% decrease in patient volume since the beginning of the crisis.

Latest deadline is fast approaching

Providers hoping to garner some of the $20 billion need to submit applications with revenue data by the June 3 HHS deadline.

Providers have been given more flexibility to agree to HHS’s terms and conditions in order to retain the funds. HHS this week allowed providers to apply for the second tranche of payments without first agreeing to HHS’s terms and conditions for payouts from the first tranche, said Timothy Fry, an associate with McGuireWoods.

“If anybody was on the fence, they are giving the incentive to go ahead and get that application in,” Fry said.

Providers have 90 days from receipt of each tranche payment to either agree to the terms and conditions or return their payment. If they retain the funds without agreeing, they will be deemed to have agreed, the HRSA spokesperson said.

Some of the provisions of the terms and conditions raised concerns among providers, but many still accepted them.

“There were some questions about it but not enough to not accept the money,” Speed said.

Continued areas of uncertainty include how HHS is defining healthcare-related expenses in the calculation of lost revenues in applications and payments, Fry said. The uncertainty could affect how accurate providers’ applications are later deemed in planned reviews by the HHS Office of Inspector General.

“Providers are in a real struggle,” Fry said. “People are looking for more guidance there.”

Physicians face challenges in reopening

As states have begun reducing restrictions on medical practice operations, the financial situation for those in much of the country is improving, Speed said. But in states in the Northeast, one of the hardest-hit regions, practices are just starting to reopen.

Limitations on restarting operations have included a shortage of PPE and higher costs for such equipment.

“There still is a definite financial need out there as this is slowly getting better,” Speed said.

Some practices have been able to create a financial stream through the expanded use of telemedicine.

But telemedicine sometimes is a more costly way to interact with patients, such as when they need to bounce between in-person and telehealth visits, which can lead to time-consuming technical issues, Speed said.



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