The COVID-19 pandemic continues to impact operations and financial performance of physician practices. PYA’s recent webinar, “Physician Practices Survival Tactics,” offered details and suggestions to reduce the negative effects of substantially lower patient volumes, resulting in pressure to preserve revenues and aggressively manage expenses. PYA offers the following practical takeaways in these uncertain times.
- Cash Flow Support:
- Consider applying for a Paycheck Protection Program (PPP) loan. These loans— all, or a portion of which may be forgiven tax-free—are up to $10 million based on loan calculation, as laid out in the Small Business Administration (SBA) application. For more information on the PPP loan program and application, view PYA’s insight, “Fast Facts: Paycheck Protection Loan Program for ‘Small’ Businesses.”
- Utilize the tax credit opportunities afforded in the CARES Act. The Employee Retention Credit can cover 50% of qualified wages up to $10,000 per employee (i.e., up to $5,000 per employee) and takes the form of reduced remittance of federal employment taxes, including withheld taxes, required to be deposited with the Internal Revenue Service (IRS).
- Evaluate an Economic Injury Disaster Loan (EIDL), a working capital loan of up to $2 million from the SBA. Eligible practices may be able to receive a $10,000 advance, requested as part of the EIDL process. This advance must be used for payroll, sick leave, increased supply costs, rent/mortgage payments, and other specified items, and does not have to be repaid regardless of ultimate loan qualification decision. EIDL proceeds may not be used for the same expenses as those paid with PPP loan funds—no double counting.
- Reach out to your lender to discuss opportunities to increase an existing line of credit. Many financial institutions are also offering deferment options for those with existing loans.
- Monitor your bank account for the arrival of CARES Act Relief funds. The Department of Health and Human Services (HHS) began distributing $30B in CARES Act Relief funds beginning April 10 to providers based on their 2019 traditional Medicare receipts. Distribution of the funds is through Optum Bank with a designation of “HHSPAYMENT.” These funds are not a loan and do not have to be repaid, though they do come with terms and conditions required for funds’ use. See PYA’s article on CARES Act Relief funds for additional information.
- Revenue Preservation:
- Apply for Medicare Advance payments to boost cash availability. Medicare Part A providers and Part B suppliers may be eligible for up to 100% of Medicare payments for a 3-month period. Eligible providers can use the advance payment request form posted on each Medicare Administrative Contractor’s (MAC) website. For additional guidance, see PYA’s “Ensuring Provider Cash Flow During the COVID-19 Pandemic–Medicare Advance Payments” insight.
- Utilize relief options if you opt-in to providing Families First Coronavirus Relief Act (FFCRA) benefits to your employees. If opting in, be sure to follow the guidelines of both the Emergency Family and Medical Leave Expansion (EFMLE) and Emergency Paid Sick Leave (EPSL). For more information on these pieces of the CARES Act, see PYA’s “Physician Practices Survival Tactics” webinar and FFCRA article.
- Increase the use of telehealth within your practice to boost revenue, particularly if you are restricting or eliminating the provision of in-person services during the COVID-19 pandemic. With the expanding flexibility and coverage of telehealth services during the pandemic, PYA has been diligently monitoring telehealth legislation and offers several resources on PYA’s COVID-19 hub.
- Focus on accounts receivable (A/R) balance collections from all sources. If billing and collections functions are outsourced, communicate daily with your vendor, and work in tandem to monitor denials and identify opportunities to improve the likelihood of receiving payment. For those performing revenue cycle functions in-house, conduct an A/R analysis, and focus efforts on high dollar, aged, and/or self-pay amounts. Identify routine denial types or payer-specific trends such that follow-up may be streamlined, particularly if you are operating with a reduced staffing complement. Ensure timely filing and timely appeal deadlines are met, and routinely monitor missing charges to decrease a lag in charge submission.
- Expense Management:
- Evaluate staffing during this low-volume period. Implement wage freezes, bonus deferrals, and decreased hours to conserve cash and retain staff. When making staffing decisions, consider key revenue-generating functions and the staffing complement needed to complete those functions. If temporary or permanent staffing cuts are necessary, evaluate options and obligations related to insurance coverage and unemployment benefit reporting requirements.
- Speak to your landlord regarding office rent, and negotiate partial payments or deferrals. If individual carrier or locality-specific legislation permits, utilize business insurance coverage to assist.
- Seek deferment on malpractice premiums. Like office rent, some malpractice carriers are providing deferment options for their clients. Additionally, some states have provided relief by allowing consumers and small businesses experiencing financial hardship due to COVID-19 to defer insurance premiums, including malpractice.
- Eliminate any discretionary spending on donations and non-essential purchases.
PYA’s COVID-19 Hub provides additional details on the various federal government COVID-19 assistance programs, considerations for revenue preservation and operational efficiency, and more. If you have any questions regarding these initiatives or require assistance in developing action plans for implementing them, contact one of our PYA executives below at (800) 270-9629.
Disclaimer: To the best of our knowledge, this information was correct at the time of publication. Given the fluid situation, and with rapidly changing new guidance issued daily, be aware that some or all of this information may no longer apply. Please visit our COVID-19 hub frequently for the latest updates, as we are working diligently to put forth the most relevant helpful guidance as it becomes available.
