Latest relief package expands reach of Paycheck Protection Program: Your COVID-19 Briefing
In this edition
Use the links listed below to jump between sections.
NEWS
Vaccine rollout not quite what was expected — but getting better
The Omnibus Appropriations and Coronavirus Relief Package
COMPLIANCE
ADMINISTRATIVE
Please note
The views, information, and guidance in this resource are provided by the author and do not necessarily reflect those of WellSky. The content provided herein is intended for informational purposes only. The information may be incomplete, and WellSky undertakes no duty to update the information. It is shared with the understanding that WellSky is not rendering medical, legal, financial, accounting, or other professional advice. WellSky disclaims any and all liability to all third parties arising out of or related to this content. WellSky does not make any guarantees or warranties concerning the information contained in this resource. If expert assistance is required, please seek the services of an experienced, competent practitioner in the relevant field. WellSky resources are not substitutes for the official information sources on COVID-19. Providers should continue to track developments on official CMS and CDC pages, including:
Current cases & maps
As we begin a new year, one thing is certain — COVID-19 will remain a big part of 2021. Over the New Year’s holiday, the United States passed 20 million individual cases of COVID-19 and 351,000 deaths from the disease. It took 10 months to reach 10 million cases and only two months to double that number. Hospitals and ICUs are overflowing, and hospital conference rooms and halls are full of beds occupied by patients who need care. And, in a déjà vu moment, we can see from the New York Times COVID-19 heat map below that once again, the disease is on the rise in southern states.
On Saturday, January 2, the rolling seven-day average for new cases stood at just over 205,000. The 14-day average was a bit over 197,000. When the seven-day average exceeds the rolling two-week counts, cases remain on the rise. It takes a period of weeks for deaths to catch up, but with rising cases, mortalities are bound to be on the upswing in the coming weeks, too.
New cases are predicted to rise again in the coming days due to holiday travel. Over one million travelers passed through U.S. airports on the Wednesday before Christmas alone, and airports counted a million travelers per day over the five days before that. We will likely see yet another surge upon a surge in the coming two weeks.
As cases rise, mortalities will rise, which means that the dip on the New York Times graph will not recover as soon as we hope.
Over the last week, hospitalizations due to COVID-19 have surged to more than 128,000 people. More than 23,000 of those are in an ICU, as depicted by the Wall Street Journal’s map below.
Generally speaking, when the percentage of available ICU beds falls below 20%, hospitals start to worry about capacity. For some hospitals, especially in California, hospital as well as ICU occupancy is now at or near 100%. Currently, 23 states are at or beyond 75% ICU occupancy — Alabama, Arizona, Arkansas, California, Delaware, Florida, Georgia, Indiana, Kansas, Louisiana, Maryland, Michigan, Mississippi, Missouri, Nevada, New Mexico, North Carolina, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Texas, and West Virginia.
Adding to the concern is the new B.1.1.7 variant of COVID-19 first discovered in Britain and now confirmed to be in the United States. Many have suggested that this variant, which spreads more quickly than earlier mutations of the virus, will become the dominant strain of COVID-19. This version is about 60% more transmissible than earlier virus strains, and it’s believed to be more contagious because of the amount of virus carried by infected individuals in their noses and throats. The end result? As infected people breathe, talk, cough, and sneeze, more viral particulate matter is introduced into the air. The following graph from an article published by the New York Times tells the story of concern when comparing infection spikes in Britain to other European and African countries.
Clearly, we have some work to do to keep ourselves and those around us healthy. Despite COVID fatigue, it’s important we stay the course until vaccination rates offset the negative trends we have witnessed the last several weeks.
News
Vaccine rollout not quite what was expected — but getting better
The Trump Administration expected to have more than 20 million Americans — including frontline healthcare workers and nursing home residents — vaccinated against COVID-19 by the end of 2020. Reality has fallen short, with only about 4 million confirmed vaccinations as of January 4. More than 12.4 million doses have been shipped across the country and include vaccines from both Pfizer-BioNTech and Oxford/AstraZenica.
Vaccine allocations to states have been based on population. The shipments have been accompanied by suggestions for how the vaccines should be used, but without specific rules governing their distribution. As a result, the distribution schedule and prioritization differ by state. Of course, the biggest problem has been that many state and local health departments simply lack funds for getting the vaccines into the hands of those who will administer them. Thankfully, the recent stimulus package does earmark $8 billion for this purpose. The Wall Street Journal has published an interactive map showing the number of shots given, doses used, and doses shipped by state — with California, Florida, New York, and Texas receiving the highest volume of shipments.
At this point, most of the doses have been administered to healthcare workers and those in long-term care facilities in accordance with guidance from the Centers for Disease Prevention and Control (CDC). Based on the CDC guidance, essential workers — including teachers and grocery store workers — and 49 million elderly people over the age of 65 not living in long-term care facilities will be next.
As predicted, there have been a few hiccups in the Operation Warp Speed logistical process. “Hospitals aren’t vaccinating everyone at the flip of a light switch,” according to Claire Hannan, executive director of the Association of Immunization Managers. “There may have been an expectation from Operation Warp Speed or others that we’d give everyone the vaccine overnight… It was a logistics equation for them. If you’ve been [working] in vaccines for a long time, you know that’s the easy part. Getting it into the actual arms is the hard part.” This is particularly true given that most who receive the vaccine must stick around for a period of time — from 15 minutes to a half-hour — to ensure that there is no allergic or other reaction that might require medical care. And hospitals aren’t the only ones administering vaccines. Most long-term care facilities are getting theirs from places like CVS or Walgreens — that means an extra step in the deployment process which also takes time.
As I mentioned, states have been free to make their own rules for how the vaccines are deployed. In Florida, Governor Ron DeSantis extended eligibility to everyone over the age of 65. This prompted much confusion over how to make a vaccination appointment, leading to long lines at vaccination sites and more than a few all-day campouts along the way. Nonetheless, Dr. Anthony Fauci, director of the National Institute of Allergies and Infectious Diseases, remains upbeat about the program, despite noting on NBC’s Meet the Press that the country is behind on vaccinations versus expectations. “No excuses, we are not where we want to be. But hopefully, we’ll pick up some momentum and get back to where we want to be in regard to getting [the vaccines] into people’s arms.”
The Omnibus Appropriations and Coronavirus Relief Package
After significant back-and-forth with Congress, the President signed the second stimulus package on December 27. The Omnibus Appropriations and Coronavirus Relief Package will provide $900 billion in funding, making it the second largest expenditure legislation in U.S. history. While most of the front-page news has been focused on the squabble over how much individual Americans should receive, there is a lot more to consider, and it is notable that President-elect Biden will likely propose more in the months to come. Here is what we know for the moment, but there will be more information to come as much of this legislation will rely on additional regulation that is forthcoming in January.
Paycheck Protection Program
Almost $284 billion has been added to the Paycheck Protection Program (PPP) which has been covered extensively in past briefings. The package expands the types of entities that can apply for PPP loans, streamlines the application process, allows for second draws for businesses that have already taken advantage of prior PPP loan opportunities, and expands the types of expenses that can be funded with loan proceeds.
- Some PPP funding has been reserved for “very small” businesses — especially second draws. In order to take a second draw, if the business took an original loan, original proceeds must have been used in their entirety for allowed types of expenditures. The second draw loans are intended to be focused on very small businesses with fewer than 300 employees (which is the majority of home health and hospice providers) that had at least a 25% reduction in gross receipts during one or more quarters of 2020 compared to the same quarter or quarters in 2019.
- Second PPP loans may still qualify for full forgiveness.
- Businesses that had prior PPP loans which were forgiven or are in the process of being forgiven, will be allowed to deduct the costs covered by the loans on their federal income tax returns. This, as many readers know, has been a bone of contention between Congress and the IRS which contended that tax-free money used to pay for routine expenses constituted a double dip — meaning, in practical terms, that many businesses were facing some really awful tax consequences for 2020. Now, the specter of that has been lifted to the delight of business owners everywhere.
- As many readers will recall, there was some talk in mid-2020 about automatic forgiveness of small PPP loans, but nothing really happened to make that a fact. Apparently, it isn’t going to happen, but now, there will be a new and simplified application for loan forgiveness for loans of $150,000 or less. This will apply to loans that have already been made but not yet forgiven. The forms for this won’t be out for another month or so. I will keep an eye out and report next month.
- The Small Business Administration (SBA) is obligated to come up with regulations for the new loans within 10 days of the bill’s enactment.
Economic Injury Disaster Loans
As with PPP loans, Economic Injury Disaster Loan (EIDL) grants will not be taxed for 2020, and expenses that were covered with the grant funds will still be deductible. Keep in mind that the grants, which ended up being $1,000 per employee up to a maximum of $10,000, are what we are talking about here. The EIDL loans are just that — loans that are not considered a grant or part of revenue and which are also repayable.
In addition to the tax holiday, the legislation makes additional grants possible with another infusion of $20 billion — you’ll recall that the grants were discontinued early on after passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act due to high demand. For some businesses, the full $10,000 may be available. Of course, there are a couple of catches because the qualifications are more stringent this time around. Businesses qualifying for expanded EIDL grants must be operating in a low-income community and must have suffered an economic loss of more than 30% due to COVID-19.
As with PPP loans, the SBA is obligated to come out with a new application for EIDL grants in January.
Provider Relief Funds
Another $3 billion will be added to the Provider Relief Fund, bringing the total to $178 Billion. At least 85% of the monies that remain will be allocated equitably based on applications for funding that take into account financial losses and/or increased operational expenses over 2020. According to the National Association for Home Care and Hospice (NAHC), home-based care providers that do not provide government-financed services may be eligible for some of this funding.
The legislation also confirms that providers may transfer all or a portion of provider relief funding among eligible subsidiaries. It also stipulated that the use of funds received before September 19, 2020 must be accounted for based on the FAQ guidance from the Department of Health and Human Services (HSS).
Medicare sequestration
Readers will remember that the sequestration deductions from reimbursement were curtailed in connection with the CARES Act through the end of 2020. The new stimulus extends the curtailment of sequestration adjustments through March 31, 2021. According to NAHC, this is expected to bring $100 million in additional relief to hospices and $90 million for home health agencies. Further efforts are underway to extend the sequestration holiday again.
Vaccine distribution
The package provides $50 billion in funding for acceleration of the vaccination program across the country and also includes funds to be directed to a national testing and contact tracing strategy.
- Approximately $20 billion has been reserved for testing, contact tracing, surveillance, containment, and mitigation.
- About $20 billion is to be directed to the purchaser and/or production of vaccines, therapeutic agencies, and ancillary supplies.
- There is more than $8 billion set aside for vaccine distribution which will include planning, preparation, and promotional activities.
Hospice-specific measures
Any piece of legislation labeled as an “omnibus” bill is really a compilation of related measures. This bill is no exception and there are several hospice-specific measures included here.
- Medicare payments for Rural Health Clinics (RHC) and Federally Qualified Health Centers (FQHC) will be allowed to enable RHC and FQHC physicians to serve as hospice attending physicians and to bill for their services, starting in January 2022.
- Cap calculations will be adjusted to rely on the hospice payment update percentage rather than the Consumer Price Index for Urban Consumers starting in 2026.
- Survey and enforcement procedures will be made more consistent to improve oversight activities and allow the U.S. Department of Health and Human Services (HHS) to use intermediate enforcement remedies.
- Hospices will be surveyed no less frequently than once every three years — although there will be a new special focus program to enable more frequent surveys of poor performing hospice providers every six months.
- Hospices that do not report quality information will see an increase in the penalty from 2% to 4% starting October 2024.
- Survey and certification results will be made public no later than October 2022.
- Immediate jeopardy findings may result in temporary management, program termination, or other remedies, such as civil monetary penalties or payment suspension. For hospices which are found to be in compliance during a survey, but out of compliance for some period of time prior, civil monetary penalties can be imposed for the date range when the non-compliance was in effect.
Compliance highlights
Auditing the use of Provider Relief Funds: White House grants an extension
For large or regional, not-for-profit post-acute providers that may have received $750,000 or more in provider relief funds, there are new single audit rules that come in the form of an addendum to rules issued last summer by the Office of Management and Budget (OMB). The new addendum came out in December and relates to the permitted uses of Provider Relief Funds. It includes guidance that must be used for those required to have “single audits,” but the guidance is also useful for those who aren’t required but simply want to get their reporting right.
In essence, the rules extend to any monetary relief received under the CARES Act. Single audits are so named because they are only required for not-for-profit and governmental entities that receive more than $750,000 in grant funds from programs other than Medicare or Medicaid. Congress originally set aside $175 billion for provider relief, and the newest stimulus package, signed into law on December 27, adds another $3 billion to that.
The OMB guidance for single audits is updated annually and this year was no exception; however, the August update did not address CARES Act Provider Relief Funds. The audits, usually due within nine months of the entity’s fiscal year–end, have been extended for three months for those whose original due dates were between October 1, 2020 and June 30, 2021. No approval for the extension is required.
In section 4-93.498 of the document, we learn the following:
- Of the 12 types of compliance requirements, only three apply to Provider Relief Funds:
- Activities — Allowed or Unallowed
- Allowable Costs — Cost Principles
- Reporting
Under allowable activities, the guidance states that funds “shall be available for building or construction of temporary structures, leasing of properties, medical supplies and equipment, including personal protective equipment and testing supplies, increased workforce and trainings, emergency operation centers, retrofitting facilities and surge capacity.” Clearly, all of these things will not apply to most post-acute providers but medical supplies, equipment including personal protective equipment (PPE), and extraordinary workforce expenditures would apply. The guidance also goes on to reiterate that funds may not be used to reimburse expenses or losses that have been reimbursed from other sources or that others are obligated to reimburse in the future.
Funds distributed under the Skilled Nursing Facility Infection Control Distribution may be used to cover expenses associated with COVID-19 testing using approved tests or those under emergency use authorization. This extends to the costs associated with reporting test results. Other allowable expenses include hiring staff to provide patient care and/or administrative support, expenses associated with infection control improvements, and additional technology expenditures that allow facility residents to communicate with their family members who are not allowed to visit.
Providers of all types should be aware that the newest stimulus package also elasticizes the methodology for calculating revenue losses. Now the provider relief funds measurement allows providers to put the funds to lost revenue compared to budgeted revenue for 2020 rather than actual revenue for 2019. This is an important and welcome change for the reporting process.
Administrative highlights
Comparing Medicare FFS and Medicare Advantage
In a new study released by the Better Medicare Alliance and conducted by Avalere Health, the long-held supposition that Medicare Advantage (MA) plans have the capacity to reduce costs and still improve patient outcomes is gaining traction based on data analysis.
The report notes, “The hallmark features of Medicare Advantage — such as risk-adjusted capitated payment, strong value-based performance incentives, and flexibility in benefit design — together enable plans to offer care management interventions that help meet the complex care needs of vulnerable beneficiaries in ways that achieve positive health outcomes.”
Data related to 1.4 million Medicare Advantage members and 7.9 million Medicare Fee-for-Service (FFS) beneficiaries from 2015 through 2017 was divided into three groups: Disabled <65, Frail Elderly, and Major Complex/Chronic Disease. The analysis yielded the following findings related to intensity of services measured in days:
- Skilled nursing facility (SNF) days were lower across all three groups with the largest savings (41%) for disabled patients under the age of 65.
- Home health days for disabled patients <65 and those with significant chronic illness were 27% lower for MA than FFS but only 10% lower for frail elderly patients who consume the largest share of services.
- Inpatient rehabilitation facilities (IRFs) and long-term acute care hospitals (LTACHs) also showed more efficiencies among all three population groups with nearly 50% savings for LTACHs.
- For all groups, MA costs were consistently lower by a range of 19% for home health to 49% for LTACHs.
Outcomes data differed too, suggesting that it isn’t only cost that is a factor. The MA population achieved better outcomes than the Medicare FSS population on 17 of 22 clinical quality of care measures such as:
- Higher rates of pneumonia vaccination — from 50% to 52% higher among MA beneficiaries.
- Higher rates of eye examinations — from 14% to 56% higher among MA patients.
- Higher rates of eye examinations for diabetic patients — from 14% to 56% higher for MA members.
MA members were more likely to have physician office visits within 14 days of their hospital discharge, including 74% of MA members who were in the frail elderly group compared to only 52% of the FFS patients who received similar services in the same timeframe. MA members also had generally higher rates of outpatient visits.
There were lower rates of avoidable hospitalizations for acute conditions for all of the populations including a 57% lower rate for those with major chronic conditions and a 45% improvement for frail elderly. MA plans had a 12% lower hospital readmission rate within 30 days of discharge than FFS patients.
Inpatient hospital costs were between 9% and 23% lower. Drug costs were between 38% and 44% lower.
The report’s authors note this: “The study found better outcomes for the high-need, high-cost beneficiaries in Medicare Advantage as compared to the same population of beneficiaries in Traditional FFS Medicare. Similar positive results for quality of care, utilization of care, and costs of care were found for the overall matched Medicare Advantage population as compared to Traditional FFS Medicare.” All in all, a bit of an indictment of non-case managed services under FFS Medicare that providers would be well served to notice in terms of care planning and service delivery.
In closing
As we move beyond the holidays and into a new year with new possibilities and challenges, I’m reminded that, as always, there will be good and bad to come. 2021 is unlikely to be the “magic bullet” that will end COVID-19 or all of the things that have happened to change what we used to think of as “normal.” Indeed, our COVID-19 abnormal normalcy will be here for a while longer and, as we realize that, what will matter most is how we handle both good times and those that aren’t so good in the coming days and months.
We live in turbulent times — and not just because of the pandemic — where kindness, humor, hospitality, and tolerance will mean more than ever. Last year I was amazed at how providers — and those of us who serve you — were able to set competitive differences aside and cooperate for the good of all. And, in the midst of the pandemic, when everyone’s business was down a bit, I still had the benefit of more camaraderie and goodwill from industry friends and colleagues than I have ever witnessed before. I hope you did, too, and that the trend will be one of the good things that came from 2020 that will last throughout 2021 and beyond. Have a safe month — and as they say, be positive without testing positive! We’ll be back with more in February.