LUGPA on CARES Act and Assistance for Physician Practices During the COVID-19 Crisis - Views from the Political Consultants - Neal Shore
March 26, 2020
The House passes a $2 trillion COVID-19 emergency bill. Neal Shore hosts a discussion with Drs. Gary Kirsh and Deepak Kapoor, and Political Consultants for Health Policy, Tracy Spicer, and John McManus on the LUGPA update on the CARES Act and Assistance for Physician Practices During the COVID-19 Crisis. The group details the CARES Act, a necessary emergency relief stimulus package and the economic impact the crisis is having on independent medical practitioners.
Tracy Spicer, LUGPA Democratic Political Consultant for Health Policy Avenue Solutions
John McManus, LUGPA Republican Political Consultant for Health Policy, The McManus Group, LLC
Deepak A. Kapoor, MD, Founding Member of LUGPA and LUGPA Chairman of Health Policy
Gary M. Kirsh, MD, Founding Member of LUGPA and Chairman of LUGPA Political Advocacy Group
Neal Shore, MD, Medical Director for the Carolina Urologic Research Center, Myrtle Beach, South Carolina, USA.
View Part 1: LUGPA Focus on Telemedicine an Update on the CARES Act and Assistance for Physician Practices - Neal Shore
View and Download Slides: LUGPA Update on the CARES Act
View: COVID-19 and Genitourinary Cancers Videos
Neal Shore: Let's now go over to John McManus and I'd love for a Tracy at certain points to please interject. The two of you have been absolutely essential in supporting the efforts of health policy and political affairs. So glad you could be on the program tonight and to share with us and with this remarkable content that you put together because this is really what everybody's trying to understand. How can they use this to maintain their economic viability in these very, very challenging times? John, please take it away.
John McManus: Sure. Thanks for having me here. There are two major programs that the bill creates, which could be a resource for our practices. Most significantly is the $349 billion Small Business Paycheck Protection Program. That provides loans up to $10 million per firm, as long as that firm has less than 500 employees, for firms that were adversely impacted by COVID. I think all of our practices would easily qualify since our patient volume went down so significantly with all the healthcare warnings and so forth.
The second program is $100 billion in grants from the Health Emergency Fund, emergency appropriations, really afford the direct treatment of COVID patients and the infrastructure that would require, including surge infrastructure.
The small business program, the Paycheck Protection Program, they're going to start pumping money out almost immediately. The House is going to vote on the bill tomorrow. I would wager the President would sign it and we'll see regulations very shortly, probably next week on how to access, and it goes through lenders backed by the federal government.
The good news for our practices is, if you hire back your staff by June, these loans turn into grants. In other words, you don't have to pay them back at all. It's rather a complicated formula on how it works, but they look at how many employees you had as a February 15th of this year and then take another snapshot at June 30th. You're basically not penalized because I think Congress and the administration understood that many businesses, restaurants, your practices, other businesses are severely impacted by the economic shutdown. Laid off staff, you can bring them back on board and as long as you get them back on by June, you'll receive a prorated amount for those costs. For example, they'll cover up to $100,000 per person prorated for that two and a half month period. And other business expenses, rent, mortgages, utilities, contractors, debt obligations, all of that could also be forgiven as legitimate expenses.
One significant wrinkle, you can't decrease any employee's salary by more than 25% from the most recent quarter of employment. If for example, you brought back, let's say you had a practice with a hundred employees and by June you were back up to 80, you would get 80% of your debt forgiven for salaries up to $100,000. If you brought them all back, they would look at a rolling average of those months and you would get proportional grants provided for that.
It is a fixed pot of money, $349 billion of money so it's very important that we get our applications in there quickly. We're going to provide some recommendations over the next week of people who can help write these applications, working with your practices. And those have to be provided by June 30th because the money starts going out the door. There is a prioritization of loans in the statute entity serving underserved areas, businesses in rural markets, veterans, minority-owned businesses, women, new businesses that have been in operation for less than two years. This isn't focused on healthcare exclusively. It can be any type of small business of up to 500 employees.
Deepak Kapoor: But there's just another proviso because it's the greater of 500 employees or certain economic limitations, correct? And also can you clarify that for our medical practices that have over 500 employees, this is a little problematic for us, correct?
John McManus: Yes. If you have more than 500 employees, you can't qualify unless you're in an industry designated by the Small Business Administration with a different designation and because they don't provide a number of employees for physician practices or inventory surgery centers, we don't need that escape valve. For example, they have designations for greeting card industry, restaurants, all kinds of different types of businesses, but that doesn't help us. Unfortunately, if you're in a firm larger than 500, I know Dr. Kapoor, your practice is one of those, they would not receive assistance under this program so we'd have to focus all of our efforts for those larger practices on the $100 billion and grants provided in the emergency fund.
Tracy Spicer: John, before we get to the grant fund, if I could just add, I think there were a couple of points that you stated that are worth reiterating and highlighting. The SBA loan pot of money is really not all dedicated to the healthcare sphere, and because there are existing mechanisms in place, SBA loans have been in existence for quite some time, the ability to get that money out the door should flow fairly quickly. And so to John's earlier point, you are going to see regulations come out of these agencies in very short order, so we will obviously try to provide some recommendations for assistance, but people should be thinking about how best to write these loan applications to fit the needs based on the criteria listed in these bills. I think that having that infrastructure is really critical because when John next explains the grant pot of money, that is a wholly new operation and a mechanism that doesn't currently exist, and therefore could take additional time. Even though everybody recognizes the urgency of the situation, it could take a little more time to actually push that money out.
Deepak Kapoor: I think everybody's going to be wondering, with this pot of money that's been designated, really how far can that go, 349 billion versus the need when it is covering all of the restaurants and gyms and physician practices? I think practices really have to think about this because before they count on government relief and retain staff that they otherwise might furlough, I think we need to really consider how adequate this measure will be across industries.
Tracy Spicer: Gary, that's a great question and I think it's important to note that this is a $2 trillion package. And while that is the largest in our nation's history in terms of an economic stimulus package, when you break it down, and just as you pointed out, it's 349 billion for just these small businesses alone. When you're having every industry across the country try to tap into these, the concern is that all of these pots of money are going to be depleted fairly quickly. I'm frightened to tell you that folks have already talked about another future coronavirus relief package. It's hard to even talk about that as we haven't finished and completed our action legislatively on this one. But I do think there will be an ability hopefully to reassess in the coming weeks, depending on how quickly these funds are depleted. There could, unfortunately, be the need to try to increase these pots of money down the road.
John McManus: Yeah. One thing to keep in mind, this is the third legislative package on this issue, and it's been around for what, three weeks, four weeks? But Congress will go home we think for an extended period here, in part because they're lockdown as well, for the next six weeks probably, and then we'll probably have a fourth package, which maybe, people see where these things are going. Have they run out of money on this Paycheck Protection Small Business Program? Where are they on that? Do we need a more specific fix along the lines of some of the issues we were working on with Senator Barrasso and Bennett? There was more focus on physician practices and ambulatory surgery centers rather than these larger...
This was trying to get money out the door for those who were in free fall, and I think our practice has met that profile, but great question Gary. We don't know what's going to happen, and you have until June to figure out whether these loans get forgiven or not. You don't have to hire everybody next week. They understand that this is complicated and it takes time for you guys to make decisions on how you're running your businesses.
There was a wide recognition, particularly in the hospital community, that resources were needed immediately and that the old way of getting money out the door of plusing up payment rates on Medicare and Medicaid DRGs would not be sufficient. There was a $100 billion fund created in the bill. It was originally 75 billion in the first version we saw, and it got plused up to 100 billion to prevent, prepare for, and respond to the coronavirus and to reimburse providers for healthcare-related expenses, including lost revenue attributable to the virus. People often talk about this as a hospital fund. We fought hard to make sure that other healthcare providers like physicians would be eligible, and they clearly are in the statute.
The language is very directive though. It talks about building or construction of temporary structures, leasing properties, medical supplies and equipment, PPE, which we know your practices are buying a lot of, retrofitting facilities. We know there's a discussion now at HHS with the ambulatory surgery center industry of how can we take some of those and convert them and taking some of these patients or patient overflow in New York and other areas where we're seeing a surge.
These funds cannot be used if you're getting reimbursed from other parties. You can't bill an insurance carrier or Medicare and then try to get funds for the same purpose. This has to be outside of that, and that's why it's more focused on an infrastructure type thing. We don't know how the application process will operate exactly yet, but we think they're going to hand it off to a Medicare contractor as they do with your billing system now, and we're going to get guidance from the Secretary probably as early as next week, I would imagine, and we need to get the loan applications in right away.
For the distribution of funds, the language provides a lot of flexibility to the Secretary, whether it could be a prepayment, prospective payment, retrospective payments. They're basically saying, keep receipts and we'll figure it out later. If you need funds right away, we're going to try to get them out to you. Obviously, there's going to be some auditing of the program and findings to Congress on how well it worked.
This is a wholly new program that's never been operated before. I think it's going to be much more difficult logistically to get the money out than the Small Business Program, and I do think when you look at their language, it's tilting more at the hospital. We just have to be very creative, particularly those firms who can't qualify for the Small Business Program, on how we write our applications, and making sure we're fitting into the spirit of the law, which is you're helping address the COVID crisis.
Neal Shore: Tracy and John, the issue of sequestration, which has been ongoing for many years now, how will that be addressed during this current health economic crisis?
John McManus: The bill suspends the 2% payment cut you guys see on all your procedures and activities for May 1 to the end of the year. We said earlier, but I think the CMS technical team asked that that be done at that time period. That will be some relief particularly [inaudible], drugs, it'll give you a bit more breathing room.
Neal Shore: Thank you, John. That was tremendous. This is obviously for all who are listening and following this pandemic and this health policy crisis. It's so multilayered, incredibly complex, but yet we're making progress, and none of this would have been beneficial to the independent practice of medicine and urology without the exceptional efforts of the LUGPA health policy and political affairs team, and I can't thank the four of you enough for doing all that you've done.
It's pretty clear to me that there's a lot more education that needs to ensue. There's still a lot of questions that haven't been answered. More of it's coming. There'll probably be more legislation as you've already alluded to. Thank you all so much. Let me just maybe if you want to each have some final closing comments, I'm going to start with you, Gary.
Gary Kirsh: Neal, thank you and I appreciate the call out for our advocacy and health policy work, which as Deepak's pointed out, it's to a large extent overlapping, and we've seen some communication from certain elements of the Congress internally and externally that specifically mentioned physician practices being eligible for these Small Business Administration loans, and we believe that it is possible that that specific call-out would not have been done without our active intervention. We're grateful to the Congress for recognizing the plight that independent medical providers are in today.
Deepak Kapoor: Thank you, Neal. And again, this has been a very informative dialogue, and I commend my co-panelists for really condensing very complicated material into a very short period of time. This isn't done yet. We don't know exactly when things are going to peak, but clearly, this is the first step. It's going to be really important that everybody gets their act together relatively quickly, particularly for that 349 billion, for those that are eligible for it because that's the whole country. It really behooves people. That's an easier route and most physician practices will fall under that aegis. I would urge people to take that route first and get their ducks in a row, so to speak, so as soon as the guidance comes out, they're ready to go in first in line.
John McManus: It's been great working with you guys. I think we had an impact here for independent practice and medicine and just to convey the gravity of the situation, and it's good to see we're going to get some results out of this, so stay tuned.
Tracy Spicer: Yeah, thanks. I would love to just say thank you to Dr. Shore and Kirsh and Kapoor for all that you do for LUGPA and to help support us. We are so grateful to be part of this team. And to everyone watching, I just want to say thank you for all you guys are doing. You're on the front lines. We know how challenging this is for all of you and we appreciate everything you do and we thank you and be safe.
Neal Shore: With that, thank you all so much. I have a favor to ask of you. You've presented an enormous amount of accomplishment work through teamwork of dedication and expertise, and I sure hope we can get you back and have some additional conference calls on this and education because it benefits clearly not only the members of LUGPA, but really the entire house of urology so thank you very, very much.