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APRIL 20, 2020 -- Family physician Frank Maselli, MD, saw approximately 30 patients a day in his office in the Bronx before COVID-19. But New York City has become a hot spot for the virus that has claimed the lives of the lives of more than 40,000 people nationwide.
Now Maselli and the other 10 physicians in the practice each treat only eight or nine patients a day via telemedicine. He spends most of his time on the phone answering patients' questions about COVID-19 symptoms and potential exposure. Although he tries to bill for telemedicine and phone calls, he says many commercial payers reject the claims because their processing systems aren't updated to reflect new coverage policies. He has enough cash in reserve to cover two payrolls, but he knows he needs a backup plan if patient volumes continue to decrease indefinitely.
"Our doctors will take a pay cut before we let people go," says Maselli. "So far we're OK because we're getting paid for things we did two months ago before all of this happened."
Ninety-seven percent of medical practices have experienced a negative financial impact directly or indirectly related to the COVID-19 pandemic, according to new data from the Medical Group Management Association (MGMA). On average, practices report a 60% decrease in patient volume and a 55% decrease in revenue since the beginning of the public health emergency.
Four Options for Financial Assistance
However, there are ways to offset revenue loss and remain financially viable during the economic uncertainty of the COVID-19 pandemic. Options include the US Small Business Administration's (SBA) Paycheck Protection Program; the SBA's Emergency Economic Injury Disaster Loan (EIDL); Medicare's advanced payment program; and an SBA Coronavirus Economic Stabilization Act (CESA) loan. These are in addition to several other strategies aimed at reducing costs and improving revenue.
1) Maselli, for example, applied for the Paycheck Protection Program, a short-term loan that helps small businesses (ie, for physician offices, those with an annual revenue of under $12 million) keep staff employed during the COVID-19 crisis. The loan covers a variety of costs, including payroll, rent, utilities, mortgage interest, and interest on any other debt obligations incurred before February 15 of this year.
"We have no idea if this is coming and when, but it would be a big help," he adds.
(As of press time, the Paycheck Protection Program had stopped accepting applications, having reached the limit of its $349 billion budget. Congress must now agree on legislation to add additional funding to assist small businesses.)
Practices can take out a loan of up to 2.5 times the average monthly payroll (excluding payroll for those making more than $100,000 annually) with a cap of $10 million. For example, if the average monthly payroll is $10,000 — and no employees earn more than $100,000 annually — the maximum loan amount is $25,000.
Practices approved for this loan can expect to receive the funds from their SBA-approved lender within 10 calendar days of the date of loan approval. Although it's technically a loan, the good news is that it doesn't need to be repaid if the practice complies with all of the loan requirements — particularly these two: The practice uses at least 75% of the loan specifically for payroll, and the practice keeps employees on the payroll (or rehire, when necessary) for 8 weeks after the loan origination date.
Forgiveness is reduced if full-time headcount declines, or if salaries and wages decrease. If a practice does need to repay all or a portion of the loan, it must do so within 2 years at an interest rate of 1%, and payments are deferred for 6 months.
Andrew D. McDonald, FACHE, practice leader of healthcare consulting at LBMC Healthcare, says it behooves practices to apply for this loan because it's essentially free money during a time when revenue may be at an all-time low. "While the devil is in the details, on the surface, the paycheck protection funds appear to be a no-brainer. However, each practice will need to confirm with their lender that it's a solid decision."
One challenge with this loan is that some banks weren't necessarily ready to accept applications on April 3, and many continue to lag behind in processing these applications.
2) A second option is the SBA's EIDL, a low-interest, long-term loan (capped at 3.75% for small businesses) that practices with 500 or fewer employees can use to pay fixed debts, payrolls, accounts payable, and other bills that could have been paid had the disaster not occurred. Borrowers can ask for up to $2 million, and the maximum term of this loan is 30 years, though the overall process for obtaining these loans will depend on the lender.
Practices have until December 16 to apply for this loan. They can also apply for an expedited disbursement (ie, an Economic Injury Disaster Advance) of up to $10,000 that's paid within 3 days of the request.
3) A third option is Medicare's COVID-19 advanced payment program. Under this program, eligible physicians are those who:
- Billed Medicare for claims within 180 days prior to the date of the request
- Are financially solvent (ie, aren't in bankruptcy)
- Are free from any active medical review or program integrity investigations
- Are in good standing with Medicare (ie, don't have an outstanding delinquent Medicare overpayment)
If physicians meet this criteria, they can ask their Medicare Administrative Contractor (MAC) to provide an advanced payment of up to 100% of the Medicare payment amount based on a 3-month lookback period.
Once requested, MACs will issue payment within 7 calendar days from the date of the request. Repayment will occur in the form of automatic recoupments beginning 120 days after the advanced payment is received. Medicare has already approved more than 21,000 requests totaling more than $51 billion. CMS has provided a fact sheet to learn more about how to request an accelerated payment.
"The key is that you need to repay this, so you want to set a reasonable goal," says Sarah Hostetter, senior consultant at Advisory Board, a healthcare research & data consulting firm. She says practices should consider what they'll realistically be able to repay within 120 days.
4) A fourth option — specifically for mid-size practices — is a CESA loan, the details of which have yet to be announced, that will enable practices to access funds with an annualized rate no greater than 2% and with no principal or interest due for at least 6 months. The CARES Act, signed into law 3 weeks ago, provides $454 billion for this program.
Selecting the Right Option for Your Practice
Which singular option — or combination of options — is best for your practice? McDonald says to ask these questions:
- How well are patient volumes holding up?
- How well are physicians pivoting to telehealth?
- What is the overall economic loss?
- What are the available liquid assets, and how long can the practice maintain its financial viability over the next couple of months and beyond?
Cheryl Mongillo, MBA, administrative director of two independent family practices in Delaware, applied for both the Paycheck Protection Program and Medicare advanced payments because she's worried about being able to pay staff while also covering costs related to personal protective equipment, medical waste, and cleaning, all of which have tripled since the pandemic began. One of the practices includes one physician and four nurse practitioners. The other includes five physicians and three nurse practitioners. In total, both practices employ 35 additional staff.
"I want our staff to know how much we care about them. My hope is that after this is over, our business will pick back up pretty quickly," she adds. "However, until I can get the business back, I needed something to keep us afloat."
Others are being more cautious. Crystal Bruning, practice manager at an Ob/Gyn clinic in Orlando, Florida, says her practice applied for the Paycheck Protection Program but is waiting another month or so before deciding whether it will also take advantage of Medicare advanced payments.
The practice is still trying to assess the true financial impact of its 30% reduction in patient volume. Bruning says the advanced payments wouldn't amount to much anyway because only 10% of the practice's patients have Medicare.
Making Tough Financial Decisions While Awaiting Assistance
Kansas-based family physician Jennifer Bacani McKenney, MD, says she hasn't paid herself a salary in weeks because of the revenue loss her practice has incurred.
"I want to make sure we can pay [all 12] employees," she says. "In my family, we have two incomes, and we're pretty good at saving money. However, I know not every physician can afford to do this."
Although McKenney's practice has seen a 75% reduction in patient volume, staff continue to provide virtual visits — including Zoom-based nursing home visits — phone visits, and in-person visits for acute illnesses. They also provide curbside immunizations. Still, long-term revenue loss is a concern. "I have a threshold in mind based on what we have in reserves," she says. "If we hit that point, we would need to talk about a loan or Medicare advanced payments."
Arkansas-based family physician Lonnie S. Robinson, MD, says he immediately applied for the Paycheck Protection Program after it was announced. "We also made sure we had a line of credit with our local bank during the very first discussions about what the pandemic would mean for our revenue streams," he says.
However, because he's in a rural area of the state, he continues to struggle with telemedicine due to broadband and connectivity challenges. Cashflow is another challenge because a lot of insurance companies are waiving copayments.
"I didn't realize the amount of money we collect immediately from the patient," he says. "This was a substantial revenue stream, and it was immediate revenue — not revenue waiting on a claim to be paid."
Illinois-based family physician Deborah L. Winiger, MD, says she also applied for the Paycheck Protection Program but in the meantime had to reduce staff hours by a third because her patient volume dropped by more than half. She will also encourage staff to pursue temporary positions at a local hospital if the federal funds don't materialize.
Kelly Shackleton, practice manager at a New York-based internal medicine practice, says she laid off 7 of her 16 staff members (including lab technicians, licensed practical nurses, billers, a referral specialist, and a file clerk) due to a 70% decrease in patient volume.
"I didn't lay them all off at once," she says. "I kept them until things were all caught up in each department. I plan to get them all back when the time is right, but I want to be sure to keep the practice afloat so they have a place to return to." If the Paycheck Protection Program for which she applied comes through, then she will rehire them. She also applied for Medicare advanced payments and increased the practice's line of credit.
Bill Properly — and For Everything You Are Still Doing
Accurate and complete coding is critical during this time of financial instability, says Maselli. "I keep telling doctors to bill for everything they do," he says. This includes phone calls between patients and physicians or other qualified healthcare providers (CPT codes 99441-99443). Note that these are time-based codes, requiring a minimum of five minutes of medical discussion.
Remote physiologic monitoring (including monitoring a patient's oxygen saturation levels using pulse oximetry), virtual check-ins, and online digital evaluation and management services are also covered by Medicare and some commercial payers.
Other good news is that the Centers for Medicare & Medicaid Services added more than 80 additional services that providers can furnish using telehealth, including new patient office visits, home visits, prolonged office visits, smoking and tobacco cessation counseling, annual depression and alcohol screenings, advanced care planning, and much more.
Mongillo, the family practice administrator in Delaware, agrees that physicians need to bill for as many services as possible. At one of the family medicine practices she manages, physicians perform wellness visits, when appropriate, if patients are already coming into the office for another ailment.
Also look for ways to cut costs. For example, Mongillo was able to renegotiate the practice's telemedicine contract after she received several proposals from other vendors offering three months of complimentary service. Shackleton discontinued provider dictation services to save money.
Physicians need to take a hard look at what's going on to help them sustain their business through times of uncertainty, says Advisory Board's Hostetter. "Now is the time to evaluate options and figure out what's right for your practice," she adds.