AMGA Seeks Payroll Relief for Medical Groups Impacted by COVID-19

Medical groups should be able to access the $349 billion in forgivable loans through the Paycheck Protection Program while practices wait on HHS to distribute the more than $100 billion in coronavirus stimulus funding from the Coronavirus Aid, Relief, and Economic Security (CARES) Act, according to AMGA.

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The loans would “provide important financial support to medical group practices that are facing financial troubles as they respond to the COVID-19 public health emergency,” the association representing over 440 multispecialty medical groups and integrated delivery systems said in an April 2 letter to the heads of the Department of Treasury and Small Business Administration.

“As you implement the PPP it is important that you use your authority to ensure medical groups, many of which may be organized as one entity that have multiple locations, each with fewer than 500 employees, are eligible to benefit from the funding,” the letter stated.

COVID-19 is an unprecedented healthcare crisis that is not only straining the healthcare system’s ability to respond and treat patients, but also the financial positions of healthcare organizations and ultimately their ability to continue providing care.

AMGA members have reported revenue declines of 50 to 90 percent in the last two weeks as a result of care delivery changes in response to COVID-19. Physician practices and medical groups have had to cancel elective surgeries and other procedures that normally drive revenue in order to keep patients from contracting and spreading the novel coronavirus.

These efforts to “flatten the COVID-19 curve” have in turn forced practices to furlough staff, reduce salaries and shifts, and engage in other cost-cutting strategies.

“The irony of the situation is that as our members are retooling to respond to the unprecedented challenge presented by COVID-19, they simultaneously need to lay off staff to continue operations. Cleary, this is an untenable situation,” AMGA stated in the letter.

The organizations are slated to receive a portion of the more than $100 billion earmarked for healthcare providers in the CARES Act. However, HHS has yet to open an application process for the emergency funding.

As practices prepare to layoff thousands of their staff, AMGA is asking the Treasury Department and Small Business Administration to step in for immediate financial relief through the Paycheck Protection Program.

According to the Small Business Administration, the Paycheck Protection Program is a loan designed to offer direct incentives for small businesses to keep workers on payroll. The agency will forgive the loans if all employees are kept on payroll for eight weeks and the money from the loan is used for payroll, rent, mortgage interest, or utilities.

Small businesses with less than 500 employees can apply to the Paycheck Protection Program through any federally insured depository institution, credit union, or Farm Credit System institution, as well as any SBA 7(a) lender. The program offers loans up to 250 percent of the business’ average monthly payroll costs, with a maximum loan amount of $10 million.

However, the program does not currently allow healthcare providers with over 500 employees to apply, AMGA highlighted in the letter.

“We ask you to use your authority to allow medical groups to utilize the PPP so they can keep delivering care,” the association stated. “The PPP, created under Sec. 1102 of the CARES Act, will enable our members to survive and deliver care to their patients. Without these funds, layoffs will continue, some groups will cease operations, and care will be compromised, all occurring during a public health emergency.”

Medical groups may not qualify for the program because of the Small Business Administration’s definition of “small business.”

“Small Business definition is under 500 employees and there are affiliation rules so if a ‘small’ company is actually owned and controlled by a larger company – the number of employees is combined,” John Kelliher, managing director at Berkeley Group Research, told RevCycleIntelligence.

AMGA argued that there is already a precedent for “going beyond the statutory language found in CARES Act” as demonstrated by CMS’ recent expansion of the Accelerating and Advanced Payment Program. The move by CMS made pre-payment options available to all providers, not just those listed in the CARES Act, the association explained.

But the Paycheck Protection Program is not the only payroll help available to medical groups. The Treasury Department is also offering a loan program for larger businesses, including larger healthcare organizations. These businesses just have to show officials that they have no other source of credit available to them, Kelliher stated.

Other options are also available to providers of all sizes, he added. For example, all businesses can defer the employer portion of the Social Security tax – about 6.2 percent of wages – in 2020 into 2021 and 2022 without interest. The government is also offering a wage credit for business closed due to COVID-19 shutdowns.

For healthcare providers specifically, Kelliher also pointed to Medicare’s Accelerated and Advance Payment Program, which will give approved providers three to six months of Medicare reimbursement upfront as a loan. The program has already doled out nearly $34 billion to over 17,000 organizations since the CARES Act expanded the program in late March.

Overall, providers should be making use of “all the levers to maintain liquidity,” Kelliher advised. Leveraging telehealth, which has become more available thanks to flexibilities granted by Congress and CMS, will also help providers stay afloat during the unprecedented crisis.