CARES ACT Update Ordinary professionals making an Extraordinary impact - Florida HFMA
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CARES ACT Update Ordinary professionals making an Extraordinary impact
Conversation leaders
Matt Wolf
Health Care Senior Industry Analyst
Matt.wolf@rsmus.com
Rick Kes
Health Care Partner and Senior
Industry Analyst
richard.kes@rsmus.com
2
Agenda Share latest developments for 40 Minutes CARES Act Highlight audit implications and 10 Minutes considerations • Single Audits of nonprofit providers • GAS compliance Q+A 3
LATEST
DEVELOPMENTS ON
THE CARES ACT
4
Coronavirus, SARS-CoV-2, and COVID-19
• Coronaviruses
⁻ Corona/crown-like appearance of virus
⁻ Enveloped, RNA viruses with spike proteins
⁻ Responsible for SARS, MERS, COVID-19, some common colds
• Severe Acute Respiratory Syndrome CoronaVirus-2
• COronaVIrus Disease of 2019
⁻ Disease caused by SARS-CoV-2
⁻ Common symptoms:
• Fever or chills, cough, shortness of breath or difficulty breathing, headache, nasal congestion
or runny nose, muscle or body aches, sore throat, new loss of smell or taste, diarrhea
5
https://www.cdc.gov/coronavirus/2019-ncov/hcp/non-us-settings/overview/index.html
COVID will have a lasting impact on society and health care Source: Bloomberg LP, RSM US LLP 6
Vaccination will take time
• $2.7 trillion of economic
activity sidelined
• ~10 million Americans on
some form of unemployment
assistance
• 1 in 4 small businesses
remain closed, many will not
reopen
• Trillions in stimulus
Source: Mayo Clinic
7
Sequestration Extension 8
Other Impacts to Health Care
Image Credit: University of Utah
9
The future of health and senior care will be phygital
Phygital • “Digital front door” is
misleading
• 2021+ requires cohesive
phygital strategy
• More care moved to the home
Digital Physical
10Timeline and changes for provider relief funds
CARES Act Issued June September 19
In March of 2020 the President
signed the CARES Act into law
Definition of Reporting Guidance
Introduced:
Lost Revenue • Two step process
Focused on: • Indication of Step 1 (cost identification) first then
• Revenues Step 2 (lost revenues really margin) in process
• Budget to actual or CY to PY • Calendar year over year basis
October 22 December 28 January 15
Post Payment Notice Consolidated Reporting Guidance
• Delayed former (2/15) reporting deadline
of Reporting Requirements Appropriations Act, 2021 • Provided additional clarity on lost revenue
HHS reverts lost revenue definition to, lost patient • The law permits measurement of lost • Actual current calendar year vs. prior calendar year
service revenue, rather then margin revenue on budget to actual basis • Budget to actual – calendar year
• Allocation of targeted distributions • Other reasonable methods acceptable, however, with
risk
• Further clarity on reporting of subsidiariesFAQ Updates
MAY JULY SEPT
6, 12, 19, 20, 21, 26, 29 8, 10, 14, 17, 22, 23, 30, 31 1, 3, 4
12 FAQ Updates
JUNE AUG OCT
2, 3, 8, 9, 12, 13, 15, 19, 22, 25, 30 4, 7, 10, 18, 25, 27 1, 3, 5, 8, 9, 28
FAQ Updates
NOV DEC JAN FEB
5,12,18 4, 11,18, 28 12,15, 28 24
Call to Action
✓ Stay up to date on FAQ changesConsiderations of Funding
FINANCIAL CASH
REPORTING FLOW
• 9/30 financial reporting • How much of the funding can a
• 12/31 financial reporting provider keep?
13Calculation to Support the Provider Relief Funding Received Step
INCREMENTAL INCREMENTAL
EXPENSES REIMBURSEMENT LOST TOTAL
ATTRIBUTABLE TO RELATED TO REVENUE SUPPORTED
CORONAVIRUS CORONAVIRUS FUNDING
STEP 1 STEP 2
DEFINITION OF INCREMENTAL REIMBURSEMENT DEFINITION OF LOST REVENUE
• Sources of reimbursement related specifically to Coronavirus, • September 19 – lost margin on a year-over-year basis based
common examples on actual results
• FEMA • October 22 – lost patient service revenue on a year-over-
• County/State funding year basis based on actual results
• 20 percent additional reimbursement from Medicare for • December 28 – same as October 22, except now able to use
Coronavirus admissions budget or another reasonable method
14Common questions • Do I have to do Step 1 if Step 2 is more then my PRF? • I am a critical access hospital with cost reimbursed revenue sources what issues do I need to consider? • I obtained PPP loan funding, what should I consider there? • There was M&A activity what issues does that represent? • I am a non-calendar year end, what do I do for lost revenues if my approved budget is not for the entire year? • How/when will future distributions be distributed? 15
Future Distributions 16
Current Status of Reporting Portal • Its still not open (as of the preparation of these slides) • Letter to HHS from HFMA and others 17
AHA Letter to HHS 18
Congressional Support https://axne.house.gov/sites/axne.house.gov/files/Axne%20and%20Miller-Meeks%20PRF%20Deadline%20Letter%20to%20HHS.pdf
SUBSEQUENT EVENTS 20
Evaluation of Subsequent Events
• Change in reporting guidance after the
balance sheet date
• FASB reporters follow ASC 855
• Recognizable subsequent events
• Events that provide additional evidence about
conditions that existed at the balance sheet date
• Non-recognizable subsequent events
• Conditions that did not exist at the balance sheet
date
• GASB reporters
• GASB technical bulletin 2021SINGLE AUDIT
IMPLICATIONS
22? Other Questions
NONPROFIT AND
GOVERNMENT ENTITIES
• Addendum to the Compliance Supplement
FOR-PROFIT ENTITIES
• GAS audits
• Tax considerations
23ADDITIONAL INSIGHTS
EVENTS RESEARCH AVAILABLE TO YOU
HEALTH CARE WEBCASTS– Live and on-demand HEALTH CARE INDUSTRY OUTLOOK
• Tackling 2021's greatest board leadership and governance challenges (Feb. 2) Data-driven analysis can help mitigate uncertainty created by the
• HHS Provider Relief Fund and AICPA health care expert panel [Recording] pandemic's shocks to the economy. Our health care specific insights
can help. Our Outlooks are developed by RSM's senior analysts
• Preparing your organization for a federal compliance audit [Recording available]
dedicated to studying economic and industry data, market trends and
• Health care today and tomorrow: Address immediate needs while planning emerging issues.
for a bright future WEBCAST ON-DEMAND (1 CPE available)
COMING SOON! RSM HEALTH CARE WEBCAST SERIES SPRING 2021 THE REAL ECONOMY HEALTH CARE BLOG
Financial Sustainability and Growth in a Changing Health Care Environment Health care industry analysts interpret data and share timely insights
for health care leaders and media.
RSM Classic PGA event occurred
Nov. 21-24 2020 – watch for 2021 dates THE REAL ECONOMY
Monthly publication to help the middle market anticipate and address
• RSM Donates $4 Million through 2020 Birdies Fore
unique issues and challenges facing the industries in which they
Love Program (rsmus.com) operate. Written by chief economist, Joe Brusuelas, and professionals
throughout the firm.
RSM CORONAVIRUS RESOURCE CENTER
Recent articles with our senior analyst insights/quotes Stay on top of the evolving issues related to the pandemic in order to
mitigate risks and plan accordingly. Highlights:
•CARES Act funds terms and conditions,
•CMS waivers and flexibilities, FEMA funding
•FCC telehealth funding
ELECTION RESOURCE CENTER: Here you can read, listen to
Modern Healthcare and view our latest election-related insights, and most importantly,
learn about the potential impacts the outcome of the elections will have
on middle market
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