Late Wednesday evening, the U.S. Senate unanimously passed a $2 trillion package, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to provide emergency aid as the U.S. struggles to deal with COVID-19. This is the third bill Congress has passed to in response to COVID-19 and is the largest economic rescue package in U.S. history, and discussions are already beginning on a likely fourth package in response to the outbreak. The U.S. House passed the bill on Friday by voice vote. President Trump is expected to sign the bill into law at the time of this writing.
There are many key provisions impacting ACG member and GI practices serving your communities, both as clinicians on the front-lines of care and as small business owners. Please find below ACG’s summary for membership. ACG will continue to advocate for the safety and solvency of GI practices and will provide updates as the federal government begins the process of digesting and implementing this massive stimulus package.
Key Healthcare Provisions Impacting ACG Members
The CARES Act temporarily suspends sequestration-mandated cuts on Medicare claims from May 1, 2020 through December 31, 2020, which will have the effect of increasing payments to providers by approximately 2%. ACG and the GI societies urged Congress to delay these Medicare sequestration cuts in the joint-society advocacy push last week. Thank you, ACG members, for your help and advocacy efforts on this issue.
The CARES Act also includes an expansion of telehealth under Medicare, eliminating a provision from the first legislative package Congress passed (“Phase 1”) that required providers to have a pre-existing relationship with a patient in order to provide telehealth services during the emergency period. Please note: CMS announced on March 17 that this provision would actually not be enforced.
The CARES Act includes a provision allowing personal protective equipment (PPE) and swabs to be stockpiled (along with other supplies) in the Strategic National Stockpile, as well as expanded liability protections for manufacturers of respirators.
The CARES Act includes supplemental HHS appropriations for $100 billion to provide funding, through grants or other mechanisms, to providers for expenses or lost revenues that are attributable. As you know, ACG and the GI societies have advocated for necessary assistance for physician practices. And much more is needed. Despite press reports, this provision is not just for hospitals, but rather, is for eligible health care providers treating COVID-19 patients. Specifically, eligible providers include “public entities, Medicare or Medicaid enrolled suppliers and providers, and such for-profit entities and not-for-profit entities…that provide diagnoses, testing, or care for individuals with possible or actual cases of COVID–19.” HHS will establish an application process in the immediate future to begin awarding grants.
The CARES Act extends a number of health care programs and provisions that were set to expire on May 22, 2020, providing funding through November 30, 2020. This is good news, as this extension allows ACG to focus on the time sensitive issues safety and solvency, and delay important but less pressing advocacy efforts, such as the Removing Barriers to Colorectal Cancer Screening Act, the Safe Step Act, as well as legislation on “surprise billing.” However, it is possible that surprise billing will become an issue sooner than the end of the year and ACG will remain vigilant in monitoring any legislative efforts on this topic.
Key Small Business Provisions Impacting ACG Members
The CARES Act provides $349 billion for expedited Small Business Association (SBA) loans, known as the Paycheck Protection Program, for up to $10 million through approved lenders that are guaranteed 100% by the U.S. government. The loan proceeds can be used to cover payroll support, such as employee salaries, paid sick or medical leave, insurance premiums, mortgage, rent, and utility payments incurred from February 15, 2020, through June 30, 2020. The maximum amount of a loan equals 2.5 months of regular payroll expenses (subject to a cap of a $100,000 of annual salary per employee).
Much like the U.S. home mortgage market, the SBA doesn’t make small business loans directly. It works with lenders that do offer small business loans, guaranteeing a portion of the loan. This acts as an insurance policy for the lender, which encourages them to make loans available to eligible businesses.
Benefits for Borrowers: Maximum interest on these loans is 4% and loan maturity can be as long as 10 years. No prepayment fees will be charged. Loan payments can be deferred for 6-12 months. Borrowers are also eligible for loan forgiveness equal to the amount spent by the borrower during an eight week period after the origination date of the loan on payroll costs, interest payment on any mortgage incurred prior to February 15, 2020, payment of rent on any lease in force prior to February 15, 2020, and payment on any utility for which service began before February 15, 2020. Borrower and lender fees are waived. Collateral and personal guarantee requirements are waived.
Eligible businesses include:
- Businesses with fewer than 500 employees.
- Small businesses, as defined by the Small Business Administration (SBA). According to current federal regulations, this means less than $12m in annual receipts for physician offices and $16.5m for freestanding ASCs.
- Sole proprietors and independent contractors.
While this may be subject to change, take a look at the current application process.
To expedite loan processing, this provision substantially relaxes borrower eligibility requirements. Unlike current SBA loans, eligibility will not be based on a business’ ability to repay the loan, but rather on whether it was in business on February 15, 2020, had employees for whom it paid salaries and payroll taxes, or a paid independent contractor.
The SBA is required to issue implementing regulations within 15 days and the U.S. Department of Treasury will be approving new lenders. ACG will update you as these regulations are released.
Economic Injury Disaster Loans:
The CARES Act also expands the types of entities eligible to receive up to $1.5 million in direct loans for substantial economic injury caused by the COVID-19 pandemic. Substantial economic injury is such that a business concern is unable to meet its obligations as they mature or to pay its ordinary and necessary operating expenses. The loan proceeds may be used for working capital necessary to carry your concern until resumption of normal operations, expenditures necessary to alleviate the specific economic injury, providing paid sick leave to employees, maintaining payroll, meeting increased costs to obtain materials, making rent or mortgage payments, and repaying obligations that cannot be met due to revenue losses.
New Eligible Entities:
- Any business with fewer than 500 employees.
- Individuals operating as a sole proprietor or an independent contractor during the covered period (January 31, 2020 to December 31, 2020), and others.
- Small businesses as defined by the SBA (see above).
While this may be subject to change, take a look the current application process.
Key Employee, Tax, and Unemployment Insurance Issues Impacting ACG Members
The CARES Act expands and clarifies certain employee issues that were in the Families First Coronavirus Response Act, passed last week (or “Phase 2”). Phase 2 requires employers with less than 500 employees to provide 80 hours of paid sick leave to full-time employees to cover time that an employee is away from work due to COVID-19, such as employee self-quarantine, taking care of someone else with the virus, or care for their own child due to a school closures or lack of childcare. Phase 2 also requires employers with less than 500 employees to provide 10 weeks of paid family leave to cover employees who are not working because the employee is caring for their child due to school closings, or if the childcare provider is unavailable due to a public health emergency. The emergency family leave mandate only requires employers to provide two-thirds of an employee’s pay, while the emergency sick leave mandates full wage replacement with a daily and aggregated cap. Phase 2 also provides companies with a refundable tax credit to cover the cost of the new mandated leave.
The CARES Act:
- Allows this new category of SBA loans to be used to cover paid family and sick leave.
- Allows advance payments under the SBA Emergency Economic Injury Disaster Loans grants to be used to, among other purposes, “provide paid sick leave to employees who are unable to work due to the direct effect of COVID-19.”
- Gives an employee that was recently rehired access to paid family leave if the employee (1) was laid off after March 1, 2020, (2) worked for the employer for at least 30 of the last 60 calendar days, and (3) was rehired by the employer.
- Allows employers to receive the tax credits in advance of providing the mandated leave rather than waiting to be reimbursed.
Expanded Unemployment Insurance Benefits: The CARES Act provides for additional federal unemployment assistance to individuals whose jobs are directly and indirectly affected by COVID-19, including individuals who are not typically eligible for unemployment assistance such as independent contractors, self-employed, and those with limited work histories. (Please note: individuals who are able to telework with pay and who are receiving paid sick leave or other paid benefits are not eligible for assistance under the Act.)
Coverage is extended to individuals who (i) have been diagnosed with COVID-19 or are experiencing symptoms and seeking a diagnosis; (ii) have a family member with COVID-19; and who, as a result of COVID-19, (iii) have a child who is unable to attend school; (iv) are unable to reach work because of a quarantine imposed; (v) are unable to attend work because they have been advised by a health care worker to self-quarantine; (vi) were scheduled to begin work but no longer have a job or are unable to reach work; (vii) have become the head of household or breadwinner; (viii) are forced to quit their job; and (iv) have their place of employment closed.
Assistance is available to covered individuals in full unemployment, partial unemployment, or had inability to work from January 27, 2020 to December 30, 2020, for up to 39 weeks. The package provides for weekly benefits of $600 (fully funded by the federal government), in addition to the weekly benefit amount authorized under state law. The CARES Act incentivizes states to waive the week-long waiting period for the initial receipt of benefits. It also provides for up to 13 weeks of emergency unemployment benefits for eligible individuals who have exhausted the 39 weeks of benefits and remain unemployed.
Employee Retention Credit for Employers Subject to Closure Because of COVID-19: The CARES Act provides eligible employers with a payroll tax credit in an amount equal to 50 percent of the qualified wages paid to each employee for each calendar quarter. The amount of qualified wages considered is capped at $10,000 per employee, inclusive of payments for certain health benefits. The credit amount is capped at the amount of employment taxes on the wages paid to the employees, less certain other credits. Subject to specific exceptions, eligible employers are those that were operating in year 2020 and (i) whose operations were suspended or partially suspended because of COVID-19 or (ii) have seen a significant decline in gross receipts. The credit is provided for wages paid or incurred from March 13, 2020 through December 31, 2020.
This provision is not limited to employers of a certain size, but the type of wages eligible for consideration in the credit varies based on employer size. Specifically, for employers with more than 100 full-time employees, qualified wages are wages paid to employees when they are not providing services due to the COVID-19-related circumstances described above. For eligible employers with 100 or fewer full-time employees, all employee wages qualify for the credit, whether the employer is open for business or subject to a shut-down order.
Limits on Employee Compensation: Employers who are recipients of direct lending under the CARES Act are prohibited from increasing the compensation and offering certain severance benefits to highly compensated employees. Specifically, these employers cannot increase the compensation of any officer or employee whose total compensation in calendar 2019 exceeded $425,000 or pay any severance of other benefits to these employees or officers upon termination that exceed twice the maximum total 2019 compensation paid to the employee or officer.