December 29, 2020

Second Stimulus Economic Relief Package Provisions

By Mary Antonetti, Partner, Tax & Business Services

Healthcare

On the evening of December 27, 2020, President Trump signed the $900 billion Second Stimulus Economic Relief Package. This includes an additional $3 billion being added to the Provider Relief Fund (PRF). Below are key highlights for providers who received PRF, State CARES Act funding and PPP Loans.

Key Highlights for Healthcare Industry

The legislation revises the definition of lost revenue back to the prior guidance issued by HHS back in June. Providers may now compare the difference between their budgeted and actual revenue to calculate lost revenue. The budget, however, had to be established and approved prior to March 27, 2020.
Parent organizations are now able to allocate and transfer both targeted distribution payments and general distribution payments to subsidiary providers who are eligible for Provider Relief Funding payments. The original recipient must report to HHS how the reallocated payments are used.
Additional funding may be ahead as there is an estimated $30 billion remaining left to be distributed. The calculation will be based on changes in operating expenses attributable to coronavirus or financial losses occurring in the third or fourth quarter or 2020 or the first quarter of 2021. This is similar to the structure of the Phase 3 distribution.
State Cares Act funding initially had a deadline date of December 30, 2020 to use their funds. They will now have an extra year, as the deadline date is extended to December 31, 2021.
The temporary suspension of Medicare sequestration will be extended to March 31, 2021.
There will be a 3.75 percent increase in payments to physicians and other professionals to help assist the reimbursement reduction from the 2021 Physician Fee Schedule.
Organizations that received PPP Loans can deduct expenses paid with forgiven PPP loan proceeds. The deductibility is without caps, guardrails or limitations and applies to all taxpayers.
Additional funding has been allocated for a new round of PPP funding. Organizations may be eligible whether or not they received prior funding. There are some restrictions on the new funding including a limitation to organizations with no more than 300 employees or meeting the alternative size test. If the organization received prior PPP funding, they must have already used or will use the entire amount of their first loan. The gross receipts of the organization during Q1, Q2 or Q3 of 2030 must be at least 25% less than the gross receipts from the same quarter in 2019. If applying after January 1, 2021, the organization may also use Q4. Finally the necessity requirement still remains.

Marcum will continue to provide updates on the second stimulus relief package as it is available. Please reach out to your Marcum Healthcare Advisor with any questions you may have.