Over two years into the pandemic, COVID-19 still materially impacts the way healthcare leaders approach financial and operational decisions. During our recent Healthcare Symposium, Forvis Mazars dedicated an entire learning track to financial leadership to emphasize the importance of staying up to date on regulatory, compliance, and accounting-related changes that will impact both financial results and financial reporting in the coming year.
Evolving Reimbursement Strategies
Recent years have seen a wave of regulatory reform, primarily benefiting rural healthcare facilities and providers. Among the most effective regulations is Section 401 of the Balanced Budget Refinement Act of 1999, which, per §412.103, allows qualifying urban hospitals to redesignate as rural for Medicare reimbursement purposes. While the law itself was adopted in 1999, the scope of hospitals that qualify for such redesignation has recently expanded. By 2023 year-end, the Centers for Medicare & Medicaid Services (CMS) expects over 20% of all geographically urban prospective payment systems (PPS) hospitals to take advantage of Section 401.
Additional reimbursement strategy insights from the Symposium include:
- Further reimbursement opportunities for hospitals sourcing domestically manufactured personal protective equipment (PPE)
- CMS emergency-related mechanisms, such as Capital PPS Extraordinary Circumstances Exception payments, are made more accessible during public health crises
- Relevant funding grants are often based on inpatient-only metrics
- Accurate cost reporting is critical for determining eligibility for many developing reimbursement strategies
COVID Funding Opportunities
In the midst of the COVID-19 pandemic, the federal government authorized, or enabled greater access to, a number of mechanisms to assist providers through the uncertain times. Two of these stand out: employee retention credits (ERC) and FEMA natural disaster declarations. The ERC served to inject organizations with additional liquidity in order to retain employees through the pandemic by refunding employer payroll taxes to employers for the period May 12, 2020 to October 1, 2021. While the ERC effectively expired as of October 1, 2021, qualifying entities may retroactively file for ERC clawbacks up to three years post-expiration. Similar credits may arise as the pandemic crawls along.
FEMA natural disaster declarations have been extended to duly affected providers, granting relief from the following:
- PPE costs
- Purchase/lease of specialized medical equipment
- Medical waste disposal costs
- Infection control costs
- Certain labor costs
- Vaccine administration costs
- Temporary expanded facility costs
In order to qualify for FEMA relief funds, a provider must show that the reported costs were reasonable and necessary in response to the COVID-19 pandemic. Often, the paperwork and support requested by FEMA to prove eligibility—ranging from project narratives to invoices to procurement documents—can be a significant burden for providers; thus, diligent record-keeping and financial reporting can be considered a de facto prerequisite to accessing FEMA relief funds.
Audit & Accounting Changes
As the world adapts to the changing times, audit and accounting standards must do the same. To learn more about the audit and accounting updates addressed in this June 15, 2022 presentation, please refer to the files linked here: accounting updates; audit updates.
We live in uncertain times, and with uncertain times come uncertain expectations. Indeed, the future is more difficult than ever to forecast, and resources are almost universally spread thin. With the arsenal of tools above, financial leaders can take immediate steps to potentially shore up any residual liquidity shortfalls and position their companies for long-term success in better times to come. Manage the present, prepare for the future. That’s the Forvis Mazars forward vision.
If you have questions, reach out to a professional at Forvis Mazars or submit the Contact Us form below.