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Webinar 7/7 | Lights & Sirens Responses

Written by AAA Staff on . Posted in Employee Wellness, Operations, Patient Care, Professional Standards, Quality, Training, Webinars.


Flipping OFF the Switch on HOT Emergency Medical Vehicle Responses!

Free Webinar July 7 | 14:00–15:15 ET

HOT (red light and siren) responses put EMS providers and the public at significant risk. Studies have demonstrated that the time saved during this mode of vehicle operation and that reducing HOT responses enhances safety of personnel, with little to no impact on patient outcomes. Some agencies have ‘dabbled’ with responding COLD (without lights and sirens) to some calls, but perhaps none as dramatic as Niagara Region EMS in Ontario, Canada – who successfully flipped their HOT responses to a mere 10% of their 911 calls! Why did they do it? How did they do it? What has been the community response? What has been the response from their workforce? Has there been any difference in patient outcomes? Join Niagara Region EMS to learn the answers to these questions and more. Panelists from co-hosting associations will participate to share their perspectives on this important EMS safety issue!

Speakers

Kevin Smith, BAppB:ES, CMM III, ACP, CEMC
Chief
Niagara Emergency Medical Services

Jon R. Krohmer, MD, FACEP, FAEMS
Team Lead, COVID-19 EMS/Prehospital Team
Director, Office of EMS
National Highway Traffic Safety Administration

Douglas F. Kupas, MD, EMT-P, FAEMS, FACEP
Medical Director, NAEMT
Medical Director, Geisinger EMS

Matt Zavadsky, MS-HSA, NREMT
Chief Strategic Integration Officer
MedStar Mobile Integrated Healthcare

Bryan R. Wilson, MD, NRP, FAAEM
Assistant Professor of Emergency Medicine
St. Luke’s University Health Network
Medical Director, City of Bethlehem EMS

Robert McClintock
Director of Fire & EMS Operations
Technical Assistance and Information Resources
International Association of Fire Fighters

Mike McEvoy, PhD, NRP, RN, CCRN
Chair – EMS Section Board – International Association of Fire Chiefs
EMS Coordinator – Saratoga County, New York
Chief Medical Officer – West Crescent Fire Department
Professional Development Coordinator – Clifton Park & Halfmoon EMS
Cardiovascular ICU Nurse Clinician – Albany Medical Center

Register Now (Free)

ABC | Global microchip shortage impacting ambulance supply

Written by AAA Staff on . Posted in News, Operations, Press.

May 21, 2021 | By Mina Kaji and Amanda Maile | Read Full Story

“Without those chassis, the production of ambulances essentially slows down dramatically,” American Ambulance Association Spokesman Mark Van Arnam said. “So that becomes a public safety issue.”

Chassis inventories were already at “historically low levels” due to coronavirus shutting down manufacturing plants, Van Arnam explained.

In order to make an ambulance, manufacturers need to first construct a chassis, or frame, to build it on.

“An ambulance chassis contains dozens and dozens of microchips — more microchips than the average F-150,” Van Arnam said.

Read Full Story

CMS | Medicare COVID-19 Data Snapshot

Written by AAA Staff on . Posted in Operations, Patient Care, Regulatory.

Today, the Centers for Medicare & Medicaid Services (CMS) released our monthly update of data that provides a snapshot of the impact of COVID-19 on the Medicare population. The updated data show over 4.1 million COVID-19 cases among the Medicare population and over 1.1 million COVID-19 hospitalizations.

The updated snapshot covers the period from January 1, 2020 to March 20, 2021. It is based on Medicare Fee-for-Service claims and Medicare Advantage encounter data CMS received by April 16, 2021.

View the Updated Snapshot

Microchip Shortage to Affect Ambulance Supply

Written by AAA Staff on . Posted in Operations.

From the American Ambulance Association & The Commission on Accreditation of Ambulance Services (CAAS) Ground Vehicle Standards

By Mark Van Arnam, Administrator, CAAS GVS

A global semiconductor shortage is crippling the production of motor vehicles both in the US and worldwide.  Ford Motor Company, which supplies approximately 70% of the ambulance chassis used in the US, shut down production at various plants that produce the E series, T series, and F series ambulance chassis in mid-April.  These scheduled shutdowns continue and are already approaching the 6 to 7-week mark.  The end is not yet in sight, with the shortage of the critical microchips predicted to run into 2022. Ford currently predicts an overall production loss of over 1.1 million units in 2021.

These production shutdowns by Ford and other chassis manufacturers have created a major supply chain interruption of chassis needed to produce ambulances in North America. Many Final Stage Ambulance Manufacturers (FSAMs) and Remounters are reporting chassis shortages that are worse than those experienced in the 2020 pandemic period when those OEM truck plants shut down for COVID reasons.

Both Ford and GM report that the duration and extent of the semiconductor shortage and resulting production shutdowns are not yet known and “the situation changes daily”.  As of mid-May, many FSAMs are reporting significant ambulance production slowdowns due to chassis shortages, with complete shutdowns of some ambulance assembly lines highly likely in the near future.

Study | EMS Super-Utilizers

Written by AAA Staff on . Posted in Operations, Patient Care, Professional Standards, Publications.

The Penn State College of Medicine is conducting a national study of social needs in EMS patients, particularly in regards to potential interventions for EMS super-utilizers (frequent flyers). The study consists of an approximately 7 minute online survey with questions about provider (911-EMT, Paramedic, EMS Physician) knowledge of social needs, recognition of patient needs, perceptions of possible interventions, and background information. Those who participate will have the option to enter into a drawing for a $50 gift card.

With the implementation of programs such as ET3, we are hoping to hear from as many EMS providers as possible to give them a voice in how to best to address social needs and EMS super-utilizers. As such, we are hoping you consider sharing our study flyer, study overview from JEMS, or the study link with your employees and/or social media.

CMS: Revised Repayment Terms for Medicare Accelerated Payments

Written by Brian Werfel on . Posted in Operations, Patient Care.

On October 8, 2020, the Centers for Medicare and Medicaid Services (CMS) issued a Fact Sheet setting forth the repayment terms for advances made under the Medicare Accelerated and Advance Payments Program (AAPP).  These changes were mandated by the passage of the Continuing Appropriations Act, 2021 and Other Extensions Act, which was enacted on October 1, 2020.

Background

On March 28, 2020, CMS expanded the existing Accelerated and Advance Payments Program to provide relief to Medicare providers and suppliers that were experiencing cash flow disruptions as a result of the COVID-19 pandemic, and associated economic lockdowns.  Under the AAPP, Medicare providers and suppliers were eligible to receive an advance of up to three months of their historic Medicare payments.  These advances are structured as “loans,” and are required to be repaid through the offset of future Medicare payments.

CMS began accepting applications for Medicare advances in mid-March 2020, before ending the program in late April following the passage of the CARES Act.  CMS ultimately approved more than 45,000 applications for advances totaling approximately $100 billion, before it suspended the program in late April 2020.

Under the pre-existing terms of the AAPP, repayment through offset was required to commence on the 121st day following the provider or supplier’s receipt of the advance funds.  The program also called for a 100% offset until all advanced funds had been repaid.

Revised Payment Terms

Under the revised payment terms announced by CMS, providers and suppliers will not be subject to recoupment of their Medicare payments for a period of one year from the date they received their AAPP payment.  Starting on the date that is one year from their receipt of the AAPP payment, repayment will be made out of the provider’s or supplier’s future Medicare payments.  The schedule for such repayments will be as follows:

  • 25% of the provider’s or supplier’s Medicare payments will be offset against the outstanding AAPP balance for the next eleven (5) months; and
  • 50% of the provider’s or supplier’s Medicare payments will be offset against the outstanding AAPP balance for the next six (6) months

To the extent there remains an outstanding AAPP balance after that 17 month period (i.e., 29 months after the date the provider or supplier received its AAPP payment, the provider or supplier will receive a letter setting forth their remaining balance.  The provider or supplier will have 30 days from the date of that letter to repay the AAPP balance in full.  To the extent the AAPP balance is not repaid in full within that 30-day period, interest will begin to accrue on the unpaid balance at a rate of 4%, starting from the date of the letter.

Medicare providers and suppliers are also permitted to repay their accelerated or advance payments at any time by contacting their Medicare Administrative Contractor.

 

CMS: COVID Testing and Screening Guidance for SNF and Long-Term Care Facilities

Written by Brian Werfel on . Posted in Operations, Patient Care.

On August 25, 2020, the Centers for Medicare and Medicaid Services (CMS) published an interim final rule with a comment period titled “Medicare and Medicaid Programs, Clinical Laboratory Improvement Amendments of 1988 (CLIA), and Patient Protection and Affordable Care Act; Additional Policy and Regulatory Revisions in Response to the COVID-19 Public Health Emergency.”  The interim final rule sets forth a number of new requirements designed to limit the COVID-19 exposure and to prevent the spread of COVID-19 within nursing homes.

Specifically, the interim final rule requires skilled nursing and other long-term care facilities to test residents and staff for COVID-19.  The frequency of such testing is based on the positivity rate in which the facility is located, and can require COVID-19 testing as frequently as twice per week.  Regardless of the frequency of required COVID-19 tests, facilities must also screen all staff, residents, and persons entering the facility for the signs and symptoms of COVID-19.

These requirements extend to individuals that provide services to nursing homes under arrangements, including health care personnel rendering care to residents within the facility.  In subsequent guidance, CMS clarified that these testing and screening requirements apply to EMS personnel and other health care providers that render care to residents within the facility.  However, in that same guidance, CMS indicated that EMS personnel must be permitted to enter the facility provided that: (1) they are not subject to a work exclusion as a result of to an exposure to COVID-19 or (2) showing signs or symptoms of COVID-19 after being screened.”  CMS further indicated that “EMS personnel do not need to be screened so they can attend to an emergency without delay.”

In plain terms, CMS has created an affirmative obligation on nursing homes to ensure that any individual that provides services under a contractual arrangement with the nursing home comply with these testing and screening requirements.  CMS has expressly waived the screening requirements for EMS personnel responding to medical emergencies at a nursing home.  However, CMS has not specifically addressed the testing and screening requirements applicable to EMS personnel responding to nursing homes in non-emergency situations. 

The A.A.A. is aware that a handful of State Health Agencies have issued their own guidance on this issue.  The A.A.A. is also aware that individual nursing homes have started to require proof that EMS personnel have been tested for COVID-19 prior to allowing these individuals to enter the nursing home in a non-emergency situation.

EMS agencies may already be subject to state and local testing mandates.  EMS agencies may also have their own internal policies that require employees to be periodically tested for COVID-19.  As a result, there exists the potential for conflict where these existing testing policies conflict with the testing requirements of your local nursing homes.

The A.A.A. has been engaged in an ongoing conversation with CMS on these issues since the issuance of the interim final rule in August.  As part of that conversation, the A.A.A. pushed for the exclusion of EMS personnel from the screening requirement when responding to medical emergencies, which was included in the recent CMS guidance document.  The A.A.A. also continues to push for additional funding for COVID-19 testing for EMS agencies.  CMS has recognized that the frequent testing of health care workers is essential to reducing the spread of the novel coronavirus.  CMS has allocated funding for these purposes to other industries, including hospitals and nursing homes.  As front-line health care workers, EMS agencies should have similar access to testing funds.  The A.A.A. will continue to push for funding equity for the EMS industry.

In the interim, we strongly encourage our members to work with their state associations and other stakeholders to advocate for reasonable rules related to testing on the state and local levels.  To the extent the applicable state or local agency has determined the appropriate frequency for the testing of EMS personnel responding to medical emergencies, those rules should also apply to EMS personnel responding to scheduled transports and other non-emergencies that start or end at a nursing home.  Requiring more frequent testing in these situations would impose an undue burden on EMS agencies that provide these services.  More frequent testing may also prove counterproductive, as it may discourage EMS agencies that cannot meet these higher requirements from responding in these situations.  We also encourage our members to continue to push for state and local funding for the testing of their employees.

 

Update – SNF COVID-19 Testing Does Not Apply to EMS

Written by Kathy Lester on . Posted in Operations, Patient Care.

CMS Clarify in Guidance that EMS Personnel Are Not Required To Be Tested under Skilled Nursing Facility Testing Interim Final Rule

The Centers for Medicare & Medicaid Services (CMS) have issued guidance clarifying the types of personnel who are subject to the testing requirements when entering a Skilled Nursing Facility (SNF) in the Interim Final Rule with Comment (IFC) on Additional Policy and Regulatory Revisions in Response to the COVID– 19 Public Health Emergency.  The new guidance memo states:

 

Entry of Health Care Workers and Other Providers of Services

Health care workers who are not employees of the facility but provide direct care to the facility’s residents, such as hospice workers, Emergency Medical Services (EMS) personnel, dialysis technicians, laboratory technicians, radiology technicians, social workers, clergy etc., must be permitted to come into the facility as long as they are not subject to a work exclusion due to an exposure to COVID-19 or show signs or symptoms of COVID-19 after being screened. We note that EMS personnel do not need to be screened so they can attend to an emergency without delay. We remind facilities that all staff, including individuals providing services under arrangement as well as volunteers, should adhere to the core principles of COVID-19 infection prevention and must comply with COVID-19 testing requirements.

 

CMS issued this guidance at the request of the American Ambulance Association (AAA) to address concerns our members had raised about some SNFs misinterpreting the requirements.  The guidance is also consistent with AAA’s interpretation of the IFC.   As we indicated in an earlier Member Advisory, the IFC requires SNFs to test certain individuals for COVID-19 before they enter the facility.  Specifically, it applies to employees, consultants, and contractors of a skilled nursing facility (SNF).  It does not apply to vendors, suppliers, attending physicians, family, or visitors. Providers, such as medical directors and hospice, that are under a contract or consultants to a SNF are subject to the rule.  EMS personnel do not come within the scope of the IFC.

 

Even though the testing requirements of the IFC do not extend to ground ambulance services that do not have a contractual relationship with a SNF, the AAA supports the efforts of all of our members to follow the World Health Organization and Centers for Disease Control and Prevention Guidelines to have EMT and paramedics use full Personal Protective Equipment (PPE) when they are engaging with any patient, not only those in SNFs.  We also want to recognize the best practices of many members who have worked with SNFs to establish outdoor locations where the SNF personnel, when possible, can bring a patient out of the building to transfer the patient to the ambulance.  These and other examples of safe practices can help control the spread of COVID-19, which is the paramount concern.

Expanded Support for EMS Responding to Natural Disasters, COVID-19

Written by Amanda Riordan on . Posted in News, Operations, Press.

Frontline Impact Project Expands Support for Frontline Heroes, Offers Companies a New Way to Give Amidst Historic Natural Disasters

COVID-19 response platform will now direct resources to first responders facing wildfires, hurricanes and other catastrophes   

September 15, 2020 – Frontline Impact Project is expanding its mission and will now also support heroes on the frontlines of major natural disasters including the Western wildfires and Hurricane Laura. The platform, which The KIND Foundation launched in partnership with dozens of companies in response to COVID-19, will activate its existing infrastructure to shepherd resources like meals, snacks, beverages and personal care items to first responders in need. The announcement comes after extraordinary displays of courage and sacrifice from the nation’s firefighters, paramedics and emergency volunteers.

“We started Frontline Impact Project to meet the needs of those on the frontlines of the COVID-19 pandemic. While this work will continue, we are cognizant of the many others risking their lives to keep us safe, particularly as peak wildfire and hurricane seasons approach,” says Michael Johnston, President of The KIND Foundation. “Thanks to the generosity of more than 60 companies, we’re set up to respond in real time and help take care of America’s heroes as they take care of us.”

As part of this expansion, Frontline Impact Project has initiated partnerships with two leading disaster response nonprofits, National Voluntary Organizations Active in Disaster (NVOAD) and Good360, to get donated items to workers across the Gulf Coast and Western United States.

“Non-profit staff and volunteers work tirelessly to serve survivors impacted by disaster. Frontline Impact Project’s commitment and efforts to supporting those serving on the frontlines of disasters across the country is a welcome addition to the disaster response community,” says Katherine Boatwright, Director of Operations, NVOAD.

Since April, Frontline Impact Project has matched more than 650 frontline institutions with companies that have products or services to donate. Available resources include food, beverages, personal care items, mental health services and virtual fitness classes. Together with its inaugural partner KIND, the project has donated nearly four million products to date.

“We were looking for a flexible and streamlined way to donate our products. Frontline Impact Project gives us the opportunity to scale our giving as the situation demands and reach a deserving audience whose needs are paramount but not always top of mind,” says Aaron Croutch, Executive Vice President, Lenny & Larry’s.

Kara Goldin, Founder and CEO of Hint, adds, “Now, more than ever, it’s critical that we support first responders and help keep them healthy and hydrated. Hint has donated water to hundreds of healthcare organizations and first responders across the country, and the Frontline Impact Project has made coordination with a number of those groups much easier.”

In addition to Lenny and Larry’s and Hint, a number of companies have signed on to support this effort, including Adrenaline Shoc Smart Energy; Belgian Boys; CLEAN Cause; Just the Cheese; Kabaki Tea; Kodiak Cakes; KIND; La Colombe; Neuro; Paunchy Elephant; RISE Brewing Co; ROWDY; Purely Elizabeth; and ZICO Coconut Water.

To submit a donation or make a request, visit www.frontlineimpact.org.

ET3 Model Moves Forward Starting January 1, 2021

Written by Kathy Lester on . Posted in Operations, Patient Care.

The Centers for Medicare & Medicaid Services (CMS) has announced that the first performance period for the Emergency Triage, Treat, and Transport (ET3) Model will begin on January 1, 2021. As we reported previously, CMS delayed the start of ET3 Model, consistent with its delaying or pausing other payment models, because of the COVID-19 public health emergency (PHE).

To start this effort, CMS has indicated that it will post a revised Participation Agreement (PA) to the ET3 Model Portal by mid-October 2020. Participants must upload signed PAs to the ET3 Model Portal by December 15, 2020. CMS will also post an Implementation Plan Template (IPT). Participants must submit their IPT CMS by November 15, 2020 to allow CMS to review and accept the IPT prior to beginning their participation in the Model.

CMS plans to provide additional guidance, including:  an Orientation Overview fact sheet, Billing and Payment fact sheets, Model Participation During the PHE fact sheet, a Who’s Who fact sheet, and an ET3 Model Portal User Guide. These documents will be available to participants through the ET3 Model Portal during the next several weeks.

The re-engagement on the ET3 Model prior to the end of the PHE is something that the American Ambulance Association (AAA) has supported in discussions with CMS. While it does not address some of the gaps in reimbursement and treatment that our members are seeing nationwide, for those who are participating in the model, it will be an enormous benefit.

The AAA also continues to work with CMS to identify new models that will allow other ground ambulance providers and suppliers to participate in innovative models, even though there were not able to meet the ET3 participation requirements.

CMS Updates Cost Data Collection FAQs and Data Collection Instrument

Written by Kathy Lester on . Posted in Operations, Patient Care.

The Centers for Medicare & Medicaid Services (CMS) has released printable version of the ground ambulance data collection instrument and an expanded FAQ. Both updated documents address some of the more common questions that CMS has heard over the past months, many of which the American Ambulance Association raised.  Importantly, CMS announces through the FAQs the registration process will begin December 2021.

The topics covered in the FAQs include:

  • General questions related to the rationale for collecting data, definitions, and how the information will be used and reported;
  • Sampling and notification questions related to how ground ambulance organizations will be selected to participate in the data collection system;
  • Data collection and reporting timelines and effort questions, which focus on the timelines for collecting and reporting the information, as well as the projected effort required;
    • There are three new FAQs in this section about the impact of the delay due to the pandemic (the questions and answers are below)
  • Requirement to report questions, which focus on the types of information that must be reported and responding to requests from MACs;
    • There is a new FAQ in this section about applying for a hardship exemption (the questions and answers is below)
  • Reporting information questions, which include who within an organization should report the information, the data tool, and how to address technical problems;
    • There are two new FAQ in this section about the pause in data collection due to the pandemic (the questions and answers are below)
    • Importantly, CMS announces that the registration will begin December 2021
  • Data collection scope and principles questions, which discuss the specific type of information and level of specificity that is required;
    • There are several new FAQs in this section about using current accounting practices, municipality practices, and accounting good and services provided by another organization (the questions and answers are below)
  • Reporting information on staffing and labor costs questions, which address issues such as volunteer staff, staff with multiple duties, calculating hours worked;
    • There are three new FAQs in this section about total hours worked, staff training, and paid time off (the questions and answers are below)
  • Reporting other information, such as service area, service mix/service volume, facilities, vehicles, equipment/supplies, and revenue.


New FAQs

 Question: Will the modification listed in the COVID-19 Emergency Declaration Blanket Waiver issued by CMS on May 15, 2020 allow ground ambulance organizations selected in year 1 the option to continue with their current data collection period that started in early 2020 or choose to select a new data collection period starting in 2021? [Added 7/31/2020]

    • Answer: No. The ground ambulance organizations that were selected in year 1 do not have an option and must select a new data collection period starting in 2021. CMS cannot permit this option because the data collected in 2020 during the public health emergency may not be reflective of typical costs and revenue associated with providing ground ambulance services.
  • Question: When will sampled organizations report information? [Updated 7/31/2020]
    • Answer: Sampled organizations will report information within a 5-month reporting period that starts at the end of the organization’s collection period. For example, if your organization begins collecting information on January 1, 2021, your organization’s collection period will run until December 31, 2021 and your organization must report information during the 5- month period between January 1, 2022 and May 31, 2022.
  • Question: How are data collection and reporting dates adjusted for organizations selected in Year 1 given the modification listed in the CMS COVID-19 Emergency Declaration Blanket Waiver? [Added 7/31/2020]
    • Answer: CMS issued a COVID-19 Emergency Declaration Blanket Waiver delaying data collection and reporting requirements for ground ambulance organizations selected in Year 1 by one year. The organizations selected in Year 1 will now collect data during a continuous 12-month period starting in 2021 (rather than 2020) and will now report information during a 5-month period starting in 2022 (rather than 2021). As an example, a Year 1 organization that previously would have collected information from January 1, 2020 to December 31, 2020 and reported information between January 1, 2021 to May 31, 2021 will now collect information from January 1, 2021 to December 31, 2021 and report information between January 1, 2022 and May 31, 2022. Organizations in the Year 1 sample will not report any information collected to date in 2020.
  • Question: Can you provide examples of different data collection periods and the data reporting periods depending on my accounting period start date? [Updated 7/31/2020]
    • Answer: Example of a Data Collection and Reporting Period for a Ground Ambulance Organization with a Calendar Year Accounting Period:

Examples of Data Collection and Reporting Periods for a Ground Ambulance Organization with Accounting Period not based on a Calendar Year:

  • Question: Can my organization request a hardship exemption from the payment reduction? [Updated 7/31/2020]
    • Answer: Yes. Organizations that did not report sufficient data due to a significant hardship, such as a natural disaster, bankruptcy, or other similar situations may request a hardship exemption. To request a hardship exemption after the ground ambulance organization receives notification that it will be subject to the 10 percent payment reduction as a result of not sufficiently submitting information under the data collection system, organizations should complete a request form that will be available at the end of the data reporting period on CMS’s Ambulances Services Center website at https://www.cms.gov/Center/Provider- Type/Ambulances-Services-Center.html. Organizations can request a hardship exemption within 90 calendar days of the date that CMS notified the organization that it would receive a 10 percent payment reduction as a result of not submitting sufficient information under the data collection system. Your organization will be asked to supply information such as reason for requesting a hardship exemption, evidence of the hardship (e.g., photographs, newspaper, other media articles, financial data, bankruptcy filing, etc.), and date when your organization would be able to begin reporting information. All hardship exemption requests will be evaluated based on the information submitted that clearly shows that they are unable to submit the required data.
  • Question: Where and how does my organization report information? [Updated 7/31/2020]
    • Answer: No information will be reported until 2022. As we stated in the CY 2020 Physician Fee Schedule Final Rule (84 FR 62867), a secure web-based data collection system will be available before the start of your data reporting period to allow time for users to register, receive their secure login information, and receive training from CMS on how to use the system. CMS will provide separate instructions on how to access the online Ground Ambulance Data Collection System. You can view a printable version of the ground ambulance data collection instrument at: https://www.cms.gov/Center/Provider- Type/Ambulances-Services-Center for the data collection requirements.
  • Question: My organization was selected in the first group to collect and report cost and other required data. When will we be able to register for the data collection system? [Updated 7/31/2020]
    • Answer: Registration for the system will begin in December 2021. Please check the Medicare Ambulance Services Center website at https://www.cms.gov/Center/Provider- Type/Ambulances-Services-Center.html for updates.
  • Question: Can my organization collect information using our current accounting practices? [Added 7/31/2020]
    • Answer: In general, you will be able to report information collected under your organization’s current accounting practices. CMS understands that some ground ambulance organizations use accrual-basis accounting while others use cash-basis accounting. Please follow the instructions in each instrument section.
  • Question: My ground ambulance organization is owned and/or operated by our local municipality. The municipality pays directly for some costs associated with our ground ambulance operations (e.g., facilities costs, utilities, fuel, benefits, etc.). Do we need to report on these costs? [Updated 7/31/2020]
    • Answer: Yes. You must work with your municipality to report the costs that are relevant to your ground ambulance service. Otherwise, the costs that you report will be incomplete and not reflect your organization’s total costs. This would also apply if your ground ambulance organization is part of a broader organization that pays directly for some of your organization’s costs (e.g., a hospital Medicare provider that also owns and provides ground ambulance services). The specific information that you will need to collect and report might include information on labor costs (Section 7); facilities costs (Section 8); Vehicle costs (Section 9); equipment, consumable, and supply costs (Section 10), and other costs (Section 11). If you are a fire, police, or other public safety-based ground ambulance organization, please report labor hours and compensation associated with both ground ambulance and other public safety roles per the data collection instrument instructions.
  • Question: How should we account for goods or services provided by another organization (e.g., hospital, local government)? [Added 7/31/2020]
    • Answer: Whether and how to account for costs realized by an entity other than your ground ambulance organization depends on the nature of the relationship with the other entity. CMS has heard that it is relatively common for some costs – for example dispatch, vehicle maintenance, or administrative costs – to be borne by an organization’s local municipality or a part of a local municipal government (such as a police department):
    • If your ground ambulance organization is part of or associated with a local municipality, you need to report these costs. For example, if dispatch services are provided by your municipality’s police department and your ground ambulance organization is part of or associated with the same municipality, then you must collect and report a share of dispatch costs associated with ground ambulance operations. See the related question “My ground ambulance organization is owned and/or operated by our local municipality. The municipality pays directly for some costs associated with our ground ambulance operations (e.g., facilities costs, utilities, ambulance fuel, benefits, etc.). Do we need to report on these costs?”
    • If your ground ambulance organization is NOT part of (i.e., owned or operated by) a local municipality, you do NOT need to report costs associated with services provided by your local municipality other than costs (if any) paid directly by your organizations for the service. If your municipality provides dispatch services for your community and your organization does not pay for this service, then no costs related to dispatch are reported. See the related question “My organization received donations during the data collection period (e.g., an ambulance donated by the community, medicines or medical consumables provided by hospitals, or cash donations). How should these donations be reported?” If your organization makes a payment in exchange for a service, report the payment as a cost under the appropriate section of the data collection instrument.

The same principles apply to similar cases, for example when the other entity is a hospital, non-profit organization, or other type of entity.

  • Question: Should hours on call be included in total hours worked? [Added 7/31/2020]
    • Answer: When reporting hours worked, whether for paid or volunteer staff, do not include hours on call toward hours worked.
  • Question: How should we report staff training in the data collection instrument? [Added 7/31/2020]
    • Answer: There are two ways that you can report training. If training is conducted by your organization’s staff, you would include hours worked and compensation for training staff in your calculations of total hours worked and total compensation. Employees would report hours spent and compensation (if any) for attending trainings. If the training is not just on ground ambulance topics, the reported total hours and compensation would reflect an estimate the percent of time related to ground ambulance. If you have other training expenses or pay money to an outside organization for training activities, these can be listed in Section 11, Question 3 under the category “Training and continuing education costs (e.g., costs for materials, travel, training fees, and labor).” Costs related to collecting and reporting data to the Medicare Ground Ambulance Data Collection System should not be reported.
  • Question: How should we report paid time off (PTO) in the data collection instrument? [Added 7/31/2020]
    • Answer: Paid time off (PTO) is not included in the hours worked section in the labor portion of the data collection instrument. However, PTO is a benefit that should be included in the total compensation questions of the labor section.
  • Service Area: Question: How should our organization define the primary and secondary service area for our particular circumstances? [Updated 7/31/2020]
    • Answer: For the purposes of this data collection effort, use your best judgement. In general, your primary service area is the area in which you are exclusively or primarily responsible for providing service at one or more levels and where it is highly likely that the majority of your transport pickups occur. A secondary service area is outside your primary service area, but one where you regularly provide services through mutual or auto-aid arrangements or at a different level of service compared to your primary service area. When reporting service areas using ZIP codes, it is possible that you will report the same ZIP code as belonging to both your primary and secondary service area, for example in a case where a town and a township share a ZIP code and your organization is primarily responsible for service within the town but has mutual or auto aid agreements with the surrounding township. Please list all ZIP codes in your service area, even if they cross over into another county or municipality. For the service volume section of the instrument, responses, transports, etc. to both primary and secondary service areas should be included in the totals reported.
  • Service Mix/Service Volume: Question: How should my organization count ground ambulance responses and/or transports if more than one vehicle is sent to the scene or if more than one patient is transported? [Added 7/31/2020]
    • Answer: If more than one vehicle is sent to the scene, count this as one response. Organizations should count the total number of patients transported. A single response may result in multiple transports in cases where multiple ambulances are deployed or when multiple patients are transported by the same ambulance.
  • Question: How should our organization report on situations where we respond to calls for service in conjunction with staff from another organization? [Added 7/31/2020]
    • Answer: In Section 5, Question 3, you can report that your organization responds to calls for service in conjunction with vehicles and/or staff from another organization. You must report payments that you make to the other organization (as “other costs” in Section 11) and payments received by your organization (as revenue in Section 13). You will not need to report specific labor or other costs from the other organization. Report the total revenue that your organization receives from payers and other sources, even if you later share the revenue with the other organization.
  • Facilities: Question: My organization does not record buildings as assets or calculate depreciation for buildings. Do we need to report depreciation for buildings? [Added 7/31/2020]
    • Answer: No.
  • Vehicles: Question: How should we calculate annual depreciation expenses for vehicles and capitalized equipment? [Updated 7/31/2020]
    • Answer: In general, you will be able to use your organization’s standard approach to calculating depreciation expenses. If your organization calculates depreciation expense for multiple purposes (e.g. depreciation for tax incentive purposes vs. Generally Accepted Accounting Principles (GAAP) for standard auditing purposes), please report the depreciation expense captured for standard auditing purposes. There are several presentations, such as the December 5, 2019 National Provider Call, that provide examples of reporting annual depreciation expenses in Section 8 (Facilities Costs), Section 9 (Vehicle Costs), and Section 10 (Equipment, Consumable, and Supply Costs) of the data collection instrument. These presentations are available on the Ambulances Services Center website at https://www.cms.gov/Center/Provider-Type/Ambulances-Services-Center.html.
  • Equipment: Question: My organization uses a cash basis for accounting and does not depreciate equipment or supplies. Do we need to start calculating annual depreciation? [Added 7/31/2020]
    • Answer: No. If your department is a cash basis entity and doesn’t calculate depreciation, you do not have to report depreciation. Please report the entire purchase costs in the relevant sections.
  • Revenue: Question: How is revenue defined for the purposes of collecting and reporting data? [Added 7/31/2020]
    • Answer: Report gross/total revenue received from all sources during the data collection period. You may need to collect information from a billing company or your municipality in order to report this information. Do not report charges, billed amounts, or bad debt. Depending on your organization’s accounting practices, CMS understands that the revenue received during the data collection period may not perfectly align with the services provided during the data collection period.
  • Question: My organization is unable to separate revenue from payers related to transports and non-transport services. How should we report revenue for non-transport services? [Added 7/31/2020]
    • Answer: If possible, report only revenue from transports in Section 13, Questions 2-4. Report revenue from non-transport EMS and ground ambulance services in Section 13, Question 5.
  • Question: My organization shares revenue from billed service with another organization. Should we report the revenue we receive from payers or the share we retain? [Added 7/31/2020]
    • Answer: Report the revenue that you initially receive from payers. Do not subtract the amount that you share with another organization. Report the amount you do share in Section 11 (“Other Costs”) as a cost.

EMS1: National associations join forces to tell the story of the front line

Written by Rob Lawrence on . Posted in Government Affairs, Operations, Patient Care, Press.

AAA Communications Chair Rob Lawrence shared his insights about recent  EMS and fire association joint advocacy efforts in EMS1. Don’t miss the full article!

Last week, the AAA were approached, via EMS1, by U.S. News, a national publication represented by journalist Gaby Galvin, asking about COVID-19 as it affects the front lines, rates of infection and quarantine, and generally life on the street. This opportunity provided the chance to bring together three national organizations who are all working hard to represent their members, lobby Congress and highlight the challenges at the tip of the spear.

Keep reading on EMS1►

HHS Announces Release of Initial Tranche of CARES Act Provider Relief Funding

Written by Brian Werfel on . Posted in Advocacy Priorities, Finance, Government Affairs, Legislative, Medicare, Operations, Patient Care, Regulatory, Reimbursement.

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).  As part of that Act, Congress allocated $100 billion to the creation of a “CARES Act Provider Relief Fund,” which will be used to support hospitals and other healthcare providers on the front lines of the nation’s coronavirus response.  These funds will be used to fund healthcare-related expenses or to offset lost revenue attributable to COVID-10.  These funds will also be used to ensure that uninsured Americans have access to testing a treatment for COVID-19.  Collectively, this funding is referred to as the “CARES Act Provider Relief Fund.”

On April 9, 2020, the Department of Health and Human Services (HHS) indicated that it would be disbursing the first $30 billion of relief funding to eligible providers and suppliers starting on April 10, 2020.  This money will be disbursed via direct deposit into eligible providers and supplier bank accounts.  Please note that these are outright payments, i.e., these are not loans that will need to be repaid. 

Who is Eligible to Receive Relief Fund Payments?

HHS indicated that any healthcare provider or supplier that received Medicare Fee-For-Service reimbursements in 2019 will be eligible for the initial allocation.  Payments to practices that are part of larger medical groups will be sent to the group’s central billing office (based on Medicare enrollment information).  HHS indicated that billing organizations will be identified by their Taxpayer Identification Numbers (TINs).

Are There Any Conditions to Receipt of this Funding?

Yes.  As a condition to receiving relief funding, a healthcare provider or supplier must agree not to seek to collection out-of-pocket payments from COVID-19 patients that are greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network provider.

How is the Amount of Relief Funding an Entity will Receive Determined?

HHS indicated that the amounts healthcare providers and suppliers will receive will be based on their pro-rata share of total Medicare FFS expenditures in 2019.  HHS indicated that Medicare FFS payments totaled $484 billion in 2019.

Providers and suppliers can estimate their initial relief payment amount by dividing their 2019 Medicare FFS reimbursement by $484 billion, and then multiplying that “ratio” by $30 billion.  Note: payments from Medicare Advantage plans are not included in the calculation of a provider’s/supplier’s total 2019 Medicare payments.

As an example, HHS cited a community hospital that received $121 million in Medicare payments in 2019.  HHS indicated that this hospital’s ratio would be 0.00025.  That amount is then multiplied by $30 billion to come up with its initial relief fund payment of $7.5 million.

The AAA has created a CARES Act Provider Relief Calculator
that you can use to estimate your initial relief payment.  |
USE DOWNLOADABLE EXCEL CALCULATOR►

Do I Need to do Anything to Receive Relief Funds?

No.  You do not need to do anything to receive your relief funding.  HHS has partnered with UnitedHealth Group (UHG) to disburse these monies using the Automated Clearing House (ACH) system.  Payments will be made automatically to the ACH account information on file with UHG or CMS.

Providers and suppliers that are normally paid by CMS through paper checks will receive a check from CMS within the next few weeks.

How Will I Know if I Received My Relief Funds?

The ACH deposit will come to you via Optum Bank.  The payment description will read “HHSPayment.”

Do I Need to do Anything Once I Receive My Relief Funds?

Yes.  You will need to sign an attestation statement confirming relief of the funds within 30 days.  These attestations will be made through a webportal that HHS anticipates opening the week of April 13, 2020.  The portal will need to be accessed through the CARES Act Provider Relief Fund webpage, which can be accessed by clicking here.

You will also be required to accept the Terms and Conditions within 30 days.  Providers and suppliers that do not wish to accept these terms and conditions are required to notify HHS within 30 days, and then remit full repayment of the relief funds.  The Terms and Conditions can be reviewed by clicking here.

How will HHS Distribute the Remaining $70 Billion in Relief Funds?

HHS has indicated that it intends to use the remaining relief funds to make targeted distributions to providers in areas particularly impacted by the COVID-19 outbreak, rural providers, providers of services with lower shares of Medicare reimbursement or who predominantly serve Medicaid populations, and providers requesting reimbursement for the treatment of uninsured Americans.

CMS Announces Delay to ET3 Start Date

Written by Brian Werfel on . Posted in Medicare, Operations, Patient Care, Regulatory, Reimbursement.

On April 8, 2020, the Centers for Medicare and Medicaid Services (CMS) announced that it will be delaying the start of the Emergency Triage, Treat and Transport (ET3) Model until Fall 2020.  The ET3 Model was previously set to start on May 1, 2020.  CMS cited the national response to the COVID-19 pandemic as the reason for this delay.

In its delay notice, CMS also reminded the EMS industry that it has issued a number of temporary regulatory waivers and new rules that are designed to give health care providers and suppliers maximum flexibility to respond to the current national emergency.  This includes a number of flexibilities offered specifically to the ambulance industry.

Paycheck Protection Program Loans Summary

Written by akingump on . Posted in Finance, Operations.

Summary of Loans Under Paycheck Protection Program (Section 1102)

Download PDF

Overview

Section 1102 provides $349 billion for expedited individual loans 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) and mortgage, rent and utility payments incurred from February 15, 2020 through June 30, 2020.1 The maximum amount of a loan equals 2.5 months of average historical monthly payroll expenses, subject to certain exclusions.

On March 31, 2020, the Department of Treasury issued preliminary guidance regarding the imminent implementation of the Paycheck Protection Program (PPP). On April 2, 2020, the Small Business Administration (SBA) issued an interim final rule providing additional implementation guidelines and requirements for the PPP.

Small businesses and sole proprietorships started to apply for and receive PPP loans on April 3, 2020. Independent contractors and self-employed individuals can begin applying on April 10, 2020. The loans are first come, first served.

Benefits for Borrowers: Borrowers are eligible for loan forgiveness equal to the amount spent by the borrower during an 8-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. All borrower and lender fees, collateral and personal guarantee requirements are waived. The fixed interest rate is 1 percent and loan maturity is two years. No prepayment fees will be charged. Loan repayments can be deferred for six months.

Benefits for Lenders: Allows loans to be sold on the secondary market. Provides the regulatory capital risk weight of loans made under this program, and temporary relief from troubled debt restructuring (TDR) disclosures for loans that are deferred under this program. Lender compensation for servicing the loan is 5 percent for loans of not more than $350,000;
3 percent for loans of more than $350,000 and less than $2,000,000; and 1 percent for loans of not less than $2,000,000. Interim SBA regulations provide some protection for banks in the underwriting process.

The SBA lender list can be found at https://www.sba.gov/paycheckprotection/find.

Eligible businesses include:
  • 1. Businesses with 500 or fewer employees (calculated as discussed below);
  • 2. Small businesses as defined in the Small Business Administration Size Standards at 13 C.F.R. § 121.201;
  • 3. 501(c)(3) nonprofits, 501(c)(19) veteran’s organizations and Tribal business concerns described in section 31(b)(2)(C) of the Small Business Act with not more than 500 employees;
  • 4. Hotels, motels and restaurants with either 500 or fewer employees at each physical location or in the aggregate, without regard to affiliation under
    13 C.F.R. §§ 121.103 and 121.301;
  • 5. Franchises listed in the SBA Franchise Directory without regard to affiliation under 13 C.F.R. §§ 121.103 and 121.301; and
  • 6. Sole proprietors, independent contractors, gig economy workers and self-employed individuals are all eligible.
Ineligible Businesses include but are not limited to:
  • 1. Employers who elect to take advantage of “Delay of payment of employer payroll taxes” in CARES Act Section 2302 or the “Employee retention credit for employers subject to closure due to COVID-19” in Section 2301 are not eligible to take advantage of these loans (unless, in the case of the Section 2302 payroll tax deferral, the loan proceeds were not forgiven under either Section 1106 or Section 1109).
  • 2. Financial businesses primarily engaged in the business of lending, such as banks, finance companies and factoring companies (pawn shops, although engaged in lending, may qualify in some circumstances); SBA’s Standard Operating Procedure 50 10 (SOP) provides this includes:
    • i. Banks;
    • ii. Life Insurance Companies (but not independent agents);
    • iii. Finance Companies;
    • iv. Factoring companies;
    • v. Investment Companies;
    • vi. Bail Bond Companies; and
    • vii. Other businesses whose stock in trade is money.
  • 3. Passive businesses owned by developers and landlords that do not actively use or occupy the assets acquired or improved with the loan proceeds (except Eligible Passive Companies under 13 C.F.R. § 120.111);
  • 4. Businesses located in a foreign country (businesses in the United States owned by aliens may qualify);
  • 5. Pyramid sale distribution plans;
  • 6. Businesses deriving more than one-third of gross annual revenue from legal gambling activities;
  • 7. Loan packagers earning more than one third of their gross annual revenue from packaging SBA loans;
  • 8. Businesses primarily engaged in political or lobbying activities; and
  • 9. Other businesses listed at 13 C.F.R. § 120.110.2

Counting Employees and Affiliation Rules:

SBA counts all individuals employed on a full-time, part-time or other basis, so this includes employees obtained from a temporary employee agency, professional employee organization or leasing arrangement. Contractors receiving IRS Form 1099 and volunteers are not considered employees.

The method for determining size includes the following principles:

  1. The average number of employees (including the employees of its domestic and foreign affiliates) for each of the pay periods for the preceding completed 12 calendar months.
  2. Part-time and temporary employees are counted the same as full-time employees.
  3. If a new company/venture, the average number of employees is used for each of the pay periods during which it has been in business.
  4. The average number of employees of a business with affiliates is calculated by adding the average number of employees of the business with the average number of employees of each affiliate. If the business has acquired an affiliate or been acquired as an affiliate during the applicable period of measurement or before the date on which it self-certified as small, the employees counted in determining size status include the employees of the acquired or acquiring concern. Furthermore, this aggregation applies for the entire period of measurement, not just the period after the affiliation arose.
  5. The employees of a former affiliate are not counted if affiliation ceased before the date used for determining size. This exclusion of employees of a former affiliate applies during the entire period of measurement, rather than only for the period after which affiliation ceased. However, if a business has sold a segregable division to another business concern during the applicable period of measurement or before the date on which it self-certified as small, the employees used in determining size status will continue to include the employees of the division that was sold.

The SBA’s affiliation rules substantially impact the ability of many entities to qualify for small business loans. On April 3, 2020, SBA issued an interim final rule (Affiliation IFR) about the applicability of affiliation rules at 13 C.F.R. §§ 121.103 and 121.301 to PPP loans. This supplements the SBA’s April 2 interim final rule.

The Affiliation IFR clarifies that SBA’s affiliation rules apply to all PPP applicants unless an exemption provided in the CARES Act applies. It also adds a new exemption, providing that affiliation rules do not apply to relationships of any church, faith-based organization, or entity that is based on religious teaching or belief. Affiliation rules a waived for:

  1. any business concern with not more than 500 employees that, as of the date on which the loan is disbursed, is a hotel, motel, or restaurant;
  2. Franchises listed in the SBA Franchise Directory;
  3. business concern that receives financial assistance from a company licensed under section 301 of the Small Business Investment Act of 1958 (15 U.S.C. 681); and
  4. the relationship of a faith-based organization to another organization if the relationship is based on a religious teaching or belief or otherwise constitutes a part of the exercise of religion.

Concerns and entities are affiliates of each other when one controls or has the power to control the other, or a third party or parties controls or has the power to control both. It does not matter whether control is exercised. SBA’s affiliation rules applicable to financial assistance programs, found at 13 C.F.R. §§ 121.103, provide that any of the following circumstances is sufficient to establish affiliation.

Ownership:
  • a. A concern is an affiliate of an individual, concern, or entity that owns or has the power to control more than 50 percent of the concern’s voting equity.
  • b. If no individual, concern, or entity is found to control, SBA will deem the Board of Directors or President or Chief Executive Officer (CEO) (or other officers, managing members, or partners who control the management of the concern) to be in control of the concern.
  • c. SBA will deem a minority shareholder to be in control, if that individual or entity has the ability, under the concern’s charter, by-laws, or shareholder’s agreement, to prevent a quorum or otherwise block action by the board of directors or shareholders.
Stock options, convertible securities, and agreements to merge:
  • a. Stock options, convertible securities, and agreements to merge are treated as though the rights granted have been exercised for purposes of determining control.
  • b. However the following are not given such present effect:
    • i. Agreements in negotiations;
    • ii. options, securities, and agreements subject to conditions precedent which are incapable of fulfillment or where the probability of the transaction occurring is extremely remote; and
    • iii. options, securities, and agreements that give entities in control of the operative business concern the ability to divest all or part of their ownership interest in order to avoid a finding of affiliation.
Common management:
  • a. Affiliation arises where the CEO or President of the applicant concern (or other officers, managing members, or partners who control the management of the concern) also controls the management of one or more other concerns.
  • b. Affiliation also arises where a single individual, concern, or entity that controls the Board of Directors or management of one concern also controls the Board of Directors or management of one of more other concerns.
  • c. Affiliation also arises where a single individual, concern or entity controls the management of the applicant concern through a management agreement.
Identity of interest
  • a. Affiliation may arise among two or more individuals or firms with an identity of interest. Individuals or firms that have identical or substantially identical business or economic interests (such as close relatives, individuals or firms with common investments, or firms that are economically dependent through contractual or other relationships) may be treated as one party with such interests aggregated.
  • b. Where SBA determines that such interests should be aggregated, an individual or firm may rebut that determination with evidence showing that the interests deemed to be one are in fact separate.
Totality of the circumstances:
  • a. SBA may consider all connections between the concern and a possible affiliate. Even though no single factor is sufficient to constitute affiliation, SBA may find affiliation on a case-by-case basis where there is clear and convincing evidence based on the totality of the circumstances.
  • b. However, where an SBA Lender has made a determination of no affiliation, SBA will not overturn that determination as long as it was reasonable when made given the information available to the SBA Lender at the time.

Loan Amount

Eligible borrowers can seek a total loan amount equal to monthly average of payroll over the past 12 months, multiplied by 2.5. “Payroll costs” include salary, wages, commissions, cash tips, paid vacation or leave, insurance premiums and other group health care payments, allowance for separation or dismissal, paid retirement benefits and state or local taxes. The statute also allows a business to include the “sum of any compensation to or income of a sole proprietor that is a wage, commission, or income, net earnings from self-employment, or similar compensation” in payroll costs to the extent these amounts are in an amount that is not more than $100,000 in one year.

“Payroll costs” do not include individual compensation in excess of $100,000, certain taxes (including the employer’s share of the social security portion (6.2% of employee wages) and the Medicare portion (1.45% of employee wages) of payroll taxes known as Federal Insurance Contributions Act (FICA)) and ordinary income tax withholding, compensation paid to an employee if their place of residence is outside the United States and paid leave under the Families First Coronavirus Relief Act.

Example: An employer with total payroll costs of $12 million over the past 12 months is eligible for a PPP loan of $2.5 million ($1 million average monthly payroll cost x 2.5).

If you received an Economic Injury Disaster Loan (EIDL) between January 21, 2020 and April 3, 2020, you can add the outstanding amount of that loan (less the amount of any “advance” under a COVD-19 EIDL) to your calculated total (average monthly payroll cost x 2.5) for purposes of calculating your maximum loan amount.

Example: An employer calculated the $2.5 million amount in the above example, and also has an outstanding COVID-19 EIDL of $600,000, $100,000 of which was an advance. The employer is eligible for a PPP loan of $3 million ($2.5 million plus
$600,000, minus $100,000 advance).

Borrowers that were not in business between February 15, 2019 and June 30, 2019 can receive a loan amount equal to 2.5 times their average payroll costs between January 1, 2020 and February 29, 2020. Borrowers that have existing loans under certain SBA programs may be subject to different limits.

Certifications, Fees and Allowable Uses

Lenders must consider whether the borrower was in operation before February 15, 2020 and had employees for whom the borrower paid salaries and payroll taxes, (or paid independent contractors under Form 1099-MISC). Borrowers also must make a good faith certification on the PPP application form that:

  1. Current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant;
  2. The Applicant is eligible to receive a loan under the rules in effect at the time this application is submitted that have been issued by the Small Business Administration (SBA) implementing the Paycheck Protection Program under Division A, Title I of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (the Paycheck Protection Program Rule).
  3. The funds will be used to retain workers and maintain payroll, or make mortgage payments, lease payments and utility payments;
  4. Any loan received by the Applicant under Section 7(b)(2) of the Small Business Act between January 31, 2020 and April 3, 2020 was for a purpose other than paying payroll costs and other allowable uses loans under the Paycheck Protection Program Rule;
  5. The recipient has not received loan amounts under the same subsection for the same purpose between February 15, 2020 and December 31, 2020;
  6. The Applicant will provide to the Lender documentation verifying the number of full- time equivalent employees on the Applicant’s payroll as well as the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments and covered utilities for the eight-week period following this loan; and
  7. All information provided in the application and all supporting documents and forms is true and accurate in all material respects, acknowledging that knowingly making false statements is punishable by imprisonment of not more than 5 years and/or a fine of up to $250,000.

The PPP waives certain fees typically required for SBA loans, including those under Sections 18(A) and 23(A) of the statute. Applicants also do not need to certify that they are unable to obtain credit elsewhere, or provide a personal guarantee or collateral for a covered loan. However, loan proceeds received under PPP cannot be used for the same costs for which proceeds from a loan received through the Economic Disaster Loan Assistance Program are used.

Use of Loan Proceeds, Forgiveness and Reduction in Forgiveness Amount

Loan proceeds may only be used to pay: (1) payroll costs; (2) costs related to the continuation of group health care benefits during periods of paid sick, medical or family leave, and insurance premiums; (3) mortgage interest payments; (4) rent payments; (5) utility payments; (6) interest on any debt obligation incurred before the covered period; or (7) refinancing EIDL made between January 31, 2020 and April 3, 2020.

Loan amounts expended during the eight-week period following the loan origination will be forgiven, up to the total amount of the loan, if used for payroll costs (up to an annualized rate of
$100,000 per employee). In addition, up to 25 percent of the loan forgiveness amount may be attributable to qualifying non-payroll costs including: (1) interest on a mortgage obligation; (2) rent; or (3) covered utilities. The CARES Act provides an exception from the general rule that debt forgiveness is taxable, so that that amount of loan forgiveness will not be included in the borrower’s taxable income.

The forgiveness amount will be reduced if the employer reduces the number of full-time equivalent employees, or reduces employees’ salary and wages beyond a certain amount during the eight-week period.

First, the forgiven amount will be reduced by multiplying the amount of forgivable costs by:

  1. the average number of full-time equivalent employees (FTEs) employed during the eight weeks following the loan origination, divided by
  2. the average number of FTEs employed between either February 15, 2019 and June 30, 2019, OR January 1, 2020 and February 29, 2020 (the employer may elect the period used).

*Seasonal employers must measure the average number of FTE employees for the period from February 15, 2019 to June 30, 2019.

Example: Borrower had average FTEs of 300 employees per month from February 15- June 30, 2019, and average FTEs of 250 employees per month from January 1- February 29, 2020. The borrower obtains a $2.5 million loan and uses all of the loan proceeds to pay for forgivable expenses. During the eight-week period following the loan, the borrower employ an average of 150 FTEs per month. Employer elects January 1-February 29, 2020 baseline period. Forgiveness on the loan is reduced as follows:
150 Covered Period FTEs / 250 Baseline Period FTEs = 0.6
$2.5 million x 0.6 = $1.5 million forgiven
*Remaining $1 million principal must be repaid at applicable interest rate over remaining term of loan

Second, the forgiven amount will be reduced by the amount of any reduction in total salary or wages during the eight weeks after origination that exceeds 25 percent of an employee’s total salary or wages during most recent full quarter during with the employee was employed.
Employees that earned annualized pay in excess of $100,000 in 2019 are not counted for these purposes.

Example: Borrower obtains a $2.5 million loan and uses all of the loan proceeds to pay for forgivable expenses. During the eight-week period following the loan, the borrower reduces pay of hourly employees by 50 percent, resulting in a total reduction in compensation of $1,500,000. The borrower also reduces the pay of its five officers, all of whom earn more than $100,000, by 50 percent. The reduction in officer pay produces a savings of $250,000. No reduction in FTEs occurs. Forgiveness on the loan is reduced as follows:

$2.5 million – $750,000 (comp. reduction in excess of 25 percent to employees earning less than $100,000) = $1.75 million forgiven

(Remaining $750,000 principal must be repaid at applicable interest rate over remaining term of loan)

Borrowers may “cure” reductions in FTEs or compensation for purposes of forgiveness in certain circumstances. Specifically, these reductions will not reduce the forgiveness amount if:

  1. The borrower reduces the number of FTEs between February 15, 2020 and the date 30 days after the enactment of the Act and eliminates that reduction no later than June 30, 2020.
    Example: Same as above. Borrower has a baseline of 250 FTEs and lays off 100 FTEs on March 1, 2020. Average FTEs over the eight-week period is 150, but the borrower rehires 75 FTEs on June 15, 2020.
    225 Covered Period FTEs / 250 Baseline Period FTEs = 0.9
    $2.5 million x 0.9 = $2.25 million forgiven
  2. The borrower reduces the salary and wages of employees between February 15, 2020 and the date 30 days after enactment of the Act and eliminates the reduction no later than June 30, 2020.
    Example: On March 15, 2020, the borrower reduces the pay of hourly employees by 50 percent, resulting in a total reduction in compensation of $1,500,000. On June 15, 2020, the borrower restores all hourly employees to full pay.
    No reduction in forgiveness amount.

Borrowers must provide sufficient documentation to demonstrate compliance with these requirements, including: (1) payroll tax filings reported to the Internal Revenue Service; (2) state income, payroll and unemployment insurance filings; and (3) other documentation, including cancelled checks, receipts or account transcripts, to verify mortgage interest, rent and utility payments.

Borrowers also must certify that the amounts for which forgiveness is requested were used to retain employees and make covered mortgage interest, rent or utility payments.

SBA intends to issue additional guidance on the loan forgiveness provisions of the PPP loan.

Application Process

Beginning on April 3, 2020, you can apply at any lending institution that is approved to participate in the Small Business Administration’s 7(a) lending program. Additionally, upon completion of the CARES Act Section 1102 Lender Agreement (SBA Form 3506), the following types of lenders will be “automatically qualified” to issue PPP loans provided they are not currently designated in Troubled Condition:

  1. Federally insured depository institutions or federally insured credit unions;
  2. Farm Credit System institutions (other than Federal Agricultural Mortgage Corporations); and
  3. Certain depository or non-depository financing providers.

However, the $349 billion in funds may not still be available by the time additional qualified lenders submit the requisite Lender Agreement. You will not have to visit any government institution to apply for the loan. Applicants are eligible to apply for the PPP loan until June 30, 2020.

For eligibility purposes, lenders will not be determining eligibility-based repayment ability, but rather whether the business was operational on February 15, 2020 and had employees for whom it paid salaries and payroll taxes (or paid independent contractors).

Notes

  • Section 7(a)(36)(A)(iii) of the Small Business Act (15 U.S.C. § 636(a)(36)(A)(iii)), as added by the CARES Act, defines the covered period for the PPP loan program as the period beginning on February 15, 2020 and ending on June 30, 2020. However, this covered period is not further addressed in the interim final rule SBA issued on April 2, 2020.
  • Although this list of ineligible businesses also includes: “[b]usinesses principally engaged in teaching, instructing, counseling or indoctrinating religion or religious beliefs, whether in a religious or secular setting,” SBA issued guidance on April 3, 2020, following the issuance of its interim final rule on affiliation earlier that day, stating that this provision “impermissibly exclude[s] some religious entities” and therefore it will decline to enforce this provision with regard to PPP and EIDL. See https://www.sba.gov/sites/default/files/2020-04/SBA%20Faith- Based%20FAQ%20Final.pdf.
  • The Department of Treasury issued guidance on affiliation in conjunction with the Affiliation IFR, which largely mirrors the affiliation rules found at 121.301.
  • Section 7(a)(36) of the Small Business Act (15 U.S.C. § 636(a)(36)), as added by the CARES Act, does not place any requirement on the amount of PPP loan proceeds that must be applied to any particular eligible expense. However, the interim final rule SBA issued on April 2, 2020, requires that at least 75% of the PPP loan proceeds be used for payroll costs.

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