Staying afloat as patient volumes and revenues decline during COVID-19

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4/8/2020

The Medical Group Management Association’s most recent MGMA Stat poll asked medical practice leaders, “Has your organization seen a drop in patient volume amid COVID-19?” The majority (97%) responded “yes,” while 3% indicated “no.” Additionally, 71% of practices that reported a drop in patient volume noted that the decrease was by 50% or more.

The poll was conducted April 7, 2020, with 1,635 applicable responses.

Among the practice leaders reporting patient volume drops, respondents noted these patient volume issues:

In one OB/GYN practice, the loss of preventive care visits resulted in a 75% patient volume decrease, with only obstetrics patients still coming in.
One podiatry practice reported a 90% decrease, limiting patients only to emergent, trauma, and post-operative care, along with visits for other acute issues.
A primary care practice with eight physicians reported seeing half of normal levels, and patient numbers are still decreasing.
Multiple multispecialty practices reported visits being down about 50% across the board, and multiple general/vascular surgeon practices reported drops between 70% and 99% following the suspension of elective surgeries.

Medical practices across the nation have reported to MGMA that the loss of patient visit volumes can lead to a 50% to 80% drop in the revenues associated with those visits. In many instances that means practice leaders are forced to consider furloughs, layoffs of staff and even closing offices.

Preliminary U.S. Bureau of Labor Statistics data on ambulatory healthcare services shows about 40,700 employees were dropped from payrolls from February to March 2020 nationwide as the pandemic and associated stay-at-home orders disrupted practice schedules and kept many patients away from their provider’s office.

One such example is the temporary closure of offices by Atrius Health in Massachusetts, which reported patient volume dropping 75% since mid-March. The closures also were paired with furloughs for many employees and a percentage of withheld pay for remaining working staff.

This dire situation also has downstream effects that are very concerning for practice leaders, according to Anders Gilberg, MGA, senior vice president, MGMA Government Affairs, who noted the growing likelihood of “a second-wave access crisis when the pent-up demand for non-COVID-19 healthcare is released” yet the rest of the nation’s healthcare system is largely offline. As one MGMA member from South Dakota said, he’s “concerned about deferred care snowballing and creating a ‘crash’ in systems three to six months out.”

MGMA joined dozens of healthcare associations and medical societies April 7 in a letter to the U.S. Department of Health & Human Services (HHS) urging immediate relief for physician practices in the form of a month of revenue to each physician (MD or DO), nurse practitioner and physician assistant enrolled in Medicare or Medicaid to account for financial losses and non-reimbursable expenses.

Where can practices find financial assistance?

The CARES Act, signed into law March 27, allocated $100 billion to the “Public Health and Social Services Emergency Fund” to reimburse (through grants and “other mechanisms”) eligible healthcare suppliers and providers for healthcare-related expenses or lost revenues attributable to COVID-19.

Small Business Administration (SBA) loans and the Paycheck Protection Program

The CARES Act also authorized $349 billion in loans to cover small business (no more than 500 employees) payroll costs under the Paycheck Protection Program (PPP) with the purpose of helping employers retain employees at their current pay. A loan of up to 250% of the business’ average monthly payroll costs — capped at $10 million — is available to cover eight weeks of payroll and other expenses (e.g., rent, mortgage, utilities).

Loan forgiveness is based on maintaining employee and salary levels. The SBA states that 75% of the loan must go to payroll to get full forgiveness. For a portion of a loan that is not forgiven, terms include a max term of two years and 1% interest.

Starting April 3, businesses seeking first-come, first-served PPP loans should apply through an SBA-approved lender or through any federally insured depository institution, federally insured credit union, or Farm Credit System institution that is participating. Applicants must submit SBA Form 2483 (Paycheck Protection Program Application Form) and payroll documentation. Download an application form from SBA to see what information will be requested. See SBA’s website for more information and a list of available lenders or find your local SBA Field Office for further assistance.

Advance Payment Program

Additionally, the Centers for Medicare & Medicaid Services (CMS) announced a nationwide expansion of the existing accelerated Advance Payment Program (APP), making it available to most Medicare physicians and group practices. Physician practices can request an advanced payment of up to 100% of the Medicare payment amount based on a three-month lookback period.

To qualify for accelerated or advance payments, the provider or supplier must:

Have billed Medicare for claims within 180 days immediately prior to the date of signature on the provider’s/supplier’s request form;
Not be in bankruptcy;
Not be under active medical review or program integrity investigation; and
Not have any outstanding delinquent Medicare overpayments.

Healthcare entities must make a request for accelerated payment by submitting a form to their Medicare Administrative Contractor (MAC). CMS has directed MACs to issue payment within seven calendar days of a request.

As of April 7, CMS reports distributing about $34 billion through expansion of this program, and that processing times for requests is down to about four to six days.

MGMA advocacy

On March 27, MGMA wrote to HHS leadership to exercise their authority under the CARES Act to provide immediate financial support to medical groups in order to sustain operations, continue treating routine patients and prepare for worst-case scenarios. Specific recommendations include:

Prepayments to enrolled suppliers not subject to recoupment
An immediate increase in the Part B conversion factor through the end of the year to offset lost revenues from Medicare patients deferring care

An expedited grant process designed for those practices that have the resources to interface directly with the Department in the weeks ahead.

Talking to existing business partners

Additionally, MGMA President and CEO Halee Fischer-Wright, MD, MMM, FAAP, FACMPE, noted on a recent Medical Practice Trends podcast that conversations with a practice’s real estate and banking partners — including landlords for leased commercial space— can help a practice weight options alongside the recently authorized federal grants and loans.

So far, medical practice leaders who have approached their existing banking partners have reported a willingness to work with them on securing lines of credit or other means to remain financially viable for the months to come — though some MGMA members report some variances in the types of stipulations sought by banks for SBA loan applications.

“If you’re a bank, this is the best type of loan that you can possibly get: It’s short term, and you’re giving it to someone who’s already proven that they can make money and pay it back,” Fischer-Wright noted.

Additional resources

Would you like to join our polling panel to voice your opinion on important practice management topics? MGMA Stat is a national poll that addresses practice management issues, the impact of new legislation and related topics. Participation is open to all healthcare leaders. Results of other polls and information on how to participate in MGMA Stat are available at: mgma.com/stat.