Skip to Main Content

Blog

Gain perspectivesOur blog

PROFESSIONALS

Read this if you are a state Medicaid or CHIP agency.

The Centers for Medicare & Medicaid Services (CMS) has temporarily suspended all Payment Error Rate Measurement (PERM) improper payment-related engagement/communication and data requests to providers and state agencies as a result of the COVID-19 nationwide public health emergency declaration. 

CMS has also adopted a temporary policy of relaxed enforcement regarding activities related to Medicaid Eligibility Quality Control (MEQC) until further notice.

CMS continues to provide state Medicaid and Children’s Health Insurance Program (CHIP) agencies with a number of methods to assist in each state’s approach and response to the COVID-19 pandemic. Some flexibilities offered to state Medicaid and CHIP agencies include:

  • Eligibility and enrollment 
  • Benefits 
  • Cost-sharing 
  • Financing 
  • Managed care 

While this has been communicated with state Medicaid and CHIP agencies, you should take some important steps to manage these flexibilities to ensure you don’t encounter issues when PERM and MEQC review activities resume. Reviews are conducted according to state and federal policies and regulations in force at the time of service on the sampled claims under review. 

CMS has issued guidance to identify whether or not each of the flexibilities requires an approved state plan amendment (SPA), waiver, or whether simply providing documentation in the individual case file will provide the required support when PERM and MEQC activities resume. 

Additionally, it is equally important to ensure the “pre-COVID” processes and procedures resume immediately upon expiration of the public health emergency declaration in order to remain in compliance with state and federal regulations. 

Here are a few key considerations to help reduce the number of errors identified once PERM resumes:

  • Management of new state-specific policies and procedures in effect during the COVID-19 pandemic is critical. You need to ensure all processes requiring CMS approval or notification have been enacted and that these temporary processes revert back to pre-COVID processes immediately upon termination of the public health emergency.
  • Continued training and guidance to Medicaid and CHIP staff during this time to ensure understanding of expectations and adherence to new processes. Applying and understanding eligibility and enrollment flexibilities for both members and providers is vital to meet all expectations and documentation requirements.

New updates continue to be announced by CMS to ensure Americans have access to the care they need during this time. This requires remaining diligent to the expectations of these flexibilities and preparing for the impact of PERM and MEQC outcomes when these activities resume. This is key to reducing improper payment error rates. 

For additional detailed information regarding the identified flexibilities above, please refer to the PERM cycle preparation tool we have prepared.

If you have questions regarding relaxed requirements or you would like to have an in-depth conversation with our PERM experts, please contact the team.
 

Blog
PERM is suspended―key considerations during COVID-19 

Read this if your company is seeking assistance under the PPP.

The rules surrounding PPP continue to rapidly evolve. As of June 22, 2020, we are anticipating some additional clarifications in the form of an interim final rule (or IFR) and additional answers to frequently asked questions (FAQ). The FAQs were last updated on May 27, 2020. For the latest information, please be sure to check our website or the Treasury website.

A few important changes:

  1. The loan forgiveness application, and instructions, have been updated.
  2. There is a new EZ form, designed to streamline the forgiveness process, if borrowers meet certain criteria.
  3. Changes now allow for businesses to use 60% of the PPP loan proceeds on payroll costs, down from 75%.
  4. Businesses now have 24 weeks to use the loan proceeds, rather than the original eight-week period (or by December 31, 2020, whichever comes earlier).
  5. The rules around what is a full-time equivalent (FTE) employee and the safe harbors with respect to employment levels and forgiveness have been clarified.
  6. Entities can defer payroll taxes through the ERC program, even if forgiveness is granted.

These changes are designed to make it easier to qualify for loan forgiveness. In the event you do not qualify for loan forgiveness, you may be able to extend the loan to five years, as opposed to the original two years.

The relaxation on FTE reductions is significant. The reductions will NOT count against you when calculating forgiveness, even if you haven’t restored the same employment level, if you can document that:

  • you offered employment to people and they refused to come back, or
  • HHS, CDC, OSHA or other government intervention causes an inability to “return to the same level of business activity” as of 2/15/2020.

As of June 20, 2020, there was still an additional $128 billion in available funds. The program is intended to fund new loans through June 30, 2020. 

We’re here to help.
If you have questions about the PPP, contact a BerryDunn professional.

Blog
PPP loan forgiveness: Updates

Read this if you are a solar energy investor, installer, or involved in the renewable energy sector.

One of the benefits to a tax equity investor investing in a renewable energy project is the losses generated by the depreciation of the energy equipment being placed in service. Projects qualifying for the federal Investment Tax Credit are given a five-year MACRS life, providing a cost recovery deduction over five years from the in-service date (typically six tax return filings).  

Investors with eligible income from other sources can offset that income using the losses generated by the depreciation. In some cases the investors have more losses than they can use, which results in a Net Operating Loss (NOL). The rules around NOLs have changed several times recently, and it’s important to know what steps investors should take in order to maximize the benefit from their investment in a renewable energy project.

Historically, individuals could use losses to fully offset their taxable income in the current year. Any excess loss was to be carried back two years to offset taxable income on a previously filed tax return, if available. Any excess NOL carried back and not absorbed would then be carried forward and available for 20 years. This provided a source of immediate funds for investors, as an NOL carryback typically resulted in a recovery of taxes paid in a prior year.

An election could also be made with the original loss return to forgo the carryback and elect to carry forward only. In some cases investors determined that it was more beneficial to have the loss available to offset future income―for example, in cases where the tax rates were set to increase, if the depreciation benefits from a prior project were set to expire, or an anticipated large income event was on the horizon. These losses could also be carried forward for 20 years.

Impacts of Tax Cuts and Jobs Act on NOLs

With the passing of the Tax Cuts and Jobs Act (TCJA) in December of 2017, tax returns filed beginning with tax year 2018 were subject to some changes around NOLs. Some impacts:

  • Losses were no longer allowed to offset 100% of taxable income in the current year, now only being able to offset 80% of taxable income. The remainder was reserved as an NOL available on future returns 
  • The removal of the two-year carryback period 
  • The 20-year cap for NOL’s carried forward was removed, letting them carry forward indefinitely

While most investors were able to use their losses in the first several years surrounding the original loss year, removing the expiration cap on the NOL carryforwards was at least a compromise to losing the other benefits of generating a loss from the investment. The changes from the TCJA shifted the tax strategy focus, as investors who had previously been able to invest in projects and avoid paying federal income tax completely now had to budget for paying tax on at least 20% of their income. The influx of cash from carrying an NOL back to a prior year was no longer an option, as many investors factored that into their ability to repay debt or final construction invoices. While these weren’t completely devastating changes, they were ones that needed to be considered, modeled, and budgeted before any investments were made to ensure proper cash flow.

COVID-19 and its impacts

Then the COVID-19 pandemic hit, and impacted businesses in all corners of the economy. Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in March of 2020 with wide-sweeping incentives intended to keep cash flowing to those that needed to continue paying bills while businesses were closed. One of the major tax code changes was to the rules surrounding NOLs. The CARES Act temporarily repealed the 80% limit of the TCJA, once again allowing individuals to offset all of their taxable income with an NOL generated in 2018 through 2020.  

Actions to take

In addition, the carryback was also temporarily re-instated, and expanded to five years for losses generated in 2018-2020. Some considerations:

  • An investor who has already filed their 2018 tax return should look to see if their losses were limited on that filing. If so, an amended return should be filed to retroactively claim the full amount of the losses available in 2018 on that return.  
  • Additionally, an analysis should be done to verify the benefit of carrying back the losses to 2013-2017 returns and potentially claiming additional refunds for those years, depending on the volume of available losses and taxable income.

As the pandemic continues, and project completion is potentially delayed, it will be important for investors to monitor income and losses over the next six months to determine if they will be able to fully utilize NOLs for 2020, or if they will need to plan for a return to the TCJA 80% limitation rule in 2021.

If you have any questions or would like to know more, please contact the team. We’re here to help. 
 

Blog
Net Operating Loss rules in renewable energy: COVID-19 changes

Read this if your organization, business, or institution is receiving financial assistance as a direct result of the COVID-19 pandemic.

Update: On June 13, 2020 HHS updated their FAQ document to reflect a change in quarterly reporting requirements related to PRF. According to the updated language, “Recipients of Provider Relief Fund payments do not need to submit a separate quarterly report to HHS or the Pandemic Response Accountability Committee. HHS will develop a report containing all information necessary for recipients of Provider Relief Fund payments to comply with this provision.”

New information continues to surface about the reporting requirements of the CARES Act Provider Relief Funds (PRF). The most recent news published by the Health Resources and Services Administration (HRSA) states the funds will be subject to the Single Audit Act requirements. What does this mean and how does it impact your organization? Here’s a brief synopsis. 

A Single Audit (often referred to as a Uniform Guidance audit) is required when total federal grant expenditures for an organization exceed $750,000 in a fiscal year. It is important to note that while an organization may have received funds exceeding the threshold, it is the expenditure of these funds that counts toward the Single Audit threshold.  

PRF help with healthcare-related expenses or lost revenue attributable to COVID-19. Guidance on what qualifies as a healthcare-related expense or lost revenue is still in process, and regular updates are posted on the FAQs of the US Department of Health & Human Services website.

There are also quarterly reporting requirements related to PRF. Organizations that receive more than $150,000 in PRF must submit reports within ten days after the end of each calendar quarter, to ensure compliance with the conditions of the relief funds. The key distinction here is that this limit is based on total funds received, regardless of whether or not expenditures have been made. Specific reporting requirements also have not yet been identified. 

As more information comes out, we will update our website. At the moment the main takeaways are:

  • Expending $750,000 of combined relief funds and other federal awards will trigger a Single Audit
  • Receiving $150,000 of relief funds will cause reporting requirements on a quarterly basis
  • Tracking PRF expenditures throughout the fiscal year will be essential for the dual purpose of reporting expenditures and accumulating any potential Single Audit support

If you would like to speak with a BerryDunn professional about reporting under the Single Audit Act, please contact a member of our Single Audit Team.

Blog
Provider Relief Funds Single Audit

Our senior living and long-term care professionals have compiled this guide to financial resources for senior living providers, segregated by federal and state programs.

In this guide, you will receive a breakdown of the critical components of each program, related compliance requirements, payment and accounting considerations, and the provider type for which the program is available.

Included on the guide is a publication date. Please check back regularly for updates.

READ THE GUIDE NOW

We're here to help.
If you have any questions, please contact a member of our senior living consulting team.

Blog
Senior living COVID-19 financial resources guide