During this webinar we focused on the interplay between the different CARES Act provisions, in particular PPP loans, Provider Relief Funds, and Medicare Advanced Payments, and how they may impact 2020 year-end planning and 2021 forecasting.

1. WHAT HEALTHCARE PROVIDERS
NEED TO KNOW HEADING INTO 2021
into
December 16, 2020
Future.
Reimagined.
Presenters:
Aaron Cohen, JD, MPhil | Principal,HealthcareCo-PracticeLeader
Michael Criscione, CPA | Partner, HealthcareCo-PracticeLeader
Gary Bagoff, CPA | Partner, Dental PracticeLeader
Dominik van der Veen, MS | Director, HealthcarePractice
Kate Broderick, MBA, MSIS | Manager, Healthcare Practice
COVID-19 UPDATE

2. 2
Agenda
Key Programs for Healthcare Providers
Provider Relief Fund Uses & Reporting Overview
PPP Loan Forgiveness Overview
Forecasting + Cash Flow Considerations
Accounting & Financial Reporting
Key Tax Issues
Impact to Transactions
1
2
3
4
5
6
7

3. 3
Key Programs for Healthcare Providers

4. 4
Key Programs for Healthcare Providers
The CARES Act was signed into law on March 27, 2020, setting the stage for the implementation ofa number of critical
programs and policy changes for healthcare providers. While these programs haverelieved some of the economic and
regulatory burdens on providersthis year, they have also created a number of complex considerationsas we approach
the end of the year and look forward to 2021.
Funding Mechanism Form of Distribution Purpose Agency Eligible Groups
Provider Relief Fund
Grant
(with restrictions)
Cover costs/losses associated with the
preparing for, preventing, and
responding to COVID-19
HHS
• Vastmajority medical,
behavioral, long term care,
dental, certain DME companies
PPP ForgivableLoan
Supportpayrollexpenses to reduce
need for layoffs/furloughs
SBA
• Some Hospitals (<500 employees)
• MostPhysician Practices
• Some Post-Acute(<500
employees)
Medicare Advance
Payments
Cash Advance
(interestapplies after
recoupmentperiod
ends)
Provideneeded liquidity to Medicare
providers
CMS • All Medicare Providers
Medicare Sequester
Suspension
Suspension of 2%
Sequestration of
Medicare Payments
Provideneeded liquidity to Medicare
providers
CMS • All Medicare Providers

5. 5
Considerations for Year-End
Financial Projections
(Cash flow)
Financial Statement
Reporting
Tax Planning Transactions
What key program
variables need to be
factored into 2021
financial projections?
How can these
projections help us to
better prepare for 2021?
How should programs be
recorded on financial
statements? How do
program funds impact
debt covenants?
How will key programs
impact 2020 and 2021
taxable income?
How will programs
impact key transaction
issues such as deal
structure, valuation, and
working capital
calculations?

6. 6
Medicare Advance Payment Timelines &
Provider Relief Fund Uses and Reporting

7. 7
Non-hospital Provider Timeline
Year 1 11 Months 6 Months
No payments due for 12 months after payment Medicare claims reduced by 25%
Medicare claims
reduced by 50%
Recoupment Period Ends
Providers repay any
outstanding balance or face
4% interest rate
120 days 90 Days
No payments
due for 120 days
after payment
Medicare
claims reduced
by 100%
Recoupment Period Ends
Providers repay any
outstanding balance or face
~9.5% interestrate
Repaymentdue 210 days
frompayment
Repaymentdue 29 months
frompayment
Updated Timeline
Previous Timeline
Recoupment period
Graceperiod beforerecoupment
Outstanding Balance Due

8. 8
Hospital Provider Timeline
Year 1 11 Months 6 Months
No payments due for 12 months after payment Medicare claims reduced by 25%
Medicare claims
reduced by 50%
Recoupment Period Ends
Providers repay any
outstanding balance or face
4% interest rate
120 days 245 days
No payments
due for 120 days
after payment
Medicare claims reduced by 100%
Recoupment Period Ends
Providers repay any
outstanding balance or face
~9.5% interestrate
Repaymentdue 365 days
frompayment
Repaymentdue 29 months
frompayment
Updated Timeline
Previous Timeline
Recoupment period
Graceperiod beforerecoupment
Outstanding Balance Due

9. 9
Provider Relief Fund Timeline
Timeline
March 27, 2020 CARESAct signed intolaw
April 10, 2020 Phase 1 – General Distribution|Initial Tranche Distributed
April 24, 2020 Phase 1 – General Distribution|SecondaryTranche Announced
May 2020 TargetedDistributions:Rural Providers,High-ImpactHospitals,SkilledNursingFacilities,andIHSProgramsAnnounced
June 9, 2020 Phase 2 – General DistributionExpanded&TargetedDistributiontoSafety NethospitalsAnnounced
July 10, 2020 AdditionalTargetedDistributiontoSafetyNetHospitalsandRural ProvidersDistributed
July 17, 2020 SecondTargetedDistributiontoHigh-ImpactHospitalsDistributed
August 14, 2020 TargetedDistributiontocertainChildren’sHospitalsAnnounced
August 27, 2020 TargetedDistributionto NursingHomesfortesting,staffing,andPPEDistributed
September1, 2020 Phase 2 – General DistributionforAssistedLivingFacilitiesAnnounced
September3, 2020 TargetedDistribution –Incentive PaymentstoNursingHomes,basedonperformance Announced
November6, 2020 Phase 3 – General Distribution Deadline
December16, 2020 Phase 3 – General DistributionDistributions Begin
January 15, 2021 ReportingPortal Opens
February15, 2021 Deadline tosubmitreportsonuse of PRFpaymentsin2020
June 30, 2021 Deadline toexpendPRFPayments
July 31, 2021 Deadline tosubmitreportsonuse of PRFpaymentsin2021
The Provider Relief Fund distributionsbegan on April 10, 2020. Since then, most distributionshave happenedon a rolling
basis. While there is still about $70B remaining in the fund, it is unclear whether additional distributionswill be made in
2021, beyond the Phase 3 General Distribution,which closed on November 6, 2020.
Upcoming
Dates

10. 10
Financial Reporting Elements
Expenses
Eligible expensesmust be actual expensesincurred
over and above what hasbeen reimbursed by other
sources.
Period:CY2020
For entities that receivedunder $500k, expenses
can be reportedintwocategories:
• General and Administrativeexpenses (G&A)
• Healthcare-related expenses
For entities that receivedover $500k, expenses
must be reportedwithgreater granularity:
• G&A, including: mortgage& rent; insurance;
personnel; fringe benefits; lease payments;
utilities and operations; and other G&A
• Healthcare-relatedexpenses, including:
supplies; equipment; information technology;
facilities; and other healthcare-related expenses
Lost Revenue
Lost revenue will be calculated as a year-over-year
comparison of patientcare revenuesin calendar year
2019 versuscalendar year 2020
Period:CY2019 andCY2020
• Total patient care revenue, netof uncollectible
patient servicerevenue (bad debt)
• Revenue fromPatientCare Payor Mix
• Other AssistanceReceived, including: PPP loans;
FEMA CARES Act funding; CARES Act testing
funding; local, state, and tribal government
assistance; business insurance; and other
assistance
• Expenses (as outlined under “Expenses”) for
CY2019 and CY2020
Per the Terms & Conditions, PRF payments can be used for healthcare-related expenses and lost revenue attributable to coronavirus.
While HHS has evolved the definition of these categories, which we will discuss in greater depth later in the presentation, HHS has stated
in its most recent Notice that expense and lost revenue reporting will consist of the following elements:

11. 11
PPP Loan Overview

12. 12
When Do I Need to Apply for Forgiveness?
• 10 months after the end of your covered period
o 5/1/2020 loan date would result in a 8/15/2021 due date
• The lender then has 60 days to issue a decision to the SBA
• The SBA then has 90 days to conclude on forgiveness

13. 13
Which Application do I Fill Out?
• 3508S –File this application if,
• The total PPP loanamountyoureceivedfromyourLenderwas$50,000 or less, and
• The total PPP loansreceived, togetherwithaffiliates, amountedtolessthan$2 mil
• Requires fewer calculations and less documentation for eligible borrowers
• Exemptfromreductionsinloanforgivenessamountsbasedonreductionsinfull-time equivalent
(FTE) employeesorinsalariesorwages.
• Doesnotrequire borrowerstoshow the calculationsusedtodetermine theirloanforgiveness
amount
• SBA may requestinformationanddocumentstoreview thosecalculationsaspartof itsloanreview
process.
• 3508EZ – File this application if,
• You are a sole proprietor or independent contractor
• Noemployeesattime of PPP application
Or;
• No wage or FTE reductions to account for
• Nosalary or wage reductioninexcessof 25 percent, and
• No reduction in FTEs, or
• Borrower meets FTE safeharbor based on inability to operate at same level of business
• 3508 - File this application if
• Not eligible for 3508S or 3508EZ

14. 14
Walking Through the 3508
• General information
• PPP Loan info from loan issuance
• Employee count (note FTEs) at time of loan
application
• Employee count (note FTEs) at time of
forgiveness application
• EIDL Loan advance
• Payroll periods, covered period, and alternate
covered period
• Covered period is 24 week (168-day) period
beginning on the PPP Loan Disbursement date,
or
• Alternate covered payrollperiod is 168-day
period that begins on the first day of their first
pay period following the PPP Loan
Disbursement Date.

15. 15
Recent Developments
• Recent Developments
• On October 26, 2020, the SBA published a notice related to information filing forms, form 3509 and 3510, documenting the necessity certification issued under FAQ #31. The
forms require various forms of financial information to be disclosed for those whose PPP loans (including affiliates) totaled $2,000,000 or more. The purpose is intended to
facilitate the collection of supplemental information (including certifications and disclosure of quarterly revenues, distributions, compensation levels to owners and employees,
and more), that will be used by SBA loan reviewers to evaluate the good-faith certification that was made on the PPP borrower application that economic uncertainty made the
loan request necessary. The form will be issued by the lender servicing the loan and the completed form is due within ten business days of receipt from the lender. On December
9, 2020 the SBA posted final versions of Forms 3509 and 3510 along with FAQ #53 regarding questions and answers on why some borrowers are receiving a loan necessity
questionnaire.
• Does this recent filing requirementapply tohealthcare providers?
Any for profit and not-for-profit provider that obtained a PPP loan of $2M must complete form 3509 or 3510.
• But does the additional disclosure requiredby form3509 or 3510, apply toa provider that, together withits affiliates received PPP loans withan original
principal amount of $2M or greater are requiredtocomplete form3509or 3510?
The instructions for form 3509 and 3510, reference 85 FR 20817 issued on April 15, 2020 regarding the application of SBA’s affiliation rules. The rules pertain (1)to affiliation based upon 50 percent or more
equity ownership. A PPP loan applicant is an affiliate of an individual or entity the owns or has the power to control more than 50 percent of the business’s voting equity. (2) affiliation based on the power to
control based upon options, convertible securities and agreements to merge. (3) affiliation based on management, whereby CEO, President or other officers, managing members, partners who control
management of the concern controls the management of the applicant concern and another concern (4) affiliation based upon identity of interest between close relatives as defined in 13 CFR 120.10 with
identical or substantially identical business or economic interests ( close relatives operate concerns in the same of similar industry or geographical area.

16. 16
Walking Through the 3508
• Final forgiveness amount is lower of:
• Modified total (adding up all qualified costs and
adjusting for FTE and wage reductions)
• PPP Loan Amount
• Payroll / 60%
• Note that any reductions are calculated on the total
qualified costs. For example, if a company had a
PPP loan amount of $750k, and spent $1.5Mwith a
30% FTE reduction resulting in a modified total of
($1.050m),you’d still have full forgiveness because
the modified total would be more than the PPP loan
amount.

17. 17
AICPA Compensation Matrix

18. 18
Payroll Costs - Schedule A
• Payroll costs includeall forms of cash compensation paid to employees, including tips, commissions,
bonuses, and hazard pay. Notethat forgivablecash compensation per employee is limited to $46,154
for non-owners during thecovered period.
• Other payroll costs
• Employer expenses for group health care benefits that are paid or incurred by the borrower during the Covered
Period or the Alternative Payroll Covered Period are included in Payroll costs. Amounts contributed by employees
are not included. Forgiveness is not provided for expenses for group health benefits accelerated from periods
outside of the covered period.
• Employer contributions for employee retirement benefits that are paid or incurred by the borrower during the
Covered Period or Alternative Payroll Covered Period qualify as “payroll costs” eligible forloan forgiveness.
Amounts contributed by employees are not included. Forgiveness is not provided for expenses for retirement
benefits accelerated from periods outside of the covered period.
• Employer payments for state and local taxes assessed on employee compensation (e.g., state unemployment
insurance tax)
• Owner compensation for owner-employees, self-employed individuals or generalpartners is the lesser
of $20,833(2.5/12 x100,000) or 2.5/12x2019 compensation
• Benefits for owner-employees depends on business tax structure
• S corporations:employerhealthinsurance isnotallowedforownersandfamilymembersof 2%shareholders.
• LLC members/Partners:employerhealthinsurance,retirementcontributionsandstate &local taxesare not
allowed.

19. 19
Payroll Costs - Schedule A
• Timing of Payroll Cost
• Payrollcosts incurred butnot paid during the last pay period of the selected period
are eligible for forgiveness if paid on or beforethe next regular payrolldate.
• Reductions to PPP Loan Forgiveness
• If your averageamountof full-time equivalent employees is less than the reference
periods (i.) 2/15/19 - 6/30/19; (ii.) 1/1/20 - 2/29/20; thepercentage decreasewould
result in an “FTE Reduction Quotient”
• For example, if you had 100 FTEs in the measurement period, and 70 FTEs during your
covered period, you’d have a 70% FTE Reduction Quotient.
• If an employee’s salary or hourly rate was reduced by morethan 25% when compared
to the measurementperiod (Q1 2020), a reduction to forgiveness is applied by
calculating the differencein rate between the covered period and the measurement
period X .75, and applying that differenceto the hours worked during the covered
period
• For example, if someone was earning $20/hr during the measurement period and $14/hr
during the covered period. the wage reduction is based on $1/hr ($20 X .75) – $14). If the
employee worked 500 hours during the covered period, the wage reduction is $500, which is
simply subtracted from your total qualified costs.

20. 20
Non-Payroll Cost
• Mortgage interest
• Interest on business mortgages on real or personal property are eligible for loan forgiveness
• Rent
• Payments of rent obligated under a leasing agreement in force before February 15, 2020
• If the lease is renewed after 2/15/2020, it’s still qualified
• Rent to related parties is limited to the amount of the mortgage interest owed on the property during
the covered period. There is no guidance addressing whether owner attribution rules apply.
• Utilities
• Electricity, gas, water, transportation, telephone or internet access for service which began prior to
February 15, 2020
• Timing of non-payroll costs
• Eligible business mortgage interest costs, eligible business rent or lease costs, and eligible business utility
costs incurred prior to the Covered Period and paid during the Covered Period are eligible for loan
forgiveness.
• For amounts paid by the next scheduled payment date after the end of the covered period, the borrower
must prorate the total amount for only the days that fall in the covered period. The rule states
specifically that advance payments of mortgage interest and all payments of principal are not eligible for
forgiveness.

21. 21
Safe Harbors
• Certain safe harbors are provided for businesses that are unable to
maintain their FTEs and rates of pay during the covered period.
Forgiveness will not be reduced under the following circumstances.
• The most relevant safe harbor reads as follows, “If you were unable to
operate between February 15,2020,and the end of the Covered Period at
the same level of business activity as before February 15, 2020due to
compliance with requirements established or guidance issued between
March1, 2020and December 31, 2020,by the Secretary of Health and
Human Services, the Director of the Centers for Disease Control and
Prevention, or the OccupationalSafety and Health Administrationrelated
to the maintenance of standardsfor sanitation,social distancing,or any
other worker or customer safety requirement related to COVID-19,”you
will not need to apply an FTE Reduction Quotient to your qualified costs.

22. 22
Safe Harbors
• Additionally,there are exceptions to the FTE reduction if the borrower
• Makes a good-faith,written offer to rehire or restore the reduced hours ofan employee during
the covered period or the alternative payrollcovered period,the offer was rejected and the
borrower has documentationofthe offer and rejection,and notified the State’s Unemployment
Division
• Employee was fired for cause
• Employee voluntarilyresigned
• Employee requested and received a reduction oftheir hours
• Borrower in good faith can document the inabilityto rehire individualswho were employees on
February15, 2020 and hire similarlyqualified employees forunfilledpositions on or before
December 31, 2020 or the date of the application forforgiveness
• Borrower reduced FTE employee levels between Feb. 15 and Apr.26, 2020; and then restored its FTE
employee levels by not later than Dec. 31, 2020 or the date of the forgiveness application to FTE
levels in the payperiod that included Feb.15.
• There is also a safe harborforthe Salary/HourlyWage Reduction.If the employees’rate of payis
brought up to the rate duringthe payperiod that includes 2/15/2020 as of the earlier of 12/31/2020
and the date the application is submitted,the safe harboris met and no reduction is applied to the
forgiveness amount.

23. 23
Forecasting + Cash Flow Considerations

24. 24
Forecasting and Cash flow
Forecasting is not about having a crystal ball and accuratelypredicting the future. There are too many
variablesthat can change the outcome. Forecastingis a tool that allows one to track financial
performanceback to the key drivers that need to be managed.
In order to develop a forecast, one needs to understandthe correlationor relationshipbetween key
driverssuch as, volume, revenue, and expenses. By examiningthese relationshipsover prior years one
can applythat that experience as the basis to forecast financialperformance.
Forecasting cash flow is important to a) help identify issuesbefore they occur and b) to avoid a
potential cash crisis. In order to achieve this a basic cash flow forecast can be developedwhich should
include, change in net working capital,anticipatedcapitalexpenditures,and financing activities.

25. 25
Forecasting: Key Drivers
Identify trends utilizinghistorical
data
• New patients – historicalyear
over year % changes?
• Establishedpatients-
historical year over year %
changes?
• Population trends?
VOLUME
• Reimbursement increases by
insurance – what are contract
escalators?
• Changes in reimbursement –
has Medicare changed
reimbursement?
• Changes in Payor Mix
• Changes in Case Mix
REVENUE
• Inflation– what are
anticipated inflationary
factors? Merit increases,
inflationon medical supplies,
etc.
• Variabilitywith Volume:
• Medical Supplies – typically
correlate 100% with volume
changes
• Staffing – typically correlate
50% to 65% with volume
changes
• General and administrative
typically correlate 20% to
50% with volume changes
EXPENSES

26. 26
Forecast Model: Example
For years endingDecember31, For years endingDecember31,
2018 2019 2020 2021 2022 2023 2024 2025
Historical Historical Historical Forecast Forecast Forecast Forecast Forecast
Providers 10 11 10 10 10 10 10 10
Patients 35,000 39,050 29,288 33,681 37,049 38,901 40,068 40,469
Y/Y % change 11.6% -25.0% 15.0% 10.0% 5.0% 3.0% 1.0%
Operating Days 250 250 250 250 250 250 250 250
Visits per day per Provider 14.00 14.20 11.72 13.47 14.82 15.56 16.03 16.19
For years endingDecember31, For years endingDecember31,
2018 2019 2020 2021 2022 2023 2024 2025
Historical Historical Historical Forecast Forecast Forecast Forecast Forecast
Collections 4,725,000 5,330,325 3,953,813 4,592,353 5,152,620 5,518,456 5,797,690 5,972,780
OtherRevenue 1,000 1,500 1,000 1,000 1,000 1,000 1,000 1,000
4,726,000 5,331,825 3,954,813 4,593,353 5,153,620 5,519,456 5,798,690 5,973,780
Collectionsperpatient 134 137 135 136 139 142 145 148
Y/Y % change 1.9% -1.1% 1.0% 2.0% 2.0% 2.0% 2.0%
Operatingexpenses
Salaries,wages, andbenefits 3,543,750 3,886,496 3,320,040 3,716,618 4,037,362 4,251,948 4,421,559 4,539,305
Medical Supplies 378,080 414,647 354,213 396,523 430,743 453,637 471,733 484,295
General andadministrative 567,000 621,839 531,206 594,659 645,978 680,312 707,449 726,289
Depreciationandamortization 150,000 145,000 135,000 134,000 133,000 132,000 131,000 130,000
Interestexpense 0 0 0 0 0 0 0 0
Operatingexpenses 4,638,830 5,067,983 4,340,458 4,841,800 5,247,084 5,517,897 5,731,741 5,879,888
Operatingincome 87,170 263,842 (385,646) (248,447) (93,463) 1,559 66,950 93,892
Revenue
Volume
RelatedtoVolume
And/orInflation
Key Driver

27. 27
Cash Flow: Key Drivers
Working capitalis the difference
between current assets and
current liabilities
Working Capitalexample(s):
currentassets: accounts receivableand
inventories
currentliabilities: accounts payableand
accrued payroll
WORKING CAPITAL
Capitalexpenditures are assets
acquired to improve the capacity
or capabilitiesof a long-term
asset such as equipment or
buildings
Capex example(s):
• PurchaseEquipment( - cash impact)
CAPEX
Financingactivities typically
include debt, equity, and
dividends.
Debt example(s):
• Proceeds fromloan (+ cash impact)
• Payments on loan ( - cash impact)
FINANCING ACTIVITES

28. 28
Cash Flow Model: Example
For years endingDecember31, For years endingDecember31,
2018 2019 2020 2021 2022 2023 2024 2025
Historical Historical Historical Projection Projection Projection Projection Projection
Operatingincome 263,842 (385,646) (248,447) (93,463) 1,559 66,950 93,892
Depreciationandamortization 145,000 135,000 134,000 133,000 132,000 131,000 130,000
Interestexpense 0 0 0 0 0 0 0
Change inworkingcapital (22,805) 63,450 (22,150) (20,916) (13,377) (9,894) (5,584)
Capital Expenditures (70,000) (75,000) (70,000) (75,000) (100,000) (70,000) (75,000)
FinancingActivities 0 0 0 0 0 0 0
Change inCash 316,037 (262,196) (206,597) (56,380) 20,182 118,056 143,309
BeginningCash 350,000 666,037 403,840 197,243 140,864 161,045 279,101
EndingCash 666,037 403,840 197,243 140,864 161,045 279,101 422,410
WorkingCapital Detail
AccountsReceivable 323,630 365,091 270,809 314,545 352,919 377,976 397,102 409,095
Inventory 20,717 22,720 19,409 21,727 23,602 24,857 25,848 26,537
AccountsPayable 77,678 85,191 72,774 81,467 88,498 93,201 96,919 99,500
AccuredPayroll 135,925 149,071 127,344 142,555 154,858 163,088 169,594 174,110
WorkingCapital 130,744 153,549 90,100 112,250 133,166 146,544 156,437 162,021
WorkingCapital Assumptions
AccountsReceivable- Days 25 25 25 25 25 25 25 25
Inventory - Days 20 20 20 20 20 20 20 20
AccountsPayable - Days 30 30 30 30 30 30 30 30
AccuredPayroll - Days 14 14 14 14 14 14 14 14
Workingcapital
WorkingCapital
Assumptions
Key Driver
Capex

29. 29
CARES Act Programs
Cash Flow Model Example
Annual Statistics
Annual PatientRevenue $5,300,000 (PriorYear)
% Medicare 40%
CARES Act Programs Received Eligible Use/Forgiveness
ProviderRelief FundsReceived $106,000 $50,000 eligible uses
PPPLoan Received $50,000 100% forgiveness
Medicare Advance Received $530,000 0% paidby directpayment
For years endingDecember31, For years endingDecember31,
2018 2019 2020 2021 2022 2023 2024 2025
Historical Historical Historical Projection Projection Projection Projection Projection
Operating income 263,842 (385,646) (248,447) (93,463) 1,559 66,950 93,892
Depreciation and amortization 145,000 135,000 134,000 133,000 132,000 131,000 130,000
Interest expense 0 0 0 0 0 0 0
Adjustments
Provider Relief Funds Received 106,000 (56,000)
PPP Loan Received 50,000
Medicare Advance Received 530,000 (353,333) (176,667)
Change in working capital (22,805) 63,450 (22,150) (20,916) (13,377) (9,894) (5,584)
Capital Expenditures (70,000) (75,000) (70,000) (75,000) (100,000) (70,000) (75,000)
Financing Activities 0 0 0 0 0 0 0
Change in Cash 316,037 423,804 (615,930) (233,047) 20,182 118,056 143,309
Beginning Cash 350,000 666,037 1,089,840 473,910 240,864 261,045 379,101
Ending Cash 666,037 1,089,840 473,910 240,864 261,045 379,101 522,410
Here, we have provided a simple model that
illustrates the importance of understanding
the timing of the impacts of the various
programs.
In addition to these programs, providersalso
need to consider the impact of the following:
• Reinstatementof the Medicare Sequester
• Elimination of COVID-19 vaccine cost-
sharing for Medicare PartB
• Potentialend of the FMAP increase
• Potentialend of 20% DRG add-on
paymentfor COVID-19 inpatients
• Any payrolltaxesdeferred underthe
CARES Act, if taken
• Potentialend of the Public Health
Emergency and Section 1135 Waiver
flexibilities
• Perennialchanges, like the new CMS Final
Rule

30. 30
Accounting and Financial Reporting

31. 31
31
Provider Relief Funds (PRF)
CoronavirusReliefFund
• U.S Department of Treasury
• CFDA # 21.019
• Note – funds directly provided to statesand
then passed directly to healthcareproviders
CARES Act Provider Relief Fund
• U.S Department of Health and Human
Services (HHS)
• CFDA # 93.498
• Note – funds received directly from HHS – i.e.
General and Targeted Distributionpayments
• General – 2% of 2019 taxableincome
• Targeted – Infection Control for Skilled
Nursing Facilities
Two Major Pools of Funds:

32. 32
32
Accounting for PRF
Type of entity
For Profit/
Commercial
Apply the guidance under
IAS 20, Accounting for
Government Grants and
Disclosure of Government
Assistance
If conditions are not
met on the grant,
record a refundable
advance
If conditions are
probable they will
be met on the
grant, record
grant revenue
Not for Profit
Apply the guidance under
ASC 958-605, Not-for-Profit
Entities - Revenue
Recognition
If conditions are
not met on the
grant, record a
refundable
advance
If conditions are
met, record grant
revenue

33. 33
Audit Requirements for PRF
Have you expended
more than $750,000in
federalfunding?
Yes
How many CFDAs
have you expended
funds under?
1 CFDA= Program
Audit
2 CFDAs = Single
Audit
No
Only currentreporting
requirementsare the
HHS reporting portal
Potentialprogram
audit could be
required

34. 34
34
• Small Business Administration (SBA)
• CFDA # 59.073
• Loans that can be 100% forgiven – forgiveness calculation
• Approval to be received by bank and SBA
• SBA Forms 3509
• Loan necessity questionnaires – For-Profit and Non-Profit Borrowers
• Note – funds NOT SUBJECTTO FINANCIAL SINGLE AUDIT
Paycheck Protection Loan Program - PPP

35. 35
Accounting for PPP Loans
Is it probable that loan will be
forgiven?
Is this a NFP entity?
Does the entity choose to
account for loan under
ASC 470, Debt?
Does the organization
choose to account for loan
under ASC 470, Debt?
Apply the guidance under
ASC 470, Debt
Apply the guidance under
ASC 958-605, Contributions
Apply the guidance under
ASC 470, Debt
No
Yes
Yes
No
Yes
No
Apply the guidance under
ASC 470, Debt
Apply the guidance under
IAS 20, Government Grants
No
Yes

36. 36
36
• Advance fromMedicare on future billings:Treated as a debt/ liability
• Repaymentdelayeduntil one year after payment was received
• 25% will be recouped on paymentsreceived for eleven months, then 50% for six months
• After a totalof 29 months, balance subject to 4% interest charge
Medicare Advance Payments (MAP)

37. 37
37
• Audit, review or compilation financial statements:
o Balance sheet - liability versus income statement – revenue
▪ If liability:short-term and/ or long-term; debt or refundableadvance
▪ If revenue: contributionor grant
o Financial statementpolicies and note disclosure
o Each scenario has its own set of rules and conditions
• PRF might be subject to a Program or Single audit
o Single audit requires to be accompanied with financial statementaudit
o Program audit does not need to be accompanied with another level of financial statement
Financial Reporting Considerations

38. 38
38
Debt Covenants
• Incur other debt (PPP loan)
• Current ratio – current assets to current liabilities (accounting for PPP loan and PRF and AAP
refundable advances)
• Debt service – does covenant include grant and contribution income (PPP and PRF) in
calculation?
• Quarterly and semi-annual calculations during 2020
• Impact on distributions – paid in 2020 and to be paid
o Especiallythe different reporting and impact for federal and state income taxes (pass through and C
corporations)
Financial Reporting Considerations

39. 39
39
Segregate COVID related costs / expenditures between PPP and PRF
• “Double dipping”
• Reduce by funding received from other sources
o Private Foundation
o State and government grants/ contracts/ awards
• Timelines:
o PPP – 8 to 24 week period
o PRF – through June 30, 2021
Other Considerations

40. 40
Key Tax Issues

41. 41
Other Program Tax Treatment Summary
Program Tax Treatment
Provider Relief Fund
Taxable in the year it was received; HHS has clarified that the taxes on the PRF payments are
an eligible healthcare-related expense and, as such, can be covered with the PRF payments
For Profit providers: The payment from the Provider Relief Fund is includable in gross income
under section 61 of the Code.
Tax-exempt providers: A healthcare provider described in section 501(c) of the code generally
is exempt from federal income taxation under section 501(a) and therefore receipt of may be
subject to tax under section 511 if the payment reimburses the provider for expenses or lost
revenue attributable to an unrelated trade or business as defined in section 513.
Medicare Advance Payments Not includable in taxable income; loan that must be repaid

42. 42
Impact to Transactions

43. 43
Key Conceptual Issues
Impacting Transactions
Medicare Advanced Payments
(MAPs)
Provider Relief Fund
(PRFs)
PPP Loans
Key Issue: Recoupment of
payments over time
• Valuations may be impacted if MAPs havebeen utilized during 2020, as cash flow would be reduced as
recoupmentbegins
• Buyer typically wants to know that all of the MAP funds arestill available or that the havebeen paid back to
CMS prior to the execution of the deal
Key Issue: Potential need to return
funds in 2021
• The rules regarding useof PRFs havebeen complex and ever-evolving, making it difficult to determine
precisely how much of the PRFs received in 2020 can be utilized by the selling organization in 2020 and 2021
• Buyer typically wants to be kept whole in case the selling organization has to return any PRFs to HHS
Key Issue: Extent of the
forgiveness and timing thereof
• For transactions anticipated during the firsthalf of 2021, it is likely that the forgiveness application will not
havebeen approved by the SBA prior to the closing of the deal
• Pursuantto the SBA ProceduralNotice issued on October 2, 2020, a changeof ownership transaction will
generally be deemed to trigger a repaymentof the PPP loan amount (without forgiveness) unless an Escrow
accountis set up with the bank that issued the PPP loan for the amount of the outstanding PPP loan
• Two primary options for sellers: (1) Escrow accountset-up with corresponding reduction in purchaseprice
proceeds to the seller at closing or (2) deal is postponed until after the PPP loan is forgiven

44. 44
Key Differences between
Asset Sales and Stock Sales
Stock Sale Asset Sale
PPP Loans Generally, there is equanimity in treatment between asset sales and stock sales
Medicare Advance
Payments
Recoupment against future Medicare payments
will continue to take place against the
reimbursement due to the Seller company
Recoupment will only occur if the Medicare
Provider Agreement is assigned to the Buyer
entity. Seller company will be required to
repay/return Medicare Advance Payments
Provider Relief Funds
Buyer can continue to use the PRFs for eligible
expenses and lost revenues of the Seller company.
As a result, the PRFs can transition over with the
stock of the Seller company. Note: Targeted
Distributions must remain under the control of the
TIN to which they were distributed.
Buyer can NOT use the Seller’s PRFs. Only the
Seller’s legal entity can use the funds for its
eligible expenses and lost revenues. As a
result, the PRFs cannot transition over with
the assets of the Seller company.

45. 45
Impact on Business Terms in the
Purchase Agreements
Definition of “debt” or “indebtedness”
PPP and Medicare Advance Payments received and NOT repaid by
closing are falling under the definition of “debt” or “indebtedness,”
which impacts purchase price
Definition of “excluded liabilities”
In asset sales, the recoupment amounts or repayment amounts for
PRFs and Medicare Advance Payments are falling under the definition
of “excluded liabilities,” which stay with the Seller
Indemnification
• The definition of “losses” that fall under the indemnification may
include any liability for recoupment by or repayment to any
Government Authority of PRFs, PPP, or Medicare Advance
Payments.
• The indemnification may also cover losses arising from any
governmental audits related to PRFs, PPP, or Medicare Advance
Payments

46. COVID -19 UPDATE
FOR MORE INFORMATION
Kate Broderick, MBA, MSIS
Manager
kbroderick@citrincooperman.com
419.367.6334
Michael Criscione, CPA
Partner, Healthcare Co-Practice Leader
mcriscione@citrincooperman.com
401.421.4800
Aaron Cohen, JD, MPhil
Principal,Healthcare Co-Practice Leader
acohen@citrincooperman.com
301.654.9000
Dominik van der Veen, MS
Director
dvanderveen@citrincooperman.com
301.654.9000
Gary Bagoff, CPA
Partner, Dental Practice Leader
gbagoff@citrincooperman.com
973.218.0500

47. 47
About Citrin Cooperman
ASSURANCE
At Citrin Cooperman, we offer a wide range of assurance, tax, and advisory services to meet the business and personal needs of our clients
AUDIT AND ATTEST
• Agreed-Upon Procedures
• Employee Benefit Plan Audit
• Financial Statement Audit
• Public Company Audit Services
• Reviews and Compilations
• Royalty Audit, Compliance,
and Consulting
ACCOUNTING ADVISORY SERVICES
• Business Combinations
• Going Public Readiness
• Lease Accounting
• Revenue Recognition
COMMERCIAL TAX SERVICES
• Federal Tax Policy
• IRS Representation and
Tax Controversies
• Mergers and Acquisitions Tax
• Not-for-Profit Tax
• Tax Accounting and Provisions
• Tax Compliance
• Tax Research and Planning
INTERNATIONAL TAXATION SERVICES
• Transfer Pricing
TAX
STATE AND LOCAL TAX (SALT)
PRIVATE CLIENT SERVICES
• High Net Worth Individuals
• Offshore Voluntary Disclosure
Initiative
• Tax Compliance
• Trust and Estate Services
BUSINESS CONSULTING
• Business Management and Family Office
• Healthcare Advisory
• IT Business Advisory Services
• Strategy and Business Transformation
BUSINESS PROCESS OUTSOURCING
• Finance and Operations
• Outsourced IT and Managed Services
TECHNOLOGY, RISK ADVISORY, AND CYBERSECURITY
• IT Risk, Cybersecurity & Privacy Services
• Risk Advisory Services
TRANSACTION SPECIALTY SOLUTIONS
• Forensic and Litigation Services
• Transaction Advisory Services
• Valuation Advisory Services
WEALTH MANAGEMENT AND INVESTMENT ADVISORY SERVICES
ADVISORY

48. 48
Healthcare Expertise
Healthcare is a complex industry that is experiencing profound change at an accelerated pace. Rapid advancements in medical science and technology and
fundamental changes in reimbursement methodology have materially altered the industry landscape.
Whether through the emergence of innovate business models or significant levels of non-traditional acquisitions and partnerships, healthcare’s remarkable
evolution requires those serving the industry to be equally transformative.
Citrin Cooperman's dedicated team works across the entire ecosystem, supporting efforts throughout the full continuum of care while servicing providers, payors,
and investors. We proactively arm our clients with the tools needed to be forward thinking and draw from our deep collective expertise to deliver services to keep
your organization competitive and financially profitable.
SERVICES
INDUSTRY EXPERIENCE
ADVISORY
TAX AND
BUSINESS SERVICES
ASSURANCE
▪ Strategy
▪ M&A and StrategicPartnerships
▪ Finance &Operations
▪ BusinessTransformation
▪ Tax Preparation&
BusinessCompliance
▪ Tax Planning&Strategy
▪ CompensationDesign&Model Development
▪ Revenue Enhancement&ReimbursementConsulting
▪ Audit,Review&Compilationof Financial Statements
▪ RiskManagement&
Internal Audits
▪ AccountingPolicies&Procedures
▪ Agreed-uponProcedures
o HospitalsandHealthSystems AcademicMedical Centers
o PhysicianPractices
o AmbulatorySurgeryCenters
o OutpatientFacilities
o ManagedServicesOrganizations
o Payorsand Plans
o ManagedCare Organizations
o Telemedicine
o GovernmentEntities
o AdvocacyandNonprofits
o Boards
o InvestorsandPrivate Equity
o Long-TermCare Facilities
o Home Health
o Hospice
o Physical TherapyandRehabilitation
o Behavioral Health