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Federal and State Regulatory and Legislative Issues

Practice Protection Committee Continues to Address Financial Issues Related to COVID-19

In its efforts to provide resources and practical suggestions for surgeons to consider as they strive to combat the financial pressures resulting from the COVID-19 pandemic, the Practice Protection Committee met this week by videoconference and has developed an updated resource document found here.

Fellows will find information and links to application information for three federal programs that provide financial resources, a list of questions to consider for discussion with their professional tax advisor, a document to assist surgeons who provide telehealth services, and perhaps most importantly, a section on practical suggestions and options to consider using in these unprecedented times. The group’s work will continue with additions and updates to the document provided as new information on the federal financial assistance programs, their strategic deployment and other resources are developed.

Financial Resources Available to Assist Surgeons

The American College of Surgeons reminds Fellows that there are several federal loan programs available at present to assist them in maintaining the financial viability of their practices during the pandemic. Following are updates, additional resources, and information related to some of these options.

  1. If a large portion of your income is from Medicare and/or you need to receive funds quickly, then you may want to consider contacting your Medicare Administrative Contractor to take advantage of the Medicare Advance Payments Program. This program allows you to request up to three months of Medicare payments. These payments are essentially an interest-free loan against future Medicare claims. Applicants who receive advance payments will continue to bill and receive payments normally for 120 days; after that, all billed claims will automatically be used to offset their advance payment balance. The entire balance must be repaid within 210 days of when it was received.

Since its inception on March 30, 2020, the program has delivered more than $34 billion in funds to providers.

More information about this program can be found here.

  1. If the possibility of having your loan forgiven is important to you, then you should consider the Paycheck Protection Program (PPP). This program is intended to help businesses maintain operations and keep their staff on payroll. The program is limited to those entities with 500 or fewer employees. If the loan funds are used for the specified allowable purposes such as payroll, mortgage interest, rent, or utilities, up to the full amount may be forgiven. Congress initially included $349 billion for this program as part of a small business loan package in the $2.2 trillion coronavirus stimulus package that passed late last month. Since applications from small business and sole proprietorships began to be accepted on April 3, 2020, reports from the field indicate the application is somewhat complex and cumbersome. Fellows should consider enlisting the services of their professional tax advisor for the application process.

Application for the PPP is submitted through your local SBA-affiliated bank or financial institution.
Fellows considering this option are encouraged to apply as soon as possible because of the current funding cap. However, there are reports that Congress plans to add additional funds to the program.

Please see a list of Frequently Asked Questions prepared by Hart Health Strategies for the American College of Surgeons here: Small Business – PPP FAQ

  1. Among the other provisions included in the series of recent congressional actions to assist small business was a shoring up of resources and expanding of the availability of loans directly through the SBA and the Economic Injury Disaster Loan (EIDL) program.

The SBA’s EIDL program provides small businesses with working capital loans of up to $2 million for vital economic support designed to help overcome loss of revenue. Small business owners in all 50 states; Washington, DC; and U.S. territories are eligible to apply. Note that while these loans have favorable terms, they are not forgiven.

As noted previously, this program is administered directly through the SBA itself, NOT your local bank or SBA-approved lender. It should be noted that the EIDL program is also limited to entities with 500 or fewer employees.

Fellows may learn more about EDILs and apply here.

Tax Provisions Could Help Ease Financial Stress

In addition to loans and advance payments through the SBA and the Centers for Medicare & Medicaid Services, there may be flexibility available through the Internal Revenue Service that could temporarily free operating capital or even offset prior years’ profits with losses caused by COVID-19. Following are questions and tax provisions that Fellows should consider discussing with their tax professional to see if they apply to their individual situation.

  • Is my practice eligible for the employee retention tax credit? This is a refundable Social Security tax credit equal to 50 percent of qualified employee wages (up to $10,000 of wages for each employee); however, small businesses that take SBA loans like those made available by the PPP are not eligible. More information can be found here.
  • Does it make sense for me to defer the Social Security portion of employer payroll taxes owed for the period between March 27, 2020 and December 31, 2020? (Note that the deferred amount must be repaid, with 50 percent of the deferred amount due by December 31, 2021, and the remainder to be paid by December 31, 2022.)
  • Do any of the modifications of Net Operating Loss rules (such as allowing them to offset 100 percent of taxable income or to be carried back for five years) apply to my practice?
  • Can I benefit from the temporary increase of the business interest expense limitation to 50 percent of adjustable taxable income for tax years 2019 and 2020?
  • Does my practice have excess business losses for tax years 2018, 2019, and 2020 that can be used due to the suspension of limitations for pass-through entities and sole proprietorships?
  • Can I claim 100 percent bonus depreciation for real estate and leasehold improvements placed in service after 2017?
  • Are there other less common flexibilities such as greater limits on charitable deductions, alternative minimum tax credit refunds, or funding of defined benefit pensions that might apply to my situation?

Commercial insurance coverage for telehealth services
For surgeons actively engaged in the provision of telehealth services, the following document from the American Academy of Orthopaedic Surgeons provides a comprehensive list of commercial health plan payors and their coverage policies for telemedicine services during the pandemic.

Practical Suggestions and Options to Consider in Weathering the Storm

The American College of Surgeons has been closely monitoring both the development of the federal response to the COVID-19 epidemic and how the programs and regulations coming out of Washington, DC, are being used by surgeons. In addition to the federal response, there are a number of tips and strategies that Fellows have developed for their practices. Following is a collection of practical suggestions, tools, tactics, and options that other surgeons have used as part of their own individual response to the financial circumstances created by the ongoing COVID-19 pandemic.

  • Make an appointment with your tax professional and/or financial advisor and seek their advice. (Consider bringing the list of tax questions provided previously with you.)
  • Try to keep staff on the payroll by limiting the number of staff in the office at any one time.
  • Take advantage of and apply for financial resources made available to small businesses by recent congressional action taken in response to the pandemic. (See previous Financial Resources section.)
  • Consider speaking with your malpractice insurance provider and ask about deferring payment of premium for a negotiated period of time.
  • When funds from the Medicare Advance Payment Program or SBA loans (PPP or EIDLs) are received, treat those funds as general receipts and carefully document where they are expended.
  • The current experience of surgeons indicates that the Medicare Advance Payment Program likely represents the best option for receipt of funds in the shortest period of time after application.
  • The PPP could be beneficial for those who qualify, because proceeds from the loan used for approved purposes may be forgiven. Although Congress may increase the amount of funds available, Fellows are urged to complete their applications as soon as possible to ensure the funds are not depleted before they are able to take advantage of this program. 
  • For those applying for a loan through the PPP, engagement of your tax professional has been found to be helpful by those who have already completed applications. The application is complex, and true benefit is obtained by seeking professional assistance.
  • For those providers who receive a loan through the PPP, keeping accurate records of expenses that can be counted toward the loan forgiveness provisions is imperative. Specifically, those expenses include payroll, mortgage interest, rent, and utilities. Again, it should be noted that up to the full loan amount may be forgiven if the proceeds are used to keep staff on payroll and proper documentation is maintained.
  • If receiving Medicare Advance Payment, create a plan for payback based on conservative projected accounts receivable and practice expenses.
  • Consider applying for the SBA's Economic Injury Disaster Loan in case it is needed to support cash flow for your practice when Medicare Advance payment paybacks are due. Simply, pay off the loan if you do not need to use it. 
  • In order to preserve your personal assets and retirement savings through this crisis, consider avoiding loans that use those assets as collateral. 

Apply for an Accelerated or Advance Payment from CMS

The Centers for Medicare & Medicaid Services (CMS) has delivered close to $34 billion in the past week to health care providers as part of its Accelerated and Advance Payments Program. These payments are intended, in part, to provide relief to providers who are delaying nonessential elective operations. Under this program, health care providers, including physicians, can receive three months of their Medicare reimbursement as an interest-free loan that they must repay. If the loan is not repaid in the specified timeframe the physician will be required to repay a lump sum with interest. The Fact Sheet on the Accelerated and Advance Payment Program describes the process and how to submit a request. Contact regulatory@facs.org with questions.

Federal Communication Commission Announces COVID-19 Telehealth Programs

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted March 27, included $200 million in funding for the Federal Communications Commission (FCC) to establish an emergency program allowing health care providers access to capital to purchase the services and devices necessary to provide care via telehealth. In addition, the FCC separately allocated $100 million to create a Connected Care Pilot Program, which will provide funding to cover 85 percent of the costs of broadband connectivity.

Telehealth Program Funding

The FCC will award up to $1 million per eligible health care provider applicant to purchase telecommunications services, information services, and devices necessary to provide critical connected care services, whether for treatment of coronavirus or other health conditions during the coronavirus pandemic. Eligible providers include: postsecondary educational institutions that offer health care instruction, teaching hospitals, and medical schools; community health centers or health centers that provide health care to migrants; local health departments or agencies; community mental health centers; not-for-profit hospitals; rural health clinics; skilled nursing facilities; or consortia of health care providers that comprise one or more facilities that fall into the first seven categories.

The FCC has identified minimum information required in the applications, which must be submitted through the agency’s online Electronic Comment Filing System (ECFS) under WC Docket No. 20-89. Applications must be addressed to the FCC Secretary, Office of the Secretary, FCC. The FCC will issue a notice announcing when applicants can begin submitting applications.

Federation of State Medical Boards highlights the rulings of each state’s medical board

Center for Connected Health Policy outlines current state laws and reimbursement policies by state

Center for Connected Health Policy’s legislative and regulatory tracking tool

Connected Care Pilot Program

The Connected Care Pilot Program will help eligible health care providers defray the costs of services and equipment, including:

  • Paying for broadband Internet access services for their patients
  • Paying for the health care provider’s own broadband data connections as needed to enable broadband connections with their patients (but not with other health care providers)
  • Purchasing other connected care information services
  • Buying certain types of network equipment, such as routers and servers, but not end-user or medical equipment

The FCC order with detailed information regarding the Telehealth Program and Connected Care Pilot Program, including application requirements, can be accessed here. To learn more, read the FCC press release.

Kansas Medical Mutual Insurance Company Answers Liability Coverage Question

The Kansas Medical Society (KMS) has received questions from physicians who are concerned that they may be asked to provide care outside of their usual practice setting or specialty during the COVID-19 pandemic. KMS reached out to the Kansas Medical Mutual Insurance Company (KAMMCO) for advice.

KAMMCO recognizes that physicians and other health care professionals may be faced with situations during the COVID-19 pandemic crisis that they may consider to be outside their traditional specialty training or expertise. Each physician will have to make his or her own determination as to the level of comfort and competency regarding the clinical situations in which the physician is placed.

Notwithstanding, subject to the terms and conditions of a physician’s particular insurance policy, most companies, like KAMMCO, provide coverage that is not specialty or geographically specific, as long as the care is delivered within the U.S. If the physician or health care provider is a Kansas resident and in compliance with the Kansas Health Care Stabilization Fund (Fund), the Fund also will provide coverage anywhere in the U.S. that the professional is licensed to provide care. KAMMCO appreciates this situation creates much stress among physicians and other health care professionals as to the potential liability they may be assuming during these extraordinary circumstances and encourages providers to check with their insurer if they have any questions about coverage limitations, and so on.

KMS is working with KAMMCO and the Kansas Hospital Association to develop a legislative proposal that would provide liability protection to health care professionals while they are in good faith delivering care related to the COVID-19 emergency. It is unclear at this point when the legislature will return to the capitol to complete the 2020 session.