credit Archives - Medical Association of the State of Alabama

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Tips for Preserving Tax Deductions in 2018

Posted by admin on February 16, 2018

Starting this year, the Tax Cuts and Jobs Act limits an individual’s or a couple’s federal tax deduction for state and local taxes (SALT) to $10,000. SALT deductions include deductions on state and local income, sales and property taxes. High-income earners, such as physicians, frequently have a SALT deduction far exceeding the new $10,000 cap and will, therefore, be negatively impacted by this change.

To illustrate, if you paid $9,000 in property tax and $22,000 in State of Alabama income taxes in 2017, you would have received a $31,000 deduction on your Federal return. In 2018, that deduction would be capped at $10,000. Consequently, the taxpayer will lose $21,000 of deductions. Fortunately for Alabamians, there is a way to help mitigate this adverse tax change in 2018.

The Alabama Accountability Act (AAA) provides an opportunity to preserve your state tax deduction through donations to a Scholarship Granting Organization (SGO). This Act, passed by the Alabama Legislature in 2015, enables Alabama residents to use up to half of their state income tax burden (limited to $50,000) to support approved schools in our state which serve an economically disadvantaged student population. The AAA donation provides state income tax credits (a dollar for dollar reduction in Alabama tax liability) to donors who contribute to a state-approved SGO operating within Alabama. This payment is treated as if you paid Alabama taxes, but for federal purposes, your donation will be reported as a charitable contribution. Otherwise, as described above, the state tax payment would be reported on your federal return as a SALT deduction subject to the $10,000 cap and provide no tax benefit to you.

Let’s update the illustration above to demonstrate the AAA donation benefit. You pay one half of the $22,000 state of Alabama income tax directly to the state as usual. You pay the remaining half of the $22,000 state of Alabama tax liability with an AAA donation ($11,000). The $11,000 AAA donation counts as a state tax payment on the Alabama tax return. However, on the federal tax return, the $11,000 AAA donation is deducted as a charitable contribution and escapes the $10,000 SALT deduction cap. The AAA donation preserves an $11,000 tax deduction which, at top federal tax brackets, is roughly $4,000 in federal income tax dollars.

It is important to emphasize the state allocates $30,000,000 annually for the AAA tax credit program. We expect the 2018 allotment to be reserved quickly, given the significant tax benefit the AAA provides. Therefore, we encourage you to act quickly, if interested, before the opportunity is gone. Based on the current AAA usage rate, we anticipate the $30,000,000 allotment for 2018 could be exhausted by the end of April or earlier.

If you wish to take advantage of this program, there is a two-step process:

1) Reserve your credit on the Alabama Department of Revenue web portal, My Alabama Taxes (MAT); and

2) Write your check for that amount and send it to the Scholarship Granting Organization (SGO) as noted below.

Have your 2016 Alabama 1040 with you since you will need your state adjusted gross income to set up your account with the Alabama Department of Revenue.
Follow the steps on this website https://myalabamataxes.alabama.gov to create your MAT account, if you do not already have an account.
Once that is completed, follow the steps online to reserve your tax credit with the state by clicking on “Report a donation to an SGO” on the right side of the web page.
Fill in your personal information and make a selection of an “SGO.”
Once you have filled in your personal information, you will then write a check for the amount you reserved to the SGO you selected.

This SGO contribution benefits deserving schools, counts as a payment of your Alabama personal income tax and enables you to gain federal tax deduction for a cost that will be otherwise non-deductible. We encourage immediate action on this mutually beneficial step. If you need help, contact one of our Warren Averett Healthcare Consulting team members.

Article contributed by Sae Evans, Maddox Casey and Jim Stroud, Members, Warren Averett Healthcare Consulting Group. Warren Averett is an official Gold Partner with the Medical Association.

Tags: credit, income, rate, SALT, tax

Posted in: Management

CMS Issues More Protections to Physicians from Health Plan Credit Card Fees

Posted by admin on November 3, 2017

In 2016 the Medical Association passed legislation to prevent physicians from unknowingly accepting virtual credit cards (VCC) and their hidden fees as a form of payment from health insurance companies and RCOs, even though the Medicaid RCO system in Alabama now appears to be defunct. Now, the Centers for Medicare and Medicaid Services (CMS) has given notice that health plans cannot require physician practices or other health care organizations to accept payments made using so-called VCCs that are often accompanied by exorbitant service fees.

Once the Automated Clearing House (ACH) EFT standard went into effect in 2014, the Medical Association joined with other medical groups to advocate that CMS issue guidance spelling out physician rights regarding insurance company electronic payments, even passing legislation in Alabama. CMS has now posted the requested clarification of its EFT operating rules and standards on its HIPAA Administrative Simplification frequently asked questions webpage.

Unfortunately, not all private insurers followed the letter or spirit of the regulations and some insisted on making payments with VCCs, a 16-digit number emailed, faxed or mailed to a provider in order to make a one-time payment. In Alabama, all health insurers and RCOs must make physicians aware of their contracts of a physicians’ right to request payment via flat-fee “direct deposit” methods over VCCs, which charge a percentage-of-claims-based fee. The new law requires that all such physician requests for payment preference be honored.

Physicians accepting VCCs are losing a percentage of their contracted rate for any claims paid via this method. The fees may be as high as 5 percent of the total payment amount and health insurers paying claims with VCCs often receive cash back (up to 1.75 percent) or other incentives. The bank or credit card company issuing the VCC is also paid for use of their card network. In other words, unknown to many physicians and their staff responsible for claims and billing, insurers and credit card companies are indirectly charging up to 5 percent of a claim for processing the transfer of money via VCC. In some practices, these fees may add up to substantial sums – and the charges are hidden.

According to CMS: “A health plan cannot require a provider to accept virtual credit card payments. A provider has the right to request that a health plan use the electronic funds transfer (EFT) transaction. If a provider makes the request, the health plan must comply.”

Health insurance companies and RCOs place language into all their contracts with physicians outlining that a physician’s request to be paid with an ACH EFT (electronic funds transfer) must be honored. Under HIPAA, payments made via the Automated Clearing House may only be a nominal flat fee – for instance, $0.34 instead of the 5 percent attached to some VCCs. The required language for all contracts, which must be in all caps, bolded 12-point font and offset from other language, reads as follows: “If a covered health care provider requests payment under a health insurance plan from a health insurer or its contracted vendor or a regional care organization be made using ACH electronic funds transfer, that request must be honored. Furthermore, such a request may not be used to delay or reject a transaction, or attempt to adversely affect the covered health provider.”

Although the Medical Association was successful in getting the law changed in Alabama to ensure physicians are notified in their contracts of their right to be paid with ACH EFT payments over VCCs, physicians and practices must individually decide whether or not they want to consent to the percentage-based fees associated with acceptance of VCCs. Additionally, because the Medical Association successfully included specific language be placed in each contract that the health insurer cannot delay or deny a transaction because of the choice of electronic funds transfer, each physician and practice should look for hidden “value-added” services. For instance, some ACH vendors have attempted to charge a higher fee for providing access to a 24-hour hotline. Under existing law, physicians are not required to enroll in such “value-added” programs.

Tags: ACH, card, cash, credit, EFT, incentive, payment, VCC

Posted in: CMS

What If No One Was on Call [at the Legislature]?

Posted by admin on May 30, 2017

2017 Legislative Recap

In times of illness, injury and emergency, patients depend on their physicians. But what if no one was on call? Public health would be in jeopardy. However, the same holds true during a legislative session. What would happen if the Medical Association was not on call, advocating for you and your patients at the legislature? Keep reading to find out.

Moving Medicine Forward

Continued success in the legislative arena takes constant vigilance. Click here to see our 2017 Legislative Agenda.

If no one was on call… Alabama wouldn’t be the 20th state to enact Direct Primary Care legislation. DPC puts patients and their doctors back in control of patients’ health and helps the uninsured, the underinsured and those with high-deductible health plans. SB 94 was sponsored by Sen. Arthur Orr (R-Decatur) and Rep. Nathaniel Ledbetter (R-Rainsville) and awaits the Governor’s signature.

If no one was on call… the Board of Medical Scholarship Awards could have seen its funding slashed but instead, the program retained its funding level of $1.4 million for 2018. The BMSA grants medical school loans to medical students and accepts as payment for the loan that student’s locating to a rural area to practice medicine. The BMSA is a critical tool for recruiting medical students to commit to practice in rural areas. As well, the economic footprint of every physician is at least $1 million, which improves both community health and local economies.

If no one was on call… Medicaid cuts could have been severe, possibly reducing access for patients within an already fragile system in which less than 20 percent of Alabama physicians participate. Due to work done during the 2016 second special session and the 2017 session, sufficient funds were made available for Medicaid without any scheduled cuts to physicians for 2018. Increasing Medicaid reimbursements to Medicare levels — a continuing priority of the Medical Association — could further increase access to care for Medicaid patients.

Beating Back the Lawsuit Industry

Personal injury lawyers are constantly seeking new opportunities to sue doctors. While Alabama’s medical liability laws have fostered fairness in the courtroom and improved the legal climate, each year personal injury attorneys seek to undo parts of the very law that helps keep “jackpot justice” and frivolous suits in check.

If no one was on call… an $80 million tax increase on physicians to fund a new government-administered malpractice claims payout system called the Patients Compensation System could have passed. The PCS would administer damage claims for physical injury and death of patients allegedly sustained at the hands of physicians. Complaints against individual physicians would begin with a call to a state-run 1-800 line and would go before panels composed of trial lawyers, citizens and physicians to determine an outcome. In addition, any determinations of fault would be reported to the National Practitioner Databank. The Patient Compensation System would undo decades of medical tort reforms which the Medical Association championed and is forced to defend from plaintiff lawyer attacks each session. The PCS deprives both patients and doctors of their legal rights.

If no one was on call… physicians could have been exposed to triple-damage lawsuits for honest Medicaid billing mistakes. The legislation would create new causes of civil action in state court for Medicaid “false claims.” The legislation would incentivize personal injury lawyers to seek out “whistleblowers” in medical clinics, hospitals and the like to pursue civil actions against physicians and others for alleged Medicaid fraud, with damages being tripled the actual loss to Medicaid. The standard in the bill would have allowed even honest billing mistakes to qualify as “Medicaid fraud,” creating new opportunities for lawsuits where honest mistakes could be penalized.

If no one was on call… physicians would have been held liable for the actions or inactions of midwives attending home births. While a lay midwife bill did pass this session establishing a State Board of Midwifery, the bill contains liability protections for physicians and also prohibitions on non-nurse midwives’ scope of practice, the types of pregnancies they may attend and a requirement for midwives to report outcomes.

If no one was on call… the right to trial by jury, including jury selection and jury size, could have been manipulated in personal injury lawyers’ favor.

If no one was on call… physicians could have been held legally responsible for others’ mistakes, including home caregivers, medical device manufacturers and for individuals following or failing to follow DNR orders.

Protecting Public Health and Access to Quality Care

Every session, various pieces of legislation aimed at improving the health of Alabamians are proposed. At the same time however, many bills are also introduced that endanger public health and safety, like those where the legislature attempts to set standards for medical care, which force physicians and their staffs to adhere to non-medically established criteria, wasting health care dollars, wasting patients’ and physicians’ time and exposing physicians to new liability concerns.

If no one was on call… legislation could have passed to lower biologic pharmaceutical standards in state law below those set by the FDA, withhold critical health information from patients and their doctors and significantly increase administrative burdens on physicians. ICYMI, read our joint letter to the Alabama Legislature opposing the bill.

If no one was on call… allergists and other physicians who compound medications within their offices could have been shut down, limiting access to critical care for patients.

If no one was on call… numerous scope of practice expansions that endanger public health could have become law, including removing all physician oversight of clinical nurse specialists; lay midwives seeking allowance of their attending home births without restriction or regulation; podiatrists seeking to amputate, do surgery and administer anesthesia up the distal third of the tibia; and marriage and family therapists seeking to be allowed to diagnose and treat mental disorders as well as removing the prohibition on their prescribing drugs.

If no one was on call… state boards and agencies with no authority over medicine could have been allowed to increase medical practice costs through additional licensing and reporting requirements.

If no one was on call… legislation dictating medical standards and guidelines for treatment of pregnant women, the elderly and terminal patients could have been placed into bills covering various topics.

Other Bills of Interest

Rural physician tax credits… legislation to increase rural physician tax credits and thereby increase access to care for rural Alabamians did not pass but will be reintroduced next session.

Infectious Disease Elimination… legislation to establish infectious disease elimination pilot programs to mitigate the spread of certain diseases failed to garner support on the last legislative day.

Constitutional amendment proclaiming the State of Alabama’s stance on the rights of unborn children… legislation passed to allow the people of Alabama to vote at the November 2018 General Election whether to add an amendment to the state constitution to:

“Declare and affirm that it is the public policy of this state to recognize and support the sanctity of unborn life and the rights of unborn children, most importantly the right to life in all manners and measures appropriate and lawful…”

If ratified by the people in November 2018, this Amendment could have implications for women’s health physicians.

Coverage of autism spectrum disorder therapies… legislation passed to require health plans to cover ASD therapies, with some restrictions.

Portable DNR for minors… legislation establishing a portable DNR for minors to allow minors with terminal diseases to attend school activities failed to garner enough votes to pass on the last legislative day.

If the Medical Association was not on call at the Alabama Legislature, countless bills expanding doctors’ liability, increasing physician taxes, and setting standards of care into law could have passed. At the same time, positive strides in public health — like passage of the direct primary care legislation — would not have occurred. The Medical Association is Alabama physicians’ greatest resource in advocating for the practice of medicine and the patients they serve.

Click here for a downloadable version of our 2017 Legislative Recap.

Tags: 2017, autism, bill, biologic, care, compensation, credit, direct, dnr, DPC, FDA, home, jury, legislative, legislature, malpractice, Medicaid, midwife, PCS, primary, recap, scholarship, tax

Posted in: Advocacy