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The Tax Cuts and Jobs Act: How It Still Affects You

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The Tax Cuts and Jobs Act: How It Still Affects You

Editor’s Note: This article is a follow-up to The Tax Cuts and Jobs Act – How Will It Affect YOU? published in the Winter 2018 issue.

On Aug. 8, the IRS issued proposed regulations for the newly created Section 199A 20 Percent Qualified Business Income (QBI) deduction. 199A has been one of the most talked about aspects of the Tax Cuts and Jobs Act since its passage last December. This provision of the act was included in the tax reform bill in an attempt to give pass-through entities (such as partnerships, LLCs and S corporations) and sole proprietorships similar tax savings that were provided to C Corporations (C Corp tax rates were reduced from a high of 35 percent to a flat 21 percent). The new 20 percent QBI deduction is effective for the 2018 tax year through 2025.

Although the new tax deduction is generous, the structure of the deduction is complicated with many limits, phase-ins, and phase-outs. Whether or not you will be able to take the deduction depends upon many factors, the key being your personal taxable income. Other factors include wages paid by the practice, the value of business property, nature of income, etc.

Physicians are especially impacted by limits on the deduction since the income is earned from what the law labels as a “Specified Service Trade or Business” (SSTB).

What is a Specified Service Trade or Business (SSTB)?

Most unincorporated business owners, partners and S Corporation shareholders benefit from the 199A deduction. However, Congress precludes some higher-income business owners from taking the deduction if the income is earned from an SSTB.

An SSTB is a trade or business involving the performance of services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, investing and investment management, trading, dealing in certain assets or any trade or business where the principal asset is the reputation or skill of one or more of its employees. Per IRS regulations:

The term “performance of services in the field of health” means the provision of medical services by physicians, pharmacists, nurses, dentists, veterinarians, physical therapists, psychologists and other similar health care professionals who provide medical services directly to a patient. The performance of services in the field of health does not include the provision of services not directly related to a medical field, even though the services may purportedly relate to the health of the service recipient. For example, the performance of services in the field of health does not include the operation of health clubs or health spas that provide physical exercise or conditioning to their customers, payment processing, or research, testing and manufacture and/or sales of pharmaceuticals or medical devices.

Based on this definition, physician practices are considered SSTBs, and therefore, limits apply on the available deduction.

How does the deduction work?

The QBI deduction is based off “pass-through income,” income reported on a Schedule K-1 earned from partnerships, LLCs and S Corporations or if a sole proprietor, what is reported on Schedule C of Form 1040 individual income tax return. Wages reported on a W2 or guaranteed payments paid to partners do not qualify as QBI. It excludes any investment-related items, such as interest, dividends or capital gains or losses from the sale of property. The maximum deduction available is 20 percent of QBI.

Although the deduction is calculated based on income earned from a trade or business (i.e. – the physician practice), the actual amount of the deduction is dependent on the taxable income of the individual. Most physicians with taxable income over $415,000 filing a joint return will be hard-pressed to qualify for the deduction. As such, it is possible for a large group practice to have some physicians qualify for a QBI deduction and some not qualify when there is a large variation in income among the owners.

The deduction itself is claimed on Form 1040 individual income tax return. Form 1040 will include a new line for the deduction in arriving at taxable income.

How do I know if I qualify to take the deduction?

The deduction is fairly simple and straightforward for individuals with married filing joint taxable income of $315,000 or less ($157,500 or less if filing single). Those taxpayers receive the full 20 percent QBI deduction. Above those taxable income amounts, the 20 percent QBI deduction becomes subject to a tangled web of limitations, phase-ins, and phase-outs. Individuals with income from SSTBs (i.e. physician practices) are subject to even more limitations that, depending on the individual’s taxable income, quickly eliminate the 20 percent deduction altogether.

Let’s first examine the limits applicable to both service and non-service businesses alike once taxable income exceeds the limits noted above. The 20 percent qualified business income deduction is limited by the greater of:

  • 50 percent of W2 wages paid by the qualifying business or
  • 25 percent of W2 wages paid plus 2.5 percent of unadjusted basis of all qualified property.

These limits are phased in for joint filers with taxable income greater than $315,000 but less than $415,000 ($157,500 / $207,500 for non-joint filers) and result in a reduced 1991A QBI deduction.

In addition to the above limits, the ability to take the 199A QBI deduction for individuals with pass-through income from a SSTB is completely lost once individual taxable income exceeds $207,500 if filing single or $415,000 if filing joint. Phase out begins at $157,500 filing single and $315,000 filing joint.

The chart at the bottom of this section summarizes the various limitations, phase-ins and phase-outs for both SSTBs and non-SSTBs.

To illustrate, assume Dr. A is a sole practitioner who files a joint return. Her practice is organized as a single-member LLC. The qualified business income as reported on Schedule C of Dr. A’s 1040 is $240,000 after wages paid to staff of $195,000. Dr. A and her husband’s taxable income for the year is $295,000.

In this example, Dr. A’s tentative 20 percent deduction is $48,000 ($240,000 QBI* 20 percent). Since Dr. A’s overall taxable income is less than $315,000, she is able to take the full deduction of $48,000 since neither the W2 phase-in limit nor the SSTB phase-out limit applies.

But what if Dr. A’s taxable income is over the $415,000 limit noted above? Since the medical practice is considered a SSTB and income is over the allowed threshold, Dr. A is not allowed to take any amount as a QBI deduction.

It is important to note 199A generally requires taxpayers to identify QBI on a business-by-business basis. Physicians who own interests in other non-SSTB pass-through entities may still qualify for a 199A deduction for that trade or business.

IRS Anti-Abuse Regulations

Various planning strategies have been considered by physicians and their advisors on how to avoid the SSTB limitation. Some of these strategies became known as “crack and pack,” which involved splitting a practice into separate legal entities to isolate non-medical activities to qualify for some amount of deduction. One of the entities would provide the medical services and the other entity would lease office space, provide billing services, or various other administrative functions.

However, the regulations issued by the IRS contain various anti-abuse provisions – one of which significantly limits the ability to segregate activities among various entities when there is common ownership among the entities solely to qualify for the 199A QBI deduction. The proposed regulations state if any trade or business provides 80 percent or more of its property or services to an SSTB, and if that other trade or business and the SSTB share 50 percent or more common ownership, then that other business is considered an SSTB too. For purposes of this anti-abuse rule, ownership is both direct and indirect ownership by related parties.

It is a common practice for various components of a physician practice to be held in separate entities, often for legal protection and tax planning. One such example is real-estate held in a separate entity and rented to the practice. This is still acceptable; the anti-abuse regulations just prohibit taking a 199A QBI deduction in such circumstances.

The regs contain various other anti-abuse provisions, such as treating non-SSTB’s as an SSTB if they share expenses/overhead with a 50 percent commonly owned SSTB. In addition, there will be increased scrutiny over changes in classification between employee versus independent contractor or partner/shareholder status due to the impact on qualifying for the 199A QBI deductions. Physicians should consult with their attorney/tax advisor prior to making any such changes in an attempt to take a 199A QBI deduction.

Planning Opportunities

Although not every physician will be able to take advantage of the new 20 percent QBI deduction, the Tax Reform and Jobs Act still provides numerous other tax breaks, such as an overall reduction in individual income tax rates, elimination of some itemized deduction limitations, increased depreciation deductions, etc. For those physicians under the SSTB thresholds noted above, now is the time to time to consult with your tax advisor to ensure optimization of the 199A QBI deduction.

  • Physicians under the SSTB threshold should review and evaluate the following items and discuss with their tax advisor and attorney:
  • Whether he or she is operating the practice in the most appropriate entity form to qualify/maximize the 20 percent QBI deduction.
  • Partners in a partnership currently receiving guaranteed payments should consider revising their partnership agreements and taking draws instead to increase QBI and the corresponding 20 percent deduction.
  • For S Corporations, review compensation agreements and ensure a reasonable compensation is paid for services provided (not QBI), and pay the remainder of income as a distribution (does qualify for QBI).

In Summary

This summary merely scratches the surface of the 199A 20 percent QBI deduction and was written in the context of physician practices. Although the regulations are still in proposed form and not expected to be finalized until later this year, the Department of the Treasury has provided sufficient insight and interpretation of the law to plan for its implementation.

Executive Summary

  • The new 20 percent QBI deduction is based on pass-through income earned from partnerships, S-Corps, LLC’s or sole proprietorships.
  • W2 wages/guaranteed payments do not qualify as QBI.
  • Deduction will be claimed on Form 1040 individual tax return.
  • Claiming the deduction will be difficult, if not impossible to claim for physicians with taxable income over $207,500 if filing single or $415,000 if married filing joint unless there are sources of income from other non-SSTB pass-through entities.
  • Newly issued IRS anti-abuse regulations limit the ability to split apart practice into various entities to isolate non-medical activities in order to take the deduction.
  • Physicians earning under the above thresholds should meet with their tax advisor and attorney now to maximize potential deductions for 2018.

Mark Baker is a Principal with Jackson Thornton CPA’s and Consultants in Montgomery, Ala. He may be reached by calling (334) 834-7660 or email Mark.Baker@JacksonThornton.com. Jackson Thornton is an official partner with the Medical Association.

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Is Your Corporate Compliance Plan Up-to-Date?

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Is Your Corporate Compliance Plan Up-to-Date?

As 2019 kicks off, it is wise to review various aspects of your practice to ensure everything is up to date and continues to operate in compliance with applicable laws. One area of focus for such review is your corporate compliance plan.

Compliance plans are written policies and procedures, adopted by a health care provider, to assist in its day-to-day compliance with applicable laws and business policies. Health care providers who participate in a federal health care program are required to implement a corporate compliance plan.

A compliance plan that is drafted without further review, revision, or implementation carries the same effect as having no compliance plan at all. Thus, to be effective and beneficial, all compliance plans should be periodically reviewed and revised to address changes in the law, operational changes, and past experiences.

As you revise your corporate compliance plan consider the following:

  • The Office of Inspector General (“OIG”) has published guidance on effective compliance plans for many types of healthcare providers, including physician practices. While the OIG allows flexibility in developing a compliance plan, this guidance provides a good insight into the various areas and topics that might be included in an effective compliance plan. The OIG compliance plan guidance can be accessed at https://oig.hhs.gov/compliance/compliance-guidance/index.asp.
  • A main component of a corporate compliance plan is the written policies and procedures that set forth the day-to-day compliance expectations of the provider. Among other things, the policies should include a review of the applicable laws and regulations (g., Stark, Anti-Kickback, False Claims Act, Civil Monetary Penalties, etc.), what is expected in terms of complying with such laws, the consequences of noncompliance, and ways to report non-compliance.
  • Compliance plans should address the risks associated with a particular practice. Risk areas common to physician practices include coding and billing, medically necessary services, proper documentation, record retention, fraud and abuse concerns, and conflicts of interest.
  • Compliance plans should address monitoring and auditing processes that detect compliance violations and ways to respond to such violations. Among other things, there should be a mechanism for reporting compliance plan violations, investigating such reports, correcting compliance plan violations, and imposing disciplinary action.
  • An effective compliance plan should include a training component, pursuant to which employees and contractors are periodically educated and trained on the various elements of the plan. Training should occur both when an employee or contractor is hired and periodically thereafter (g., every year or every six months). Many providers have found monthly “reminders”, whether at a staff meeting or via e-mail distribution, to be effective.
  • The corporate compliance plan should be made available to all employees and contractors to which it applies. If your compliance plan is lengthy, you may want to consider also having a summary available that hits the main points of the plan.
  • Any revisions you make to the compliance plan as a result of your review should be formally adopted by the practice’s Board of Directors or similar Governing Body. Employees and contractors should be promptly updated on any revisions.

Kelli Fleming practices with Burr & Forman LLP and works exclusively within the firms Health Care Industry Group. Burr & Forman LLP is a partner with the Medical Association. 

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What Can Physicians Charge for Medical Records?

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What Can Physicians Charge for Medical Records?

The State of Alabama Board of Medical Examiners amended its rules that govern the fees physicians may charge to provide patients with copies of their medical records.2 The rules are set forth in Section 540-X-9-.10(2) of the Alabama Administrative Code, and the new rules became effective April 13, 2018.

Here are the key dos and don’ts physicians should take into account to determine how much (and whether) they should charge patients for copies of their records.

Don’t charge anything other than a “reasonable, cost-based fee” for necessary supplies, labor and postage.

As in the past, the new rules permit a physician to recover a reasonable, cost-based fee to comply with a patient’s request for copies of his medical records, subject to the prohibitions, requirements and recommendations below. Federal law and applicable U.S. Department of Health and Human Services (“HHS”) guidance specify that a reasonable, cost-based fee may include (i) certain costs for the labor required to copy the medical record (subject to certain limitations, as noted below); (ii) the physician’s costs reasonably incurred for supplies (e.g., costs for paper, toner and the like for paper copies, or for CDs, USB drives, or similar electronic media, if requested); and (iii) the physician’s costs reasonably incurred for postage, if the patient requests mail delivery to him or his designee. Only charge postage if the patient specifically requests mail delivery (and agrees to be responsible for the cost).

Don’t charge a “search” fee or other labor costs not specifically authorized by law.

Physicians may recover only certain, limited costs for labor required to copy a patient’s record. The fee may not include the physician’s costs, if any, to verify or document the patient’s request, costs to search for or retrieve the record, or costs to access, store and maintain electronic or paper records, or similar infrastructure costs. Among other things, this means that “search fees,” authorized by state law, are prohibited following the issuance of the new ALBME rules.3

In determining a reasonable, cost-based fee, labor generally may be calculated using either of two methods: (a) the physician’s actual labor cost to respond to the patient’s request; or (b) the average cost to respond to a similar request, based on a schedule.

Don’t charge more than the statutory limits, no matter what.

In contrast to prior rules, the new rules include additional nuance pertaining to the permissible charge for copying electronic medical records.

If the patient requests a paper copy of his medical record, whether the record is maintained in electronic or paper form, or an electronic copy of his paper record, the physician may charge a reasonable, cost-based fee, calculated using the factors listed above. The fee may be a per-page fee, so long as it is a reasonable, cost-based fee.4 As in the past, the new rules limit the amount a physician may charge for copies to $1.00 per page for the first 25 pages and $.50 per page for additional pages, plus the actual cost of mailing the record.5

However, if the patient requests an electronic copy of his electronic record, (i) the physician may not charge a per-page fee (regardless of amount); and (ii) the physician may either charge (a) a reasonable, cost-based fee, as determined above (subject to the prohibition on per-page fees) or (b) a flat fee of $6.50.

Don’t charge patients for copies if they can’t afford it.

Significantly, recent changes in federal and Alabama laws (i.e., HIPAA and the new ALBME rules) prohibit a physician from charging any fee to make copies of the medical record of a patient who is not able to pay.6 Unfortunately, there is no specific guidance to help physicians determine whether a patient is able to pay a reasonable, cost-based fee. The new rules indicate that, in making this determination, physicians “should give primary consideration to the ethical and professional duties owed to other physicians and to their patients.”

Don’t charge for access via an online patient portal.

Likewise, physicians may not charge a fee to a patient to access his electronic health record. Specifically, HIPAA precludes physicians and other covered entities from charging a fee to the patient to access his record using the View, Download and Transmit functionality of a certified electronic health record (“CEHRT”).

Notify the patient about any charges in advance.

Laws also prohibit a physician from charging a fee for copies unless the physician notifies the patient about the fee in advance (i.e., when the patient makes the request). The physician must also provide the patient with a breakdown of the fee, upon request. In fact, HHS recommends the physician make its normal charges for copies available to the public on its website or by other means.

Discussion

The new ALBME rules include some limitations not before instituted in previous rules. It is important to note the limitations discussed in this article only apply to a request made by the patient.7 So, for example, if a patient needs to provide copies of his medical record to an attorney, a physician may be permitted to charge a different (read: greater) fee if the attorney makes the request (by subpoena, for example), as opposed to the patient requesting the physician transfer the records to the attorney.

The new rules also include provisions intended to bring the Alabama rules into compliance with applicable provisions of the federal HIPAA rules.8 While the new rules provide needed clarity as to certain matters, questions remain. Likewise, HIPAA imposes certain additional limitations on permissible charges that must be taken into account, even though they are not mentioned in the ALBME rules.

In any event, the fact is, as in most legal and regulatory matters, the answer to the seemingly simple question, “What can I charge to make a copy of the patient’s record?” is it depends on a number of factors. In addition, federal and State of Alabama authorities have made it clear they intend to target physicians who charge excessive fees in future enforcement actions. Consequently, it is vital physicians have a proper understanding of the issues addressed above and promptly take appropriate action to comply.

Nothing in this article should be considered legal advice. In the event you need legal advice in respect to the matters above, or other matters, please contact appropriate legal counsel.

Article contributed by D. Brent Wills, Esq., and Mazie Bryant1 of Gilpin Givhan, PC. Gilpin Givhan, PC, is an official partner with the Medical Association.

References
1 Ms. Bryant is a Juris Doctor candidate at the University of Alabama School of Law.

2 See Ala. Admin. Code § 540-x-9-.10(2).

3 Note Section 12-21-6.1 of the Alabama Code still permits a $5.00 “search fee” to be charged. HIPAA explicitly pre-empts Alabama law on this issue. It is not clear whether or when the Alabama Legislature will update the statute.

4 Although HIPAA does not specify a per-page fee that constitutes a reasonable, cost-based fee, there is no indication that the (maximum) per-page fees specified in the new ALBME rules would not pass muster.

5 See Ala. Admin. Code § 540-x-9-.10(2).

6 Ala. Admin. Code 540-X-9.10(2).

7 Note HIPAA treats a request by the patient’s personal representative (as defined in the Privacy Rule) as a request made by the patient.

8 “HIPAA” means, in this context, the federal Health Insurance Portability and Accountability Act, together the privacy, security and breach notification rules promulgated thereunder, as set forth at 42 CFR Part 160 and Part 164, as modified by the Health Information and Technology for Economic and Clinical Health Act of 2009 (“HITECH”).

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A Refresher in the Medicare Claims Appeals Process…

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A Refresher in the Medicare Claims Appeals Process…

With the increased audit activity we are seeing among the alphabet soup of Medicare contractors – RACs, ZPICs, SMRCs, CERTs, etc. – now appears to be a good time for a refresher on the Medicare claims appeals process. Due to this increased audit activity, more and more claims are being denied, both under pre-payment review and post-payment review. This article provides an overview on the Medicare claims appeals process, as well as some tips and pointers to keep in mind.

Request for Redetermination

A request for redetermination, the first level of appeal, must be filed within 120 days of receipt of a demand letter from the Medicare carrier (or, if no demand letter is received, within 120 days from the date a Medicare remittance advice shows a claim denial). If the request for redetermination is filed within the shorter time frame of 30 days, recoupment will not be initiated. If the request for redetermination is filed after the 30-day period, recoupment may be initiated, but will be stopped once the appeal has been filed. Interest begins to accrue on the 31st day and continues to accrue, even if an appeal is filed, until the overpayment is repaid or an entirely favorable decision is rendered. Thus, the only way to avoid the accrual of interest completely is to repay the overpayment before the 31st day. However, you still retain appeal rights even if the alleged overpayment has been repaid — you just have to go through the hassle of trying to get the money back from Medicare if a favorable decision is eventually rendered.
To ensure that all the relevant information is included, send a cover letter containing your arguments (with supporting documentation), as well as the request for redetermination form available at https://www.cahabagba.com/part-b/claims-2/appeals-2-2/.

The first level of appeal is reviewed by the applicable Medicare carrier, which for physicians practicing in Alabama is Cahaba GBA. The Medicare carrier has 60 days to render a decision.

Request for Reconsideration

A request for reconsideration, the second level of appeal, must be filed within 180 days of receipt of a decision by the Medicare carrier on
the request for redetermination filing. If the request for reconsideration is filed within the shorter time frame of 60 days, recoupment will not be initiated. If the request for reconsideration is filed after the 60-day period, recoupment may be initiated, but will be stopped once the appeal has been filed. Interest will continue to accrue, even if an appeal is filed, until the overpayment is repaid or an entirely favorable decision is rendered. Importantly, all information must be presented at the request for reconsideration level of appeal, as new information is generally not allowed to be presented at the following levels of appeal.

To ensure that all the relevant information is included, send a cover letter containing your arguments (with supporting documentation), as well as the request for reconsideration form available at https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/Downloads/CMS20033.pdf.

The second level of appeal is reviewed by the applicable Qualified Independent Contractor (“QIC”), an independent party hired by Medicare to review second level appeals. The QIC has 60 days to render a decision.

Administrative Law Judge

A request for a hearing before an Administrative Law Judge (“ALJ”), the third level of appeal, must be filed within 60 days of receipt of a decision by the QIC on the request for reconsideration, assuming the monetary thresholds are satisfied. Importantly, there is no opportunity to stop recoupment at this level of appeal. Thus, recoupment will begin and will continue until a favorable decision is rendered or until the full amount of the overpayment and accrued interest has been offset. Interest will continue to accrue at this level of appeal until the overpayment is repaid, offset through recoupment, or an entirely favorable decision is rendered.

To ensure that all the relevant information is included, utilize the ALJ hearing request form available at https://www.hhs.gov/about/agencies/omha/filing-an-appeal/coverage-and-claims-appeals/request-an-alj-hearing/index.html.

The ALJ hearing is usually conducted by telephone or video conference. By regulation, the hearing is supposed to take place and a decision rendered within 90 days of the appeal request. However, due to backlogs at the ALJ level, it is currently estimated that appeals will not be heard by ALJs for approximately 6-8 years, unless there is Congressional action to resolve the backlog. There is an option to escalate the appeal to the next level if a decision is not rendered timely in light of this delay. However, the success rate for providers at the ALJ level is relatively high, so bypassing this level of review is not always in the provider’s best interest. Nonetheless, despite the delay by the ALJ office, recoupment will continue.

Medicare Appeals Council

A request for review by the Medicare Appeals Council (“MAC”), the forth level of appeal, must be filed within 60 days of receipt of a decision from the ALJ, assuming the monetary threshold is satisfied. The MAC is supposed to render a decision within 90 days. However, due to backlogs, MAC decisions are also taking longer to be issued. There is an option to escalate the appeal to the next level if a decision is not rendered timely. However, such escalation is not always in the best interests of providers.

Judicial Review

A request for judicial review by the appropriate federal district court must be filed within 60 days from receipt of the MAC decision, assuming the monetary threshold is satisfied. From this point, the judicial system will oversee the proceeding.

A couple of points to keep in mind with respect to Medicare claims appeals. Be proactive – review the RAC website for approved audit issues, as well as the most-recent OIG Work Plan for target issues. Develop a formal intake and review process for records requests and demand letters. Always respond to records requests in a timely manner, as the failure to do so will result in an automatic claim denial. Keep track of denied claims and look for patterns. Determine corrective action to take, if applicable, and appeal as necessary and appropriate. If you appeal, file everything by a trackable delivery method and keep copies of all documents that are filed and received. Always ask for confirmation in writing when receiving advice or instruction from the applicable review body.

While the claims appeal process can be frustrating, time-consuming, and costly, providers tend to have a high degree of success. However, many providers simply pay the overpayment amount without challenging the finding due to the associated time and expense. Depending on the amount of the overpayment and the frequency with which you believe the pertinent issue has occurred within your practice, spending the time and effort to appeal may be beneficial.

Article contributed by Kelli Fleming, a partner at Burr & Forman LLP and practices exclusively in the Birmingham office within the Health Care Industry Group. Burr & Forman, LLP is a Bronze Partner with the Medical Association.

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Emergency Physicians: Georgia BCBS Policy Violates Federal Law

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Emergency Physicians: Georgia BCBS Policy Violates Federal Law

WASHINGTON, DC – The American College of Emergency Physicians and its Georgia Chapter recently announced a policy that Blue Cross/Blue Shield of Georgia plans to implement in July, making subscribers pay for any emergency department visit that turns out not to be an emergency, violates the “prudent layperson” standard, which is codified in federal law, including the Affordable Care Act. It’s also the law in more than 30 states.

The “prudent layperson” standard requires that insurance coverage be based on a patient’s symptoms, not their final diagnosis. Anyone who seeks emergency care suffering from symptoms that appear to be an emergency, such as chest pain, cannot be denied coverage even if the final diagnosis does not turn out to be an emergency. It also prohibits insurance companies from requiring patients to get prior authorization before seeking emergency care.

“This new policy will mean that patients experiencing emergencies will not go to the ER because of fear of a bill, and could die as a result,” said Rebecca Parker, MD, FACEP, president of ACEP. “Health plans have a long history of not paying for emergency care.  Now, they are trying to roll over federal law that emergency physicians fought for to protect patients from this ‘profits first, people last’ behavior by insurers.”

In the new policy, final diagnoses that BCBS considers to be “non-urgent” would not be covered if the patient goes to the emergency department, leaving patients to decide whether they are experiencing an emergency. A 2013 study in JAMA found a nearly 90 percent overlap in symptoms between emergencies and non-emergencies.

“This policy threatens the safety of all Georgians,” said Matt Lyon, MD, FACEP, president of Georgia’s ACEP Chapter. “We treat patients every day with identical symptoms – some get to go home and some go to surgery. There is no way for patients to know which symptoms are life-threatening and which ones are not. Only a full medical work-up can determine that.”

Dr. Lyon adds that this action will be especially bad for Georgia’s rural population, where citizens are often limited in their options for medical care.

“If patients think they have the symptoms of a medical emergency, they should seek emergency care immediately,” said Dr. Parker. “The vast majority of emergency patients seek care appropriately, according to the CDC.  Patients cannot be expected to self-diagnose their medical conditions, which is why the prudent layperson standard must continue to be included in any replacement legislation of the Affordable Care Act.”

ACEP is the national medical specialty society representing emergency medicine. ACEP is committed to advancing emergency care through continuing education, research and public education. Headquartered in Dallas, Texas, ACEP has 53 chapters representing each state, as well as Puerto Rico and the District of Columbia. A Government Services Chapter represents emergency physicians employed by military branches and other government agencies.

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What You Need to Know about the Business of Practicing Medicine

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What You Need to Know about the Business of Practicing Medicine

While physicians today learn cutting-edge medical treatments and technologies, most of them don’t receive any instruction on the business side of medicine. That’s an unfortunate omission; practicing medicine requires doctors to enter contracts, to be aware of applicable rules, laws and regulations, to market themselves, to understand proper coding requirements, and to properly collect patient payments.

Today we will focus on one of the first business documents a physician will encounter: a contract with a physician practice. What subjects will it cover? What questions can you ask? Should you get a professional to look at the document?

Compensation is one item that will be addressed in the contract. Be sure you understand how your compensation is determined, whether you have the opportunity to earn a bonus, and exactly what a bonus will be based on. You may be offered a trial period to practice as a salaried physician (perhaps one to three years) before you can join the practice as a partner.

Don’t be afraid to ask questions. If you are required to work as a salaried physician for a time, how does the practice decide whether or not to offer you a partnership? What has happened to physicians who have come before you? Has anyone failed to make partner, and if so, what were the reasons?

If you are fortunate enough to be considering competing offers, don’t look at salaries in a vacuum. A quick online search will reveal the average income of a physician in your specialty in the city you are considering. Similarly, you can search and compare the cost of living in different cities. A slightly lower offer may go farther in a city with a much lower cost of living.

Do not forget to factor in benefits as well. A practice that pays for your CME, malpractice insurance, health and disability insurance, and makes generous contributions to your retirement account is relieving you from paying thousands of dollars per month.

OnBoard Healthcare is a partner of the Medical Association. Visit them online for more information.

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Is a Physician Leaving Your Practice? Here are Your “Must Have” Employment Agreement Provisions (Part I)

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Is a Physician Leaving Your Practice? Here are Your “Must Have” Employment Agreement Provisions (Part I)

The following is the first installment of a three-part series discussing important provisions in physician employment agreements.

When a physician leaves a medical practice, especially if the physician stays in the area to compete against his/her former employer, the situation can become stressful and acrimonious. During the final weeks of employment, the departing physician can start to focus more on his/her new practice to the detriment of the current employer, and disputes often arise regarding access to medical records, soliciting patients and employees and when to schedule procedures – before or after termination. We have seen both medical practices and departing physicians engage in questionable conduct in order to keep as many patients as possible. Lawyers are often engaged to negotiate the terms of separation or, in a worse-case scenario, to file or defend a lawsuit.

Over the years, we have counseled hundreds of physician practices on how to successfully navigate the various issues that arise when a physician departs, regardless of whether the physician is an employee or an owner. Careful planning on the front end through a comprehensive employment agreement is the most important element in an amicable and fair separation. More often than not, we have found that disputes and subsequent litigation can arise when the employment agreement is not properly drafted or does not adequately address the specific terms of separation.

This three-part series provides a summary of the key provisions (with sample language) that can be incorporated into a physician employment agreement to help mitigate problems when a physician leaves your practice. Since each medical practice is unique, please consult with your own attorney before using any of the provided sample provisions in a physician employment agreement.

Setting Expectations. Unless there is an immediate termination due to a breach of the employment agreement or other significant event, such as loss of license, oftentimes a physician’s employment is terminated by either party “without cause” upon thirty (30) to ninety (90) days prior written notice. In that situation, the physician continues to work for the medical practice during the notice period. This can be a very stressful time for both the practice and the departing physician, as the practice often feels that the physician’s loyalties have shifted. Even though the physician remains employed (and receives compensation), the physician may not be acting in the best interest of the soon-to-be former employer. As such, it is helpful to set expectations of conduct in the employment agreement during this transition period.

Following any notice of termination of Physician’s employment with the Employer which does not immediately terminate Physician’s employment, Physician shall continue to conduct himself/herself in accordance with the terms of this Employment Agreement, and specifically shall not: (a) copy (or instruct Employer personnel to copy) medical charts of patients for Physician’s use after termination of employment with the Employer, (b) compile (or instruct Employer personnel to compile) lists containing patient data, including patient names, addresses and/or telephone numbers of Employer’s patients for Physician’s use after termination of employment with the Employer, (c) schedule (or instruct Employer personnel to schedule) medical appointments, procedures and/or surgeries between Physician and Employer’s patients subsequent to the termination date of Physician’s employment with the Employer, (d) take vacation or continuing medical education time-off that is inconsistent with Physician’s normal vacation and continuing medical education time-off, or (e) otherwise diminish or lessen Physician’s services for the Employer.

In addition, upon termination of employment the departing physician should be required to complete certain obligations.

Notwithstanding the termination of Physician’s employment with Employer, Physician shall be required to: (a) cooperate with Employer on any malpractice or other actions or suits related to Physician, (b) immediately upon termination complete all medical records and return all property belonging to Employer, including, without limitation, patient and client lists, fee schedules, compensation information, medical records and all confidential information of the Employer, and (c) otherwise fulfill all responsibilities hereunder reasonably determined by Employer to relate to the services rendered by Physician prior to termination.

Patient Notices. One of the most contentious issues surrounding the departure of a physician involves notifying patients the physician is leaving. Under Alabama licensure law, the departing physician is obligated to notify his/her “Active” patients of the date the physician is leaving and his/her new contact information. The purpose behind the notification is to provide patients the freedom of choice to remain with the practice or follow the departing physician, and to minimize potential patient abandonment issues. The term “Active” patients is not defined under licensure law, but in our experience notice should be sent to those patients treated by the departing physician within the last twelve (12) months immediately prior to termination. Physicians who practice in a specialty that might require longer follow-up care, such as oncology or cardiology, would likely need to notify patients treated in the eighteen (18) to twenty-four (24) months immediately prior to termination.

Sometimes, the medical practice will provide the departing physician a list of his/her patients with addresses so the physician can send the required notice. Oftentimes, however, the medical practice does not want to provide a patient list and arguments arise over the proper way to notify patients and the timing of such notice. Specifying in the employment agreement the form of such notice, how costs are to be allocated and the timing of the notice will help avoid arguments.

Upon termination of this Employment Agreement, Physician shall not have any right to receive a list of patients treated by Physician while an employee of Employer. Any notice required by law to be sent to Physician’s patients upon Physician’s departure from the Employer shall be sent by the Employer on behalf of Physician and the parties hereby agree that such notice shall only be sent to those patients for whom the Physician served as the primary physician within _________ (_____) months immediately preceding the date of termination of this Employment Agreement (e.g., Active Patients). The Physician and Employer shall each pay one-half of the costs associated with the notice, to include applicable postage. The form of notice shall reference both Employer (and its physicians) and the Physician and shall be agreed upon by the parties in good faith.  The Physician and Employer will work together in good faith to send out the notice at least thirty (30) days prior to the Physician’s last day of employment, if feasible.

Medical Records. The patient medical records, whether paper or electronic, belong to the medical practice. However, certain situations may arise when the practice should make medical records available to the departing physician after termination, including, for example, to address medical malpractice claims or government investigations. Further, patients have the right of access to their records and can direct that the practice make copies of their records available to the departing physician. Oftentimes, we will include in the patient notice a HIPAA Authorization form for the patient to sign if he/she intends to continue under the care of the departing physician and wants the medical practice to send copies of records to the physician.

Physician shall prepare in a timely and complete manner medical records relating to his/her provision of professional services in such form and containing such information as customarily maintained by Physician and as required by applicable federal and state law, third-party payer agreements and Employer. All patient records, case histories, films, and personal and regular files concerning the patients consulted, interviewed, treated or cared for by Physician pursuant to this Employment Agreement shall belong to and remain the property of Employer. Upon termination of this Employment Agreement, Physician shall have the right, in accordance with state and federal law, including the Health Insurance Portability and Accountability Act of 1996, and its corresponding regulations, as may be amended from time to time, to obtain copies at Physician’s sole cost and expense of any patient record of Employer; provided, however, that Physician was involved in the applicable patient’s care and further that Physician’s right to copy such patient records shall be subject to: (a) Employer receiving a written authorization signed by the patient authorizing Employer to release such copies to Physician, (b) Physician requiring access to certain patient records to defend or prepare to defend any alleged or threatened professional liability claims relating to such patient records, or (c) Physician requiring access to certain patient records with respect to governmental or third party payer audits or reviews of claims for reimbursement relating to such patient records.

While it may take more work on the front-end, having a well-thought out and comprehensive physician employment agreement will save significant time, effort and potentially money when a physician leaves your medical practice. Stay tuned for Part II of this three-part series which will discuss protecting other employees, compensation, and continuing malpractice insurance.

Read the full series:

A Physician is Leaving Your Practice – “Must Have” Employment Agreement Provisions (Part II)

A Physician is Leaving Your Practice – “Must Have” Employment Agreement Provisions (Part III)

Howard Bogard is a Partner with Burr & Forman LLP and serves as the Chair of the firm’s Health Care Industry Group. Kelli Fleming is a Partner with Burr & Forman LLP practicing in the firm’s Health Care Industry Group. Burr & Forman, LLP, is an official Bronze Partner with the Medical Association.

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Florida’s Physician “Gun Gag” Overturned on Appeal 

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Florida’s Physician “Gun Gag” Overturned on Appeal 

The full panel of the U.S. Court of Appeals for the 11th Circuit struck down the Florida law restricting physicians from speaking to patients and families about the risks of guns in the home. The case, Wollschlaeger v. Scott, was filed on June 6, 2011, challenged the Florida law, which could censor, fine and revoke the licenses of physicians if the Florida Board of Medicine determined whether the physician violated the law.

The American Medical Association along with several other major medical societies opposed the gun-gag law arguing it infringed on the First Amendment right of physicians to discuss gun safety, especially when patients have children who may happen across a loaded, unsecured firearm in the home. The law banned asking gun ownership questions except when deemed clinically necessary and forbade physicians from recording whether a patient owned a weapon in the medical chart claiming that the question was discriminating and harassing of gun owners.

“There was no evidence whatsoever before the Florida legislature that any doctors or medical professionals have taken away patients’ firearms or otherwise infringed on patients’ Second Amendment rights,” the court said, noting that lawmakers based their measure on six anecdotes about medical gun questions in a state with more than 18 million residents. “There is no actual conflict between the First Amendment rights of doctors and medical professionals and the Second Amendment rights of patients that justifies FOPA’s…restrictions on speech.”

Read the U.S. Court of Appeals for the 11th Circuit’s full decision here.

The continuation of the law would have prohibited a simple conversation in the physician’s office that can save lives. Research has shown that when physicians offer guidance on gun locks and safe storage, appropriate to a child’s specific age and development, it is more likely that families will take those necessary steps.

“Pediatricians routinely counsel families about safety issues, including firearm safety, as part of anticipatory guidance, in order to reduce risk of injury to children,” said Cathy Wood, M.D., FAAP, president of the Alabama Chapter of the American Academy of Pediatrics. “Florida’s ‘gun’ law was an assault on physicians’ right to counsel their patients. We are thankful for this court decision and the hard work of the pediatricians and other physicians in Florida that worked to protect this right, not just in Florida but hopefully for all states.”

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