Posts Tagged tax

New Learning Opportunities Available for County Societies

New Learning Opportunities Available for County Societies

The Medical Association is partnering with Warren Averett in 2019 to provide several topics that you can use to host events that will interest the physician members in your county, at no cost to you. Each talk lasts about 30 minutes and several can be combined for a 60-minute talk.

MACRA/MIPS Refresher. MACRA is now in year three and the law is still changing. This presentation will cover the new areas to address, and what is in the pipeline for years to come.

What Does the New Federal Tax Law Mean to Physicians?  The new tax law affects all taxpayers, but this presentation will center around how the law affects physicians and the items that need to be addressed to minimize your personal tax.

Customer Service in the Medical Practice. Medical practice patients have increasing expectations about their medical care and plenty of options for where to obtain care. The practices where excellence in care is delivered can be selective about which patients to accept and which problem patients to release. The secret to getting highest ratings from patients is often not found in the quality of care you provide. We will share what gets you a 5-star rating and how you can put the processes in place to make raving fans out of your patients and referral sources.

How Can You Increase Employee Morale? Unemployment is at an all-time low, other practices and local employers are bidding at higher pay rates to get your top talent, and younger employees change jobs with greater frequency than older staff. Unless you are willing to pay at the highest wage rate in town, you must cultivate a culture where high morale prevails among your staff. What are the ways other practices are retaining good staff by encouraging fun and a family atmosphere in the workplace?

To book a speaker for your next event, contact Meghan Martin at mmartin@alamedical.org or call (334) 954-2500. CME credit is not provided for these opportunities.  

Posted in: Education

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

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.

Posted in: Management

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Do You Qualify for Tax Amnesty?

Do You Qualify for Tax Amnesty?

The Alabama Legislature has enacted the Alabama Tax Delinquency Amnesty Act of 2018 to allow qualifying taxpayers to receive a waiver of penalties and interest on eligible tax types. The application period is now open through Sept. 30, 2018.

The Alabama Department of Revenue (ADOR) launched alabamataxamnesty.com, a website dedicated to the Alabama Tax Delinquency Amnesty Program of 2018, created by Act 2018-153.

The amnesty application period runs July 1 – Sept. 30, 2018, and applies to eligible taxes due before, or for tax periods that began before, Jan. 1, 2017. All applications must be submitted electronically through the Alabama tax amnesty website, where taxpayers can sign up to receive notifications about the program. The website also provides all the information taxpayers may need on the program and answers to frequently asked questions.

The amnesty program will be available to eligible taxpayers who have not been contacted by the department within the last two years and are not a party to a criminal investigation or litigation in any court of the United States or Alabama pending as of March 6, 2018, for nonpayment, delinquency, or fraud in relation to any Alabama taxes administered by the Department.

Most taxes administered by ADOR, with the exception of motor fuel, motor vehicle, and property taxes, are eligible for the 2018 Amnesty Program. This includes, but is not limited to, corporate and individual income, business privilege, financial institution excise, consumers use, sellers use, withholding, and sales taxes.

All penalties and interest will be waived for approved amnesty applications.

Taxpayers who believe they may have delinquent tax liabilities in Alabama should consult with their tax advisers regarding their eligibility for the tax amnesty program.

For more information on taxpayer eligibility, eligible tax types, leniency terms, the application process, and more, visit alabamataxamnesty.com or email amnesty@revenue.alabama.gov.

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How is Tax Reform Impacting Physician Practices?

How is Tax Reform Impacting Physician Practices?

The biggest U.S. tax reform since 1986 consists of major tax law changes that will affect everyone. The most significant change for corporations is a move from the graduated corporate tax rate structure to a flat rate. Although President Trump was originally fighting for the corporate rate to be reduced to 15 percent, lawmakers settled by reducing the rate from 35 percent to 21 percent. Other aspects of the tax law are more complex, and many businesses are wondering how this new law will affect their particular industries.

Let’s dive a little deeper into how tax reform is affecting physician practices.

A significant amount of attention has been focused on the 20 percent pass-through income deduction (also known as the qualified business income “QBI” deduction). Unfortunately, physician practices are specifically excluded from QBI deduction eligibility. However, an exception is made for physicians with taxable income under $415,000 for joint filers and $207,500 for single filers. Physicians with taxable income below these thresholds may be eligible for the 20 percent QBI deduction. The QBI deduction calculation is complex and should be considered in conjunction with physician group compensation models and reasonable compensation guidelines.

Entertainment expenses need to be evaluated and minimized. Under the new law, deductions for business-related entertainment expenses are disallowed. Meal expenses incurred while traveling on business will remain 50 percent deductible. The 50 percent disallowance will now also apply to meals provided at an on-premises cafeteria or otherwise on the employer’s premises for the convenience of the employer. After 2025, the cost of meals provided through an on-premises cafeteria or otherwise on the employer’s premises will be nondeductible.

Physicians should also take into account the tax reform changes for individuals by evaluating their personal mortgage interest structure to maximize the interest deduction. This can be achieved by turning a home equity line of credit (HELOC) into a traditional mortgage, if applicable. The home mortgage interest deduction has been modified to reduce the limit on acquisition indebtedness to $750,000 for married filing jointly (MFJ), down from $1,000,000 under previous law. However, if the acquisition indebtedness occurred before Dec. 15, 2017, the limit remains $1,000,000.

Finally, tax reform limits the Federal tax deduction for state and local taxes to $10,000, beginning in 2018. Many physicians will far exceed the $10,000 state and local tax deduction cap. The limitation on state and local tax deduction encompasses both income taxes, sales tax and property taxes. Physicians can potentially minimize tax liabilities by strategically planning the payment of their individual state taxes and utilizing any state scholarship granting organizations, such as an Alabama Scholarship Granting Organization (SGO) or Georgia Student Scholarship Organization (SSO). These programs allow taxpayers to receive a state tax credit in return for an eligible contribution. This contribution qualifies as a charitable contribution on a federal return. This turns a state tax payment into a charitable deduction for federal purposes, increasing itemized deductions.

 

Article contributed by Warren Averett CPAs and AdvisorsWarren Averett CPAs and Advisors is an official Gold Partner with the Medical Association.

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Twenty States File Lawsuit against Government for the Affordable Care Act

Twenty States File Lawsuit against Government for the Affordable Care Act

Twenty states, including Alabama, have formed a coalition to file a lawsuit against the government claiming that the Affordable Care Act is now unconstitutional.

According to the lawsuit, the states are claiming that since the GOP eliminated the tax penalty associated with the individual mandate, ObamaCare itself is no longer constitutional.

The Tax Cuts and Jobs Act, signed into law by President Donald Trump on Dec. 22, 2017, eliminated the tax penalty of the ACA, without eliminating the individual mandate itself, according to the lawsuit filed in U.S. District Court in the Northern District of Texas.

In 2012, the Supreme Court ruled 5-4 that ObamaCare’s individual mandate was constitutional because Congress has the power to levy taxes. The lawsuit points to that part of the ruling in its argument that the law is no longer constitutional.

“Following the enactment of the Tax Cuts and Jobs Act of 2017, the country is left with an individual mandate to buy health insurance that lacks any constitutional basis,” the lawsuit states. “Once the heart of the ACA — the individual mandate — is declared unconstitutional, the remainder of the ACA must also fall.”

In its current form, the ACA imposes rising costs and transfers an enormous amount of regulatory power to the federal government, according to a statement by Texas Attorney General Ken Paxton and Wisconsin Attorney General Brad Schimel, who are leading the 20-state coalition lawsuit.

The lawsuit was filed by the attorneys general for the states of Wisconsin, Alabama, Arkansas, Arizona, Florida, Georgia, Indiana, Kansas, Louisiana, Missouri, Nebraska, South Carolina, South Dakota, Tennessee, Utah, West Virginia, Texas, and by the governors of Maine and Mississippi.

The Medical Association is closely monitoring the lawsuit and will report more information as it becomes available.

Posted in: Legal Watch

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Alabama’s Physicians Contribute Billions to State Financial Health

Alabama’s Physicians Contribute Billions to State Financial Health

MONTGOMERY – Alabama’s more than 8,700 patient care physicians fulfill a vital role in the state’s economy by supporting 101,770 jobs and generating $16.7 billion in economic activity, according to a new report released by the Medical Association of the State of Alabama and the American Medical Association.

“Urban or rural, large group or solo practitioner, Alabama’s physicians are major economic engines,” said Medical Association President Jerry Harrison, M.D., of Haleyville. “While we are healers first, this study shows physicians help improve the health of our state as much as the health of our patients.”

The report measured the economic impact of Alabama’s physicians according to four key economic barometers:

  • Jobs: Each physician supported an average of 11.7 jobs, including his/her own, and contributed to a total of 101,770 jobs statewide.
  • Output: Each physician supported an average of $1.9 million in economic output and contributed to a total of $16.7 billion in economic output statewide.
  • Wages and Benefits: Each physician supported an average of $839,103 in total wages and benefits and contributed to a total of $7.3 billion in wages and benefits statewide.
  • Tax Revenues: Each physician supported $64,816 in local and state tax revenues and contributed to a total of $565.4 million in local and state tax revenues statewide.

The report focused on doctors of medicine (M.D.s) and doctors of osteopathy (D.O.s) who are engaged in treating patients as opposed to those who focus on research or teaching. While this new study illustrates that physicians carry tremendous responsibility as skilled healers charged with safeguarding healthy communities, it also shows their positive impact is not confined to the exam room. Physicians are strong economic drivers in their communities by the economic growth, opportunity and prosperity they generate.

The study also noted that in comparison to other industries, patient care physicians contribute as much or more to Alabama’s economy than higher education, nursing and community care facilities, legal services and home health care.

View the full report and an interactive map of the United States here: https://www.physicianseconomicimpact.org/.

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Tips for Preserving Tax Deductions in 2018

Tips for Preserving Tax Deductions in 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.

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Legislative Update: What Happened This Week in Washington…

Legislative Update: What Happened This Week in Washington…

From President Trump’s new tax plan to renewed funding for the Children’s Health Insurance Program to former President Obama’s Independent Payment Advisory Board, health care has been at the center of a lot of discussions this week on Capitol Hill.

Vote Expected Today for CHIP — The House is expected to vote today to pass legislation to refund Children’s Health Insurance Program and send federal funds to community health centers. However, questions remain about how to pay for the funding efforts. The original funding legislation for CHIP expired a month ago leaving state programs scrambling to extending their budgets to cover millions of covered children. It’s expected that the bill will face party opposition in the Senate. While both parties have agreed to renew CHIP, how to pay for the program remains the sticking point.

New Tax Plan Proposed — The proposal repeals the student loan interest deduction — a policy that helped more than 12 million students with education loans save up to $2,500 on their tax bills in 2015. Taxpayers aren’t required to itemize their deductions to claim it, but it’s available to anyone paying interest on either private or public student loans and makes less than $80,000 in a year. Many of those student loan holders are recent medical school graduates, who make a median $54,600 in their first year of residency, according to the Association of American Medical Colleges.

No More IPAB? — The House voted Thursday to abolish the Independent Payment Advisory Board (IPAB), a federal panel that was intended to find ways to curb Medicare spending with little Congressional oversight. It was a creation of the ACA, yet the IPAB’s presidentially-appointed members were never named. The bill now moves to the Senate where Republicans may have difficulty finding the necessary votes to pass it as a stand-alone bill before the end of the year.

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What Have You Done for Me Lately?

What Have You Done for Me Lately?

“What have the Medical Association and ALAPAC done for me lately?”

It’s a question posed to me often, in various forms, by physicians whom I’m asking to join the Medical Association and contribute to ALAPAC. It’s a tough one to reply to – not for a shortage of answers – but for the difficulty, even for a seasoned communicator like myself, to encapsulate succinctly.

I like analogies, so here’s one to start: a legislative session is like a surgical procedure; hundreds of things can go wrong, and getting through one without incident is deemed a success. To reiterate: when nothing bad happens in a legislative session that is a victory. Preposterous? Allow me to elaborate.

It’s been attributed to everyone from Thomas Jefferson to Mark Twain, but the old adage “no one’s life, liberty or property are safe while the legislature is in session” certainly rings true. The Alabama Legislature may only be in session three days each week for three-and-a-half months (plus special sessions) a year, but just like with a surgical procedure, countless things can go wrong during that time.

Representing physicians at the legislature, the Medical Association is severely outnumbered. There are nearly 600 registered lobbyists in Alabama, many with clients – drug companies, health insurers, personal injury lawyers – interested in health care but whose corporate profits strategy or legislative goals are at odds with those of patients and physicians. I’ve heard physicians say they don’t like politics, that it’s dirty business. This is understandable but frankly, irrelevant. Feelings have no place here. Like it or not, politicians are in your business.

On average, a typical legislative session will see a combined 1,000 House and Senate bills introduced, with roughly 15 percent touching health care in some fashion. Over a four-year legislative cycle, that’s 600 “procedures” to get through with as few complications as possible. Some of these are initiatives the Medical Association supports, others will need tweaking through amendments or substitutes, still others will have no redeeming elements whatsoever and are outright opposed.

If that sounds simple in principle, it is not so in practice. To illustrate the complexity and unpredictability of an average legislative day, picture an emergency physician. At the State House, there is little warning of what daily catastrophes will present themselves or what will have to be triaged depending on severity. Committee testimony, one-on-one meetings with legislators, bill negotiations with opposing parties, these are all part of a typical legislative day. Getting through the day without any bad happenings is a success, even more so all 30 days of the session.

While it is the Medical Association’s role to lobby the legislature on issues important to physicians, it is the role of the Alabama Medical PAC (ALAPAC) to help elect candidates to office with whom physicians and the Medical Association can work on important health-related issues. Over just the past few legislative sessions alone, the Medical Association, with the help of ALAPAC-supported legislators, successfully saw passage of several important bills.

These include “virtual credit card” legislation to help medical practices from unknowingly getting hit with hidden processing fees in electronic payments from health insurers and RCOs; the chemical endangerment “fix” legislation protecting pregnant women and their doctors from prosecution for the issuance of legitimate prescriptions (after the courts issued a new interpretation of Alabama’s chemical endangerment of children law); and, direct primary care legislation, which ensures state government stays out of private contracts between physicians and their patients. The list also includes legislation related to increasing naloxone availability, establishing guidelines for interstate medical licensure, and preventing Medicaid cuts, to name but a few.

On the opposite end of the spectrum, other proposed legislation is so bad there is no “fixing” it, bills like the Patient Compensation System legislation from 2016. The PCS legislation would levy an $80 million tax increase on physicians to fund a new government-administered malpractice claims payout system that would deprive physicians and legitimately-injured patients of their legal rights, undo decades of medical liability reforms and make Alabama doctors appear – on the national claims database – to be practicing sub-standard medicine. This legislation was, with the assistance of ALAPAC-supported legislators, defeated.

In the same vein as the PCS bill, pharmaceutical legislation was introduced in 2017 that would (1) lower biologic pharmaceutical standards in Alabama law below those set by the FDA, (2) withhold critical health information from patients and their doctors and, (3) significantly increase administrative burdens on physicians. This legislation met the same fate as the PCS legislation, but both bills are expected to return in a future session. (Click here for a complete recap of the 2017 legislative session.)

Clearly, the Medical Association and ALAPAC have been hard at work for physicians and patients, from the primary care doctor to the sub-specialist. There is a natural tendency for physicians to associate and support their respective specialties, which they unequivocally should. At the same time however, the collective strength of a unified state medical society representing all physicians of all specialties and the patients they care for is much greater than any individual specialty on its own.

This article began with a question and so it is fitting to end with one: What have you done lately to help the Medical Association and ALAPAC succeed for you?

Posted in: Advocacy

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What If No One Was On Call…2017 Legislative Review

What If No One Was On Call…2017 Legislative Review

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 Alabama Legislature? Keep reading to find out.

Moving Medicine Forward

Patients and their physicians want assurances about not only the quality of care provided, but also its continued availability, accessibility, and affordability. Patients want to make health decisions with their doctors, free from third-party interference. Continued progress toward these objectives requires constant vigilance in the legislative arena, where special interest groups seek to undermine physician autonomy, commoditize medicine and place barriers between physicians, their patients and the care their patients need.

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 under-insured and those with high-deductible health plans. SB 94 was sponsored by Sen. Arthur Orr (R-Decatur) and Rep. Nathaniel Ledbetter (R-Rainsville).

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 to 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 continued Medical Association priority – 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.

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 Alabamians 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 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.

Posted in: Advocacy

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