News and Insights
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U.S. District Court Strikes Down Portions of the Department of Labor’s FFCRA Implementing Regulations
On August 3, 2020, a federal court in New York state struck down portions of the regulations implementing the Families First Coronavirus Response Act (“FFCRA”). In litigation brought by the state of New York against the United States Department of Labor (“DOL”), a U.S. District Court, among other things, substantially narrowed the “health care provider” exception to the FFCRA.
The FFCRA requires employers to provide employees paid leave benefits in connection with certain COVID-19-related absences. The health care provider exception allows employers to deny FFCRA’s leave benefits to employee health care providers. The court rejected as too broad DOL’s regulatory definition of “health care provider” which included:
“[A]nyone employed at any doctor’s office, hospital, health care center, clinic, post-secondary educational institution offering health care instruction, medical school, local health department or agency, nursing facility, retirement facility, nursing home, home health care provider, any facility that performs laboratory or medical testing, pharmacy, or any similar institution, Employer, or entity. This includes any permanent or temporary institution, facility, location, or site where medical services are provided that are similar to such institutions, as well as any individual employed by an entity that contracts with any of these institution . . . .”
DOL Final Rule at 19,351 (§ 826.25). Instead, after recognizing its applicability to the FFCRA, the court applied the narrower Family Medical Leave Act “health care provider” definition:
“(A) a doctor of medicine or osteopathy who is authorized to practice medicine or surgery (as appropriate) by the State in which the doctor practices; or (B) any other person determined by the Secretary to be capable of providing health care services.”
29 U.S.C. § 2611(6); State of New York v. U.S. Department of Labor, et al., No. 1:20-cv-03020 (S.D. N.Y. Aug. 3, 2020).
In that same decision, the court also: rejected a DOL rule which denied FFRCA leave to employees in the absence of available work for the employee to perform (e.g. during a furlough); vacated a DOL rule requiring employer consent to intermittent use of FFCRA leave; and struck down a DOL requirement that employees provide FFCRA documentation in advance of taking leave.
The court’s decision substantially affects key components of the FFCRA. Significantly, for healthcare sector employers, it may reduce the ability to exempt most employees from FFCRA leave benefits. It also raises the question of potential liability for employers who denied employees FFCRA leave based upon DOL’s now-vacated regulations. Finally, the impact of the court’s decision outside the state of New York is currently unclear. Employers are encouraged to speak with an attorney if they have questions about FFCRA compliance or other employee leave-related matters.
For more information regarding the implications of the court’s decision, the FFCRA or other employment-related matters, please contact attorney John Conley at (602) 792-3500.
On June 2, 2020, the Centers for Medicare and Medicaid Services (CMS) published updated FAQs related to Medicare Fee-for-Service Billing and COVID-19, and the interim final rule with comment period (IFC), CMS-1744-IFC. These updates supplement CMS’ FAQs on Section 1135 Waivers, released March 15, 2019.
In these FAQs, CMS analyzes provisions from the Coronavirus Aid, Relief, and Economic Security (CARES) Act relevant to payment for COVID-19 testing, billing, diagnostic services, hospital services, rural health clinics, opioid treatment programs, drugs, and vaccines, among other topics.
Of particular interest to physicians are the following FAQs and a brief summary of CMS’ response:
- What does the IFC change for physician and practitioner billing?
The IFC makes temporary changes to certain policies, such as supervision by a physician or non-physician practitioner (NPP), payment for certain services furnished by teaching physicians and moonlighting residents, telehealth, services furnished by Rural Health Clinics and Federally Qualified Health Centers, and payments to labs for specimen collection.
- What are the changes to supervision?
CMS has revised the definition of “direct supervision” and changed the supervision requirements for hospital outpatient non-surgical extended duration therapeutic services from direct supervision to general supervision.
- When do the changes on supervision take effect and for how long?
The supervision changes are effective March 1, 2020 and last for the duration of the national COVID-19 Public Health Emergency (PHE).
- Can residents furnish telehealth services?
Through the interim final rule and for the duration of the PHE, Medicare may pay for services billed by teaching physicians when residents furnish telehealth services to beneficiaries under direct supervision of a teaching physician provided by interactive telecommunications technology.
- Does Medicare pay for a doctor or NPP to furnish care in a beneficiary’s home?
Yes. Medicare pays for care furnished in a beneficiary’s home, including evaluation and management services, telehealth services, and non-face-to-face services to assess and manage a beneficiary’s condition. In addition, Medicare pays physicians for services furnished in a beneficiary’s home by auxiliary personnel, as long as those services are furnished incident to a physician’s service and with the physician’s appropriate supervision.
- Can a “distant site practitioner” furnish Medicare telehealth services from their home? Or do they have to be in a medical facility?
There are no payment restrictions on distant site practitioners furnishing Medicare telehealth services from their home during the PHE.
- The ambulatory surgical center (ASC) in my community has recently converted to a hospital under unique provisions available during the PHE and my medical group has been contracted to provide care there. If clinicians from our medical group furnish covered professional services to Medicare beneficiaries at the ASC-turned-Hospital, can we bill Medicare for non-surgical services?
Yes. Practitioners are permitted to bill under Medicare can bill Medicare for covered professional hospital services furnished to beneficiaries at an ASC-turned-Hospital during the PHE.
- My medical group is contracted to provide care at a local hospital. The hospital has built a tent, transitioned a gymnasium, or converted another non-clinical location into a space to provide patient care. If clinicians from our medical group furnish covered professional services to Medicare beneficiaries at those new patient care locations, can we bill Medicare?
Yes. Practitioners who bill under Medicare may bill Medicare for covered professional services furnished to patients at temporary expansion sites, such as gymnasiums or other non-clinical locations.
- The state, Army Corps of Engineers, or other governmental entity established a new care location in our area by repurposing and retrofitting a convention center, gymnasium, or other site for patient care. My medical group has been asked to provide patient care in one of these locations. Can we bill Medicare for covered professional services furnished in these locations? If so, are there reporting or billing rules that determine how this is done?
Yes. Practitioners who bill under Medicare may bill Medicare for covered professional services furnished to patients at temporary expansion sites, including those established by the state, Army Corps of Engineers, or other governmental entities. To bill for these services, practitioners would bill under the Medicare Physician Fee Schedule and follow existing billing rules for services provided in hospitals. Practitioners should also add the “CR” modifier to professional claims for care provided in temporary expansion sites.
For full answers to these physician-related and other FAQs, please visit this website: https://www.cms.gov/files/document/03092020-covid-19-faqs-508.pdf. For any other questions or comments, please contact Milligan Lawless at 602-792-3500.
The Payroll Protection Program (“PPP”) continues to be revised in ways that are favorable to physician practices and other small businesses. In May, amidst growing uncertainty about whether businesses that took out loans under the PPP would be subject to second-guessing regarding their certification as to their need for the loans, the SBA and Department of the Treasury determined that any borrower that received a PPP loan of less than $2 million would be deemed to have made the certification in good faith.
Yesterday, the Senate passed the ‘‘Paycheck Protection Program Flexibility Act of 2020 (the “Bill”), which the House had passed previously. The Bill includes several additional improvements to the PPP, from the perspective of small businesses. Among other things, the Bill:
- Extends the term of PPP loans from 2 years to at least 5 years, for loans made after the effective date of the Bill; as to loans made prior to the effective date, the Bill permits lenders and borrowers to agree to modify the maturity terms of their loans;
- Extends the maximum “covered period” during which a borrower can use its PPP loan for forgivable purposes from 8 weeks to the earlier of 24 weeks from the loan origination date, or December 31, 2020; for loans originated prior to the effective date of the Bill, borrowers who wish to retain the original 8 week covered period are free to do so;
- Provides that loan forgiveness will be available to borrowers who use at least 60% of the loan proceeds for payroll (down from 75%) and use at least 40% for rent, utilities and mortgage interest payments (up from 25%);
- Extends the period in which a borrower may rehire employees or reverse a reduction in employment, salary, or wages in order to avoid a reduction in the forgivable amount of the loan, from June 30, 2020 to December 31, 2020;
- Provides that the forgivable amount of the loan will not be reduced as a result in a reduction in the number of a borrower’s employees if the borrower is (1) unable to rehire former employees and is unable to hire similarly qualified employees, or (2) unable to return to the same level of business activity, as existed prior to February 15, 2020, due to compliance with federal requirements or guidance related to COVID-19;
- Extends the payment deferral period, from 6 months to the date on which the applicable borrower’s amount of forgiveness is determined; this means that each borrower’s deferral period will be based on the date on which the borrower applies for forgiveness. However, if a borrower does not apply for forgiveness, the borrower’s payment obligation will start 10 months after the borrower’s “covered period” (the 24-week period beginning on the origination date of the loan) expires; and
- Eliminates a provision that made borrowers ineligible for payroll tax payment deferrals if the borrowers’ PPP loans are subject to forgiveness.
Media reports indicate that President Trump intends to sign the Bill.
The full text of the Bill is available here: https://www.congress.gov/bill/116th-congress/house-bill/7010.
Prior Milligan Lawless reports on the PPP are available here:
On April 26, 2020, the Centers for Medicare and Medicaid Services (CMS) suspended Medicare’s Advance Payment Program.
CMS’s Accelerated and Advance Payment Program (AAPP) provides accelerated or advanced payments to Medicare providers and suppliers during national or public health emergencies. These expedited payments help provide funding when circumstances disrupt claim submission and claim processing. Providers and suppliers must meet certain qualifications and submit a request to their Medicare Administrative Contractor to receive accelerated funds. To increase cash flow to medical providers and suppliers amidst the 2019 Novel Coronavirus (COVID-19) pandemic, CMS had expanded the AAPP to a broader category of Medicare Part A providers and Part B suppliers for the duration of the COVID-19 public health emergency.
Congress recently appropriated $100 billion for healthcare providers in the Coronavirus Aid, Relief, and Economic Security (CARES) Act (PL 116-136). Congress also allocated $75 billion for healthcare providers through the Paycheck Protection Program and Health Care Enhancement Act (PL 116-139). The CARES Act Provider Relief Fund, administered by the U.S. Department of Health & Human Services, has released $30 billion to healthcare providers and is actively working to release an additional $20 billion. Additional funding is expected to be released soon after. Congress allocated this funding to help with healthcare-related expenses, lost revenue, and access to healthcare treatment due to the COVID-19 pandemic.
Based on the $175 billion now available for healthcare provider relief payments, and funding available through other programs, CMS announced broad restrictions on AAPP applications and payments. Beginning April 26, 2020, CMS will not accept new applications for AAPP payments and will reevaluate all pending and new applications. In addition, CMS has immediately suspended advanced payments to Part B suppliers.
CMS directs providers to visit hhs.gov/providerrelief for information on the CARES Act Provider Relief Fund. An updated fact sheet on the Accelerated and Advance Payment Program is available here.
For more information on the AAPP and other funding options available, please contact Milligan Lawless at 602-792-3500.
Written by James R. Taylor and Andres A. Sanchez
On Friday, April 24, 2020, the United States Department of Health & Human Services (“HHS”) announced the start of the remaining distributions from the $50 Billion General Distribution portion of the Provider Relief Fund. HHS distributed the initial $30 Billion on April 10th and 17th to eligible Medicare providers. Unlike the initial distributions that were sent directly to eligible providers, the remaining $20 Billion will be distributed through an application process, with the goal of a final allocation of all General Distribution funds proportionate to a provider’s share of 2018 net patient revenue.
Although some providers that are subject to cost reporting may automatically receive a second distribution from HHS, most providers will need to apply for the additional funding through the General Distribution Portal, accessible at: https://covid19.linkhealth.com/docusign/#/step/1. The application requires the provider to disclose the following financial information:
- “Gross Receipt or Sales” or “Program Service Revenue” as submitted on the federal income tax return;
- Estimated revenue losses in March 2020 and April 2020 due to COVID-19;
- A copy of the provider’s most recently filed federal income tax return;
- A listing of the TINs any of the provider’s subsidiary organizations that have received relief funds but which do not file separate tax returns.
Similar to the first distribution, recipients of a second distribution are required to agree to a set of Terms and Conditions. While largely similar to the initial Terms and Conditions, the second batch contains the following additional requirements:
- Recipient shall submit general revenue data for calendar year 2018; and
- Recipient consents to HHS publicly disclosing the Recipient’s Relief Fund Payments. Additionally, the “Recipient acknowledges that such disclosure may allow some third parties to estimate the Recipient’s gross receipts or sales, program service revenue, or other equivalent information.”
In its announcement, accessible at https://www.hhs.gov/coronavirus/cares-act-provider-relief-fund/index.html, HHS issued the following notice to providers:
“The Terms and Conditions also include other measures to help prevent fraud and misuse of the funds. All recipients will be required to submit documents sufficient to ensure that these funds were used for healthcare-related expenses or lost revenue attributable to coronavirus. There will be significant anti-fraud and auditing work done by HHS, including the work of the Office of the Inspector General.”