Prior to COVID-19, most healthcare providers were benefiting from a strong economy, low unemployment and increased patient insurance coverage thanks to the Affordable Care Act (but unfortunately not Alabama, which continues to refuse to expand Medicaid). Then, everything changed. The COVID-19 pandemic. According to an article published by the New England Journal of Medicine, the United States has 4 percent of the world's population but, as of July 16, approximately 26 percent of its COVID-19 cases and 24 percent of its COVID-19 deaths. As reported by NPR, among the 45 countries with more than 50,000 COVID-19 cases, the United States has the eighth-highest number of deaths per 100,000 people: 47.93 deaths from the coronavirus for every 100,000 Americans. Thank you to all healthcare workers and first responders who are on the front-line and taking care of COVID-19 patients.
However, the "cost" of the pandemic is not just measured in lives lost, which is staggering, but one must also consider the medical care that has been delayed or avoided because of the pandemic. In a recent McKinsey Consumer Healthcare Insights survey, 40 percent of individuals stated they have canceled upcoming appointments (for example, routine checkups, treatment for chronic conditions, etc.) and an additional 12 percent reported that they needed care but have not scheduled or received care. Of course, there is also the economic impact on healthcare providers and the economy as a whole, which has devastated businesses and families. Recently, several drug companies have reported that vaccines under development are highly effective at treating COVID-19. While it will be well into 2021 before the vaccines are widely available and distributed, it is a wonderful development. COVID-19 clearly had the most significant impact on Alabama health care providers in 2020, but other items are worth considering as well. Now, onto the list.
- HIPAA / Cybersecurity - Yes, everyone is tired of hearing about HIPAA, but it remains an important topic and government enforcement actions continued in 2020. With essentially all protected health information stored electronically, and medical records having a high value on the black market, the healthcare industry is ripe for cyberattacks. A total of 3.8 million individual records were breached through hacking and other cyberattacks in the first half of 2020. Just recently, the U.S. Department of Health and Human Services ("DHHS") issued a special notification entitled "Ransomware Activity Targeting the Healthcare and Public Sector (Update 2)". It is therefore critical that every healthcare provider conduct an annual HIPAA security audit to guard against cybersecurity threats. Further, a recent area of focus by the Office of Civil Rights ("OCR") is a patient's right to access his/her medical file, which is a right granted to patients under HIPAA. In the last 18 months there have been eleven settlements between OCR and healthcare providers with respect to right of access issues.
- COVID Lawsuits - We are starting to see an increase in COVID-19 lawsuits by families on behalf of the deceased (wrongful death) and by COVID-19 survivors suing for payment of medical bills, loss of future earnings and other damages. According to the Hunton Andrews Kurth law firm, as of November 18, 2020, there are 6,273 COVID-19 related lawsuits filed in the United States, an increase of more than 300 lawsuits since November 8. While most of the lawsuits involve claims for insurance coverage due to business interruption, there are a growing number of lawsuits filed against healthcare providers. On May 8, 2020, Governor Ivey issued an Executive Order which provides, in part, that a healthcare provider is not liable for injury, death or property damage arising from any act or omission related to a COVID-19 transmission or a "covered COVID-19 response activity," unless the injury was caused by wanton, reckless, willful or intentional misconduct. A "covered COVID-19 response activity" includes, but is not limited to, testing, distribution of testing materials, monitoring, collecting, reporting, tracking, tracing, investigating, or disclosing exposures or other information in connection with COVID-19, and providing healthcare services or treatment in response to COVID-19. While the Executive Order is helpful, it is unclear whether Governor Ivey has the legal authority to grant immunity or whether such power is reserved to the Alabama legislature. The courts will eventually decide.
- Private Equity and Physician Practices - Generally, private equity firms raise funds from wealthy individuals, institutions, pension funds and educational endowments and invest money in private companies. The goal of private equity firms is to achieve average annual returns of 20 percent or more (greater than traditional investment opportunities, i.e., stock market, real estate, commodities, etc.). The number of private equity transactions involving physician practices and other healthcare providers have steadily risen each year, and we are seeing a marked increase in transactions within Alabama. Even if your practice or facility is not interested in selling to private equity, your competitor might be. Are you prepared to compete with a private equity company?
- Changes to the Anti-kickback Statute and Stark Law - On November 20, 2020, the Centers for Medicare & Medicaid Services and the DHHS issued two significant final rules to reform the Anti-kickback Statute and Stark Law. The 1,000 page Anti-kickback Statute final rule implements seven new safe harbors, modifies four existing safe harbors, and codifies one new exception under the Civil Monetary Penalty Law. The 627 page Stark Law final rule creates new exceptions for value-based arrangements, provides additional guidance to make it easier for physicians and other health care providers to comply with the Stark Law, and provides protection for non-abusive, beneficial arrangements between referring providers. Unless otherwise specified in the rules, the new provisions go into effect January 19, 2021. These new rules will have a significant, and expected positive, impact on healthcare providers by easing burdensome regulatory restrictions.
- Telemedicine Expansion - If anything good comes out of the COVID-19 pandemic, it will be the expanded use of telemedicine and the broad acceptance by patients as to its benefits and value. While telemedicine will not replace the need for in-person visits with healthcare providers, it does have a role to play, especially with respect to preventative and follow-up care. In response to the pandemic, CMS eased coverage restrictions concerning telemedicine, some of which may remain after the pandemic is over. For example, during the pandemic Medicare telemedicine visits can be provided to patients in their homes, all out-of-pocket costs are waived, payments are allowed for audio-only telephone communications, and the requirement that a provider be licensed in the state of the patient's location has been waived. Many private insurers have followed with similar changes.
- Paycheck Protection Program - The Paycheck Protection Program ("PPP") is a loan designed to provide a direct incentive for small businesses to keep their workers on payroll during the pandemic. Administered by the Small Business Administration ("SBA"), the loans will be forgiven if employee retention criteria are met and the funds are used for eligible expenses. The SBA will audit all PPP loans above $2 million, and may (and are likely to) audit loans of lesser amounts. Accordingly, it is very important to keep accurate and detailed records supporting appropriate use of the PPP funds. The U.S. Department of Justice has already announced several criminal prosecutions for fraudulent PPP loan applications.
- Provider Relief Fund - Administered by the DHHS, the Provider Relief Fund ("PRF") was created through a Congressional appropriation totaling $175 billion to reimburse health care providers for eligible expenses and lost revenues attributable to COVID-19. The PRF was administered in three Phases, with the last one closing November 6, 2020. Providers receiving PRF grants must sign an attestation agreeing to comply with terms and conditions related to use of the funds. Failure to use the grant proceeds as required by the PRF guidelines will require repayment.
- Biden Elected President - President-Elect Biden has proposed the creation of a public insurance option similar to Medicare for individuals on the private insurance market. However, a public option would require an act of Congress, and as I write this article it remains unclear which party will control the U.S. Senate. President-Elect Biden is also expected to take steps to shore up the Affordable Care Act's insurance exchanges, which is likely to survive a challenge before the U.S. Supreme Court. President-Elect Biden's health plan also includes several proposals aimed at closing gaps in healthcare among racial groups, including boosting funding to community health centers. Finally, immediately upon taking office January 20, 2021 President-Elect Biden is expected to push for more pandemic economic relief for businesses.
- COVID-19 and the Financial Impact on Healthcare Providers - In May of this year, the American Hospital Association estimated that the four month financial impact on U.S. hospitals (March 1, 2020 to June 30, 2020) was an estimated $202.6 billion in losses, or an average of $50.7 billion per month. In April it was reported that the UAB Health System is losing $70 million a month due to COVID-19. According to Becker's, this year 12 hospitals have closed and 32 hospitals have filed for bankruptcy due to the pandemic. The Medical Association of the State of Alabama published a report this summer finding that more than 70 percent of physician practice respondents said COVID-19 had a severe impact on their practice finances and nearly 60 percent said lack of patient volume reduced their practice revenues by at least 50 percent. With the pandemic lingering into 2021, the number of infections increasing, and a vaccine months away from wide-scale distribution, it is likely that healthcare providers will continue to experience significant financial stress in the months ahead.
- COVID-19 and the Loss of Lives - The statistics are painfully grim. As I write this article, there are 12 million total COVID-19 cases in the United States, with over 252,000 deaths. The University of Washington's Institute for Health Metrics and Evaluation predicts up to 2,500 deaths a day in mid-January and a total of 471,000 Americans dead by March 1, 2021. Alabama has experienced more than 3,400 total deaths, a number likely to climb. According to a New York Times database, through September 8, Alabama, 24th in the nation in population, ranks fifth in per capita cases since March, trailing only Louisiana, Florida, Mississippi and Arizona. The death toll from COVID-19 has surpassed the number of Americans killed in both World War I and the Vietnam War combined. Think about it this way. 252,000 COVID-19 deaths since March of this year is the same as two 747 airplanes full of passengers crashing every day with no survivors (a total of 688 airplanes) or thirteen school buses full of passengers crashing every day with no survivors (a total of 3,600 buses). Words cannot describe the loss.
2020 has been a difficult year. In 2021 may your troubles be less and your blessings be more. Happy New Year!
Howard Bogard is a Partner at Burr & Forman LLP and chairs the firm's Health Care Practice Group. He can be reached at (205) 458-5416 or at firstname.lastname@example.org.