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Top 10 Questions Asked By Medical Group Clients In Response To COVID-19

In response to COVID-19, medical groups are doing their best to care for patients and ensure the safety of their contracted and employed healthcare providers in the face of this new virus. Given the scope of the virus and the questions it raises for medical groups, Sheppard Mullin has prepared, “COVID-19: Legal Guide for Medical Groups,”[1] (the “Guide”) to help medical groups navigate issues related to employee protections, infection control, and reporting obligations, workforce management and related mitigation strategies, employee obligations, business and payor relationships, privacy and telehealth, Medicare changes, and strategic transactions.

This post addresses the top 10 questions from the Guide that we have received from our medical group clients concerning issues raised by COVID-19.

1. Can we require employees to come to work, even if there are legitimate fears about possible exposure to COVID-19? 

Yes. Employers can still require employees to come to work (assuming the employee has not reported COVID-19 related symptoms, has not likely been exposed, and are currently not caring for a sick child/parent/family member). Generally, employees cannot refuse to come to work based on a general fear of the virus.  In addition, the American Medical Association mandates that a physician’s ethical duties to patients are constant, even in light of greater than usual risk to the provider’s health; provided, however, that physicians should take measures to protect themselves and their ability to care for patients in the future. We note, however, that employers should be mindful that there is some risk associated with taking action against employees, particularly non-physicians, who elect to stay home in order to avoid potential exposure, and employers should consult with counsel before proceeding with disciplinary measures in order to address the specific circumstances.

2. Can we screen employees and/or require testing for COVID-19? Do we need to protect related information that we receive from employees? 

Because the CDC and state/local health authorities have acknowledged community spread of COVID-19 and issued attendant precautions, employers may measure employees’ body temperature, but currently cannot require that employees be tested for COVID-19.  Employers must still maintain all information about an employee’s illness as a confidential medical record in compliance with the ADA, the federal Family and Medical Leave Act (“FMLA”), and state law equivalents. In California, if an employer is subject to the California Consumer Privacy Act (“CCPA”), the employer must provide a CCPA-Compliant notice prior to or at the time that it collects this information. Managers/supervisors should not handle medical information or inquire about diagnoses of employees.  If an employee voluntarily provides medical information to a manager, the manager should provide HR the information immediately.

3. Our group cannot keep up with the demand for services. What are our options? 

There are several options available that require careful consideration before implementation, including increasing providers’ existing workloads, leveraging advanced practice clinicians within their scope of practice, floating providers across specialty areas, seeking additional help from providers not currently practicing (or even those who have retired), and if permitted by law and desired by the group, potentially engaging providers from out of state. For current physician and non-physician providers, it is important to be mindful of contractual provisions that may limit the medical group’s ability to call on providers to render additional services. For providers who may be asked to float among departments or specialties, those persons must have the appropriate credentialing and skillset to render care safely in each area. If a medical group reaches the point where it may request that retired physicians assist on an ad hoc basis to help with the COVID-19 workload, the group will need to confirm that the person has valid licenses/permits, up-to-date continuing medical education, professional liability coverage (or eligibility therefor, whether on a slot coverage basis or otherwise), and, if applicable, appropriate medical staff credentialing. Groups should consult with counsel to determine whether applicable waivers permit out-of-state personnel to practice in state for purposes of addressing COVID-19.  For example, out-of-state medical personnel entering California for the limited purpose of addressing COVID-19 can request temporary recognition of an out-of-state license from the Director of California’s Emergency Medical Services Authority.

4. As a result of social distancing measures, our group has had to cancel or postpone many non-critical healthcare services and procedures, and our group does not have sufficient work to fully utilize our existing workforce. Can we furlough our employees, or should we opt for a termination/layoff? 

A furlough is an unpaid leave of absence, or a “pause” in an employee’s services, although he/she will still be considered to be an employee. For that reason, the employer should communicate in a notice to the employee that the employment relationship is continuing and that the furlough is not a termination. A furlough does not generally trigger notice requirements under the federal WARN Act. If an employee is furloughed, he/she may, but is not required, to use accrued paid-time off to cover any part of their furlough period.  During the furlough period, health benefits may continue, and we recommend that groups review their benefit plans and discuss with any 401K administrators in order to clarify how the furlough will impact the employer and employees. Conversely, a termination or layoff ends the employment relationship, even if it is temporary and even if the employer intends to later re-hire the employees. This action would trigger any termination clauses in an employment contract and may subject the employer to specific notice requirements and/or additional pay, including accrued paid time off if there is an applicable employer policy or requirement under state law. If an employee’s employment is terminated, the employer would not be required to re-hire him/her, whether to fill his/her prior position or otherwise. Note that a termination or layoff may trigger the federal WARN Act (described below) if the layoff is anticipated to be more than six (6) months.  With the COVID-19 pandemic, if the employer expects to re-hire individuals (or, even simply hopes to), its termination notice should clarify that it anticipates that the layoff is temporary and that it hopes to re-hire the employees within six (6) months.  If the company has not re-hired employees after four (4) months, it should re-evaluate whether a WARN Act notice is going to be needed and develop that notice.

5. Our group compensates some or all of our providers on a productivity basis. What are our options? 

COVID-19 has had wide-ranging impacts on the healthcare system. While self-quarantines, social distancing, shelter-in-place ordinances, and reductions in the volume of elective procedures may substantially decrease productivity within certain specialties, other specialties, including emergency services, intensive care, anesthesia and telehealth may see spikes in demand.  Some physician employment or independent contractor agreements may account for adjustments to compensation in the event of pandemic disease outbreaks, but this is atypical. As a result of COVID-19, some physicians who are compensated on a productivity-basis may be concerned about a loss in compensation, and, depending on their practice areas, medical group employers may be concerned not only about a loss of revenue but also about the well-being of their physician employees. Groups may seek to modify compensation to assist productivity-based employees to reduce the negative impact they may face as a result of decreased productivity. For example, some groups have considered extending the period over which productivity is measured and delaying compensation adjustments or true-ups to spread the impact to compensation over a longer period of time. In taking such actions, groups need to be mindful of existing contractual obligations with their physicians and third-parties (e.g., their management companies or health system sponsors). Groups also need to be mindful that any adjustments to compensation comply with the federal fraud and abuse laws (i.e., the Stark Law and Anti-Kickback Statute), and any related state laws (such as PORA in California). If a medical group desires to make these changes, we recommend conferring with counsel to ensure any contemplated change complies with contractual or regulatory requirements.

6. Can we require an employee to use his/her PTO if he/she refuses to come to work? 

Unless otherwise governed by an employee’s contract, medical groups can require employees to take available paid-time off (“PTO”), vacation time, and sick days for time away from work.  If the employee does not have available PTO, he/she may take paid leave under applicable policies and procedures.  In addition, employees may potentially be eligible for unpaid leave under state and federal family and medical leave laws.  Finally, sick employees and employees caring for family members may be also be eligible for paid sick leave under applicable local or state laws.

7. Does the federal Families First Coronavirus Act (the “Act”) change our obligations to our employees with respect to pay or sick leave? How can we tell if we are bound to follow the Act? 

The Act will take into effect no later than April 2, 2020 (15 days after presidential approval) and expire on December 31, 2020. Whether or not a medical group needs to comply depends on the number of employees, and may depend on the type of medical services that your group provides to patients. For clarity, two paid leave provisions of the Act apply to employers with fewer than 500 employees, unless they meet an exception: (1) the Emergency Family and Medical Leave Expansion Act; and (2) the Emergency Paid Sick Leave Act, each of which provide additional benefits for employees (subject to certain maximums).  The Act has an exception for “an employer of an employee who is a health care provider or an emergency responder may elect to exclude such employee from the application of this subsection.”  However, currently, this exception does not appear to be a blanket exception for the healthcare industry because the Act includes a request that the Secretary of Labor be given the authority to issue regulations exempting (1) certain health care providers and emergency responders from taking leave under the bill and (2) small businesses with fewer than 50 employees if compliance would jeopardize the viability of the business. Conservatively, we recommend that a medical group seek to comply with the Act, unless exigent circumstances require the group to mandate that its providers be at work as much as possible to combat the COVID-19 epidemic. Currently, the Secretary of Labor has not provided employers with notices to post regarding the Act’s requirements, and there is no formal notice that needs to be given, or guidance as to how employers should inform employees that they are not covered. To ensure that the group is complying with the most recent guidance, we recommend confirming with counsel whether or not your group may need to comply with additional state or local requirements.

8. If the Families First Coronavirus Act (the “Act”) applies to our medical group, what do we need to provide to our employees? 

As noted above, there are two parts to the Act. First, the Emergency Family and Medical Leave Expansion Act gives eligible employees the right to take up to 12 weeks of job-protected leave under FMLA for certain reasons related to the COVID-19 pandemic. An employee is deemed eligible if: (1) he or she has been employed for at least 30 days and (2) is unable to work (or telework) due to a need to care for minor children who is unable to go to school or child care program that has been closed or the child care provider is unavailable due to a public health emergency.  An eligible employee is entitled to 10 days of unpaid leave (the employee may choose to substitute accrued paid time off or other medical or sick leave during this period) and 10 weeks of paid leave at a rate of two-thirds of the employee’s regular rate of pay, at the number of hours that the employee is regularly scheduled to work. Paid leave, however, cannot exceed $200 a day or $10,000 in total.

Second, the Emergency Paid Sick Leave Act provides eligible employees of employers with fewer than 500 employees with up to 2 weeks (80 hours) of paid sick leave. Employees, regardless of length of employment, are entitled to immediate paid sick leave if they are unable to work (or telework) for the following reasons:

  1. The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;

  2. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;

  3. The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;

  4. The employee is caring for an individual who is subject to an order to quarantine or self-isolate or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;

  5. The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, due to COVID-19 precautions; or

  6. The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

The Act states that paid sick time shall not exceed: (i) $511/day and $5,110 in the aggregate for employees utilizing the leave for reasons (1) – (3) listed above; and (ii) $200/day and $2,000 in the aggregate for employees utilizing the leave for reasons (4) – (6) listed above. For reasons (1) – (3), the pay must be provided at an employee’s regular rate of pay (which must equal or exceed minimum wage); for reasons (4) – (6), the rate of pay must be no less than two-thirds of the employee’s regular rate of pay or the minimum wage (whichever is greater). The Secretary of Labor is required to issue regulations regarding how paid leave should be calculated under the Act.

9. We are having trouble obtaining prior authorizations from payors due to their call center staffing shortages and/or difficulty absorbing high call volumes as a result of COVID-19. Is there risk associated with providing services to beneficiaries without pre-authorizations from the applicable plans? 

There is always some risk that a plan may not reimburse the medical group for services rendered by its providers without a plan’s required pre-authorization. It is always best, if possible, to confirm with a plan in advance as to how it may be relaxing, expediting or waiving pre-authorizations given the substantial strain on providers and insurers in response to COVID-19. For example, CMS has advised Medicare Advantage plans that they may waive prior authorization requirements. CMS has also authorized plans to lift limits on prescription refills, relax restrictions on home delivery of prescription drugs, expand access to certain telehealth service, and waive or reduce cost-sharing for coronavirus tests and treatments delivered in doctor’s offices, emergency departments or via telehealth. Given the circumstances, it is possible that other commercial plans may take a similar approach.

Notwithstanding the foregoing, we note that the Families First Coronavirus Act requires that group health plans and issuers of individual and group health insurance plans (including grandfathered plans) provide coverage without cost-sharing or pre-authorization or other medical management requirements for (i) FDA-approved testing for COVID-19 and the administration of such testing, and (ii) items and services furnished to an individual during office visits (including in-person and telehealth visits), urgent care center visits, and emergency room visits that result in an order for or administration of a test for COVID-19. The mandate applies only to the extent the items and services relate to the furnishing or administration of the test or to the evaluation of the individual for purposes of determining the need for testing. Coverage from original Medicare for such testing will be paid at 100%, and the Medicare coinsurance and deductible will not apply. Similarly, Medicare Advantage organizations must also cover such testing without cost-sharing or pre-authorization or other medical management requirements.

10. Has CMS implemented any waiver of EMTALA requirements? 

No.  HHS has issued a waiver of sanctions under EMTALA “only to the extent necessary, as determined by CMS, to ensure that sufficient health care items and services are available to meet the needs of individuals enrolled in the Medicare, Medicaid and CHIP programs and to ensure that health care providers that furnish such items and services in good faith, but are unable to comply with one or more of these requirements as a result of the consequences of the 2019 Novel Coronavirus…pandemic, may be reimbursed for such items and services and exempted from sanctions for such noncompliance.”  Although this waiver has retroactive effect to March 1, CMS has not issued its own guidance adopting a broad waiver of EMTALA sanctions.  CMS has noted that, should it “receive complaints alleging either inappropriate transfers by a sending hospital or refusal of a recipient hospital to accept an appropriate transfer, it will take into consideration CDC guidance and State or local public health direction at the time of the alleged noncompliance” as well as “any clinical considerations specific to the individual case(s).”


[1]  The Guide and this Blog article are not exhaustive, and do not create an attorney-client relationship with the reader. Readers are encouraged to consult legal counsel to address specific concerns for their business, particularly given the speed at which the COVID-19 situation is developing and the varied degree and scope of responses by federal, local, and state governments. Things are changing quickly and there is no clear-cut authority or bright line rules for many of the topics addressed herein and in the Guide. Neither the Guide nor this Blog article is an unequivocal statement of the law, but instead represents our best interpretation of where things currently stand. Neither this Blog article nor the Guide addresses the potential impacts of the numerous other local, state and federal orders that have been issued in response to the COVID-19 pandemic, but which are not referenced in this Blog article or the Guide.

Copyright © 2020, Sheppard Mullin Richter & Hampton LLP.

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About this Author

John F. Golembesky Sheppard Mullin San Diego  Healthcare Technology Start-ups M&As
Partner

John Golembesky is a partner in the Corporate Practice Group in the firm's Downtown San Diego office. Mr. Golembesky represents clients in a variety of industries, with a particular emphasis on the healthcare and technology industries.

As former general counsel for a media/technology company in Los Angeles, Mr. Golembesky understands how to provide practical, actionable legal advice to his clients.

Areas of Practice

Mr. Golembesky represents clients in a variety of industries, in a range of matters.

Healthcare: Mr. Golembesky ...

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Kathleen M. O'Neill Corporate Attorney Sheppard Mullin San Diego, CA
Associate

Kathleen M. O'Neill is an associate in the Corporate Practice Group in the firm's San Diego office.

Areas of Practice

Kathleen focuses her practice on mergers and acquisitions, corporate governance and operations, and regulatory advising for clients in the healthcare industry. Kathleen is dedicated to understanding each client’s needs to assist them in navigating legal issues and achieving desired outcomes. Kathleen advises clients regularly on structuring considerations and risk mitigation strategies in transactions.

Kathleen’s transactional practice is supported by her experience with federal and state law governing corporate practice of medicine, fraud and abuse, licensure, commercial and governmental payor reimbursement, and peer review/fair hearings, including related state and federal reporting requirements. As a former registered nurse, Kathleen’s clinical experience and insight inform her practical understanding of the issues and concerns clients face in doing business in the healthcare industry. She is passionate about serving clients effectively, thereby enabling them to serve patients, providers, and other stakeholders.

Before joining the firm, Kathleen began her legal career at another prominent healthcare firm in Chicago. She attended Northwestern University Pritzker School of Law, graduated with high honors, and was named to the Order of the Coif. During law school, Kathleen was a Note and Comment Editor for the Northwestern Journal of Law and Social Policy. Prior to attending Northwestern, Kathleen worked for several years as a registered nurse at the University of Chicago, and continues to hold a registered professional nurse license in Illinois.

619.338.6660
Kirstin R. Smith Corporate and Healthcare Attorney Sheppard Mullin San Diego, CA
Associate

Kirstin Smith is an associate in the Corporate Practice Group and the Healthcare Industry Group in the firm's San Diego office.

Areas of Practice

Kirstin focuses her practice on mergers and acquisitions and regulatory compliance for clients in the healthcare industry. Kirstin is dedicated to understanding each client’s needs to assist them in navigating legal issues and achieving desired outcomes. Kirstin’s transactional practice is supported by her experience with federal and state law governing corporate practice of medicine, fraud and abuse, licensure, and payor...

619.338.6506