Telemedicine: A New Way for a New Day

by Kyle McAllister & Ashley Ray

There has been a recent uptick in interest regarding telemedicine among both patients and healthcare providers. In short, telemedicine is the practice of health care delivery through audio, video, or data communications. Originally created to treat underserved patients in remote areas, COVID-19 has accelerated the expansion of telemedicine as a tool for convenient and safely distanced medical care for all. More patients are now apprehensive about leaving their homes for routine checkups and what they consider to be minor ailments. This creates a shortfall in both patient care and healthcare provider revenue. Telemedicine can help bridge that gap by providing patients with an option to receive care remotely, avoiding the danger of being exposed to numerous other patients while going to and from the healthcare provider’s office and while waiting in the healthcare provider’s waiting room.

While there are numerous benefits of telemedicine, there are several legal issues that need to be understood and addressed by healthcare providers prior to engaging in telemedicine practice.

Business Entity Organization

The first thing any healthcare provider should do before opening a new practice is organize the practice as a professional entity. In Oklahoma, the professional entity types available to healthcare providers are a professional corporation or professional limited liability company. Both entity types serve as liability shields from claims that may be brought against healthcare providers. This means that if the healthcare provider is sued, the professional entity helps shield the doctor’s personal assets (car, home, etc.) from being taken in a lawsuit. If you are a healthcare provider who does not currently operate under a professional entity, we strongly recommend you contact an attorney to assist you with forming a professional entity.

If you are a healthcare provider who already practices under a professional entity, the question then becomes whether you may provide telemedicine services under your existing professional entity or whether you need to organize a new professional entity specifically for telemedicine services. Typically, healthcare providers who operate under a professional entity that they wholly own and operate or that they own and operate with close colleagues can add telemedicine services to their current practice with relative ease. However, for healthcare providers who currently practice as an employee or as a minority owner of a larger healthcare practice, a new professional entity will likely be required before providing telemedicine services.

Contractual Considerations

Nearly all healthcare professionals are bound by the terms of an employment agreement, an independent contractor agreement or an organization’s governing documents. In many instances, these documents include terms that prevent an employee, independent contractor or co-owner of an existing practice from starting a new practice in the same area of medicine. These restrictions are typically in the form of non-compete and non-solicitation provisions. If you practice medicine as an employee, independent contractor, or co-owner of an existing entity, we strongly recommend you seek the advice of an attorney experienced in reviewing these types of contractual restrictions. Our attorneys are experienced in this area and would be glad to review your documents and help advise you regarding the most judicious next steps.

Reimbursement

In addition to the general business considerations discussed above, healthcare providers should also be aware of numerous telemedicine-specific legal issues. One of the biggest issues is reimbursement. Telemedicine reimbursement varies based on the state, practice area, services provided and the third-party payer. Fortunately for healthcare providers, Oklahoma law requires coverage of telemedicine services. Additionally, Oklahoma is one of 19 states that does not specify the type of healthcare provider allowed to practice telemedicine, which offers a great deal of flexibility to healthcare providers. The Oklahoma Health Care Authority also provides certain requirements for reimbursement. These requirements are publicly available on the Oklahoma Health Care Authority’s website.

Out-of-State Licensure

Generally, most states, including Oklahoma, require physicians to be licensed to practice medicine in the state where each of their patients is physically located at the time the telemedicine services are provided. One exciting opportunity for entrepreneurially-minded healthcare providers is the ability to provide healthcare services to patients that live outside of Oklahoma. The good news for those providers is that on November 1, 2019 Oklahoma joined 31 other states and the District of Columbia in the Interstate Medical Licensure Compact. (IMLC). The IMLC provides healthcare providers an expediated pathway to licensure for healthcare providers who wish to practice in multiple states. The details of IMLC licensing for Oklahoma physicians is still developing, and we recommend you consult an attorney for the most up-to-date details.

Additional Requirements and Considerations

The amount of technical training and equipment needed to practice telemedicine depends on the extensiveness of the digital platform you plan to use to practice telemedicine. For instance, a more extensive platform used between primary physicians and consulting specialists requires intensive training and the purchase of a telemedicine cart and mobile health devices. Other platforms are less extensive and requires less equipment and technical training. Additionally, the Oklahoma Board of Medical Licensure and Supervision (OMB) has promulgated rules specific to telemedicine and delineates certain equipment requirements. The Centers for Medicare and Medicaid Services also mandates required elements for a service to be considered acceptable. In addition to meeting the above requirements, a provider of telemedicine services must ensure all services are HIPAA compliant.

Conclusion

While telemedicine provides exciting new opportunities for healthcare providers, it is important to start a telemedicine practice the right way to ensure you do not fall victim to common mistakes. Our attorneys have experience helping healthcare providers navigate the numerous issues involved in starting a new telemedicine-focused practice or expanding an existing practice into the telemedicine field. If you are interested in starting a telemedicine practice, we would love to help you take advantage of this expanding area of the medical field.

The CARES Act and Your Business

NOTE:  This article is current as of April 17, 2020.  We expect the specifics of the CARES Act programs to continue to evolve as they are implemented.  Watch this article for updates! 

by Kyle McAllister

One of the biggest questions we are receiving from our business clients is how the Coronavirus Aid, Relief & Economic Security Act (CARES Act) can help their business.  A large portion of the Act is aimed at helping small and mid-sized businesses weather the uncertainty brought on by the coronavirus through new and modified loan programs.  The following is a summary of the portions of the Act that may be beneficial to small and mid-sized businesses. 

Paycheck Protection Loans (PPL) 

The largest new program for small and mid-sized businesses under the CARES Act is the Paycheck Protect Loan program.  The PPL program is a short-term program designed to assist businesses meet payroll and other expenses between February 15, 2020 and June 30, 2020.  It is possible that Congress extends that time period at a later date, but for now, business owners should only expect a PPL to assist them with expenses accruing during that period. 

What types of entities qualify for a PPL? 

Businesses and nonprofits with fewer than 500 employees that were in operation before February 15, 2020 are eligible to apply a PPL.  Sole proprietorships, self-employed individuals, and independent contractors are also all eligible to receive a PPL.  When applying for a PPL, the business owner must certify that the business has been affected by the coronavirus. 

What is the maximum amount my business can borrow under the PPL? 

Businesses are eligible for a PPL up to 2.5 times the business’s average monthly payroll costs up to a maximum amount of $10 million.  Payroll costs include salary, wages, and tips paid, sick and family leave, paid time off, severance payments, group health benefits (including insurance premiums), retirement benefits, and state and local taxes assessed on employee compensation. However, it is important to note that for any employee who is paid more than $100,000 salary, only $100,000 of that salary (prorated for the covered period) is calculated into the average monthly payroll amount. 

Is my business required to pay back the PPL? 

Perhaps the most beneficial aspect of the PPL program for many small business is that the portion of the PPL that a business spends on qualifying business expenses in the eight weeks after receiving the loan is completely forgivable as long as certain requirements are met.  Qualifying business expenses include payroll, mortgage, rent, and utilities, and businesses must submit an application for forgiveness along with receipts showing each of the qualifying expenses.  However, only 25% of the forgivable amount may be spent on non-payroll expenses.  The forgivable amount may be further reduced if the business receiving the PPL lays off employees and fails to return to the previous levels of employment by June 30, 2020 and/or if the business reduces wages paid by more than 25%.   

What are the loan terms for the amount of the PPL that does not qualify for forgiveness? 

The interest rate for the amount of the PPL that does not qualify for forgiveness will be 1%.  The first payment on that remaining amount will be deferred for at least 6 months. 

How do I apply for a PPL? 

PPL applications are handled through banks that offered Small Business Administration loans prior to the CARES Act.  The government is also working to expand the loan programs to additional lending institutions.  Many banks are only accepting applications for a PPL online, so we recommend checking the website of the bank your business currently uses to determine if that bank plans to offer PPLs. 

Economic Injury Disaster Loans (EIDLs) 

While the PPL program is a new program created by the CARES Act, the Economic Injury Disaster Loan program is a Small Business Administration program that existed long before the CARES Act.  Traditionally, EIDLs were made available in specific areas that were significantly affected by a natural disaster like a tornado, hurricane, or wildfire.  For the first time in the history of the program, the CARES Act made EIDLs available to the entire country due to the coronavirus “natural disaster.”  

Whereas the PPLs are specifically intended to provide short-term assistance for affected businesses, EIDLs can provide much longer-term assistance to affected businesses.  I will answer some of the most common questions we have received regarding EIDLs below. 

What types of entities qualify for an EIDL? 

The qualification requirements for an EIDL related to coronavirus are nearly identical to the requirements for a PPL.  Businesses with fewer than 500 employees that were in operation before February 15, 2020 are eligible to apply an EIDL.  Sole proprietorships, self-employed individuals, and independent contractors are also all eligible to receive an EIDL.  When applying for an EIDL, the business owner must certify that the business has been negatively affected by the coronavirus. 

What is the maximum amount my business can borrow through an EIDL? 

The maximum amount available under the program is $2 million, but the specific amounts your business qualifies for will depend upon various factors related to the size and needs of your business. 

What are the emergency grants under the EIDL program? 

The emergency grant is an amount of up to $10,000 that a business can receive within three days of submitting its application for an EIDL and while its application for an EIDL is pending. 

Is my business required to pay back the EIDL? 

Only the amount a business receives as an emergency grant does not have to be repaid. 

What are the loan terms for the EIDL? 

For for-profit businesses receiving an EIDL, the interest rate is 3.75%.  The term of the loan is variable and may be for up to 30 years.  One of the changes to the EIDL program that was instituted through the CARES Act is that business owners are no longer required to personally guarantee the loan if the loan amount is under $200,000. 

Tax Provisions 

In addition to the loan programs discussed above, the CARES Act also attempts to help businesses by making certain changes to the way certain business expenses and income are taxed.  The following subpoints are intended to give a brief overview of some of the major tax provisions in the CARES Act.  We recommend discussing these changes in detail with your tax advisors to determine if they may be beneficial to your business. 

Payroll Tax Deferral 

For employers that do not receive loan forgiveness under the PPL program, the Act allows the employer’s portion of the 6.20% Social Security payroll tax to be deferred over two years.  This deferral applies to employee wages paid between March 27, 2020 and December 31, 2020.  Self-employed individuals also qualify for this payroll tax deferral.  The most important thing to note regarding this tax provision is that this deferral is only available to employers that do not benefit from the loan forgiveness portion of the PPL program. 

Temporary Reinstatement of Net Operating Losses Carryback 

The net operating losses carryback was eliminated in the 2017 Tax Cut and Jobs Act but was temporarily reinstated and expanded in the CARES Act.  Net operating losses incurred in 2018, 2019, and 2020 can now be carried back five years for a refund of previously paid taxes.  The CARES Act also temporarily removes the 80% of taxable income limitation on the use of net operating losses incurred, allowing net operating losses to fully offset taxable income. 

Excess Business Loss Rule 

The CARES Act suspended the excess business loss thresholds of $250,000 for single filers and $500,000 for joint filers. 

Qualified Improvement Property Correction 

This change is not coronavirus-specific but is a tax change that will affect some of our commercial real estate investor clients.  The CARES Act corrects an error in the 2017 Tax Cut and Jobs Act that required Qualified Improvement Property to be depreciated over 39-years.  The CARES Act corrected this by reclassifying Qualified Improvement Property as 15-year depreciable property eligible for 100% bonus depreciation. 

Conclusion 

The CARES Act is a sweeping piece of legislation that has the power to benefit nearly every small and mid-sized business.  Our attorneys are closely tracking the implementation of the Act’s programs and tax provisions as well as additional pending coronavirus-related legislation that may prove beneficial to the businesses we serve.  Please let us know if you have any questions about the CARES Act or can be of assistance in helping your business navigate this treacherous time. 

CARES Act Summary

by Cara Nicklas and Kyle McAllister

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief & Economic Security Act (CARES Act).  The Act is a sprawling piece of legislation that addresses a wide range of topics from healthcare and national defense to the tax code and student loans.  Rather than explaining all the technical contours of the Act, the purpose of this article is to focus on only the portions of the Act that might provide the most benefit to you and your business. 

Individual Assistance 

• Direct Payment Program – Under the direct payment program, individuals who reported adjusted gross income of $75,000 or less or couples filing jointly who reported adjusted gross income of $150,000 or less on their most recently filed tax return will receive a one-time payment of $1,200 per adult and $500 per child under 17 years old.  For each $100 of adjusted gross income that an individual or couple filing jointly reported over the established thresholds, the amount of the direct payment they receive will decrease by $5. 

• Federal Loan Modification – The federal loan modifications under the Act allow student loan borrowers to pause their monthly payments and interest until October 2020.  The Act also allows borrowers of federally backed family mortgages to pause their monthly payments and interest for up to 180 days.  

• Expanded Unemployment Benefits – The Act expands unemployment compensation benefits by expanding eligibility to workers who are not eligible for state unemployment benefits or have exhausted state unemployment benefits.   

• Penalty-Free Access to Retirement Plans – The Act allows individuals younger than 59 ½ who have experienced financial hardship due to the coronavirus to withdraw up to $100,000 from an IRA or other defined retirement plan without incurring the normal 10% withdrawal penalty.  It is important to note that there are additional restrictions regarding this distribution that change depending on what type of retirement account you are withdrawing the funds from.  If you have been negatively affected by the coronavirus and are considering making a withdrawal from a retirement account, we strongly advise you to discuss your situation with your attorney, accountant, and financial advisor. 

• Suspension of Minimum Required Distributions – Due to the precipitous drop of the stock market the past several weeks, the CARES Act includes a provision that waives the minimum required distributions from IRAs and certain defined contribution plans for 2020. 

Business Loans 

• Paycheck Protection Program (PPP) Loans – PPP loans will be administered through local lending institutions and backed by the federal Small Business Association.  The loans are intended to help businesses cover payroll and other operating expenses and will be available to businesses with less than 500 employees as well as individuals who are self-employed and work as independent contractors.  Of particular benefit to most small and mid-sized businesses is the loan forgiveness portion of the PPP.  This provision states that the portion of the loan that is spent on certain operating expenses within the first eight weeks after receiving the funds may be forgiven in full if certain requirements are met. 

• Economic Injury Disaster Loans (EIDLs) – Although the EIDL program was available to small businesses prior to the CARES Act, the Act expands the program by allowing for an emergency loan advance of up to $10,000, removing the personal guarantee requirement for loans of under $200,000, and expanding eligibility to independent contractors, sole proprietors, and non-profits.  Like Paycheck Protection Loans, the emergency loan advance of up to $10,000 may be entirely forgiven if spent on paid leave, maintaining payroll, increased costs due to supply chain disruptions, and mortgage or lease payments. 

• Interplay Between PPP Loans and EIDLs – It is important to note that a business may apply for both a PPP loan and an EIDL.  However, there are additional restrictions on businesses receiving both types of loans, including that there must be no duplication in the use of funds between the loans.  We strongly recommend talking with your attorney and accountant regarding these additional restrictions if you plan on applying for both a PPP loan and EIDL. 

Business Tax Relief 

The tax relief provided to businesses in the CARES Act includes employee retention credits, payroll tax deferral, and modifications to the IRS’s treatment of business interest deductions, net operating loss allocation, and alternative minimum tax credits.  Each of these tax relief programs is too complex to be adequately discussed in a brief summary, but our attorneys would be happy to discuss these changes with you and work with your accountant to determine how your business can benefit from the changes. 

Conclusion 

The CARES Act is a wide-ranging piece of legislation with many programs and provisions.  Certain aspects of the programs described above may be modified as the Act is implemented. Our attorneys will continue to monitor the development of the Act as implementation begins in the coming days and weeks and would be happy to provide ongoing legal advice regarding which programs may be most beneficial to you and your business.