COVID-19 is taking a financial toll on many allergy/immunology practices. College Advocacy Council and Practice Management Committee leaders developed the following tips to help you navigate these challenges.
1. Analyze your practice’s financial position.
Talk to your bank or financial advisor and/or do your own financial analysis. Most allergy practices are seeing substantial declines in new patients, immunotherapy (and an associated decline in the need for allergen extract vials that may occur several weeks to months later), allergy skin testing, pulmonary function testing and other procedures. These declines will impact practice cash flow for several months to come.
Analyze how various declines in revenue will impact your cashflow and operations. Run some “what-if” scenarios. For example, if your allergy shots drop by 25%, 50% or 75%, how will that impact your cashflow? What is your current cash reserve and how long can your practice sustain reduced cashflows? And how much and how long will it take to ramp up again?
Based on your analyses, develop a financial contingency plan. Factor in items from #4 – #6 below.
2. Check your insurance coverage.
Business interruption insurance covers lost income if a practice cannot function because of an event such as a fire or natural disaster. Find out whether you have a business interruption policy, and if so, whether it covers COVID-19-related losses.
According to two large insurance brokers, insurers may claim COVID-19 is not covered by business interruption insurance. However, they strongly recommend filing a claim and tracking your losses anyway because they expect it to be litigated. If you go ahead and file a claim it may be denied, but then if litigation (or government policy) changes things, you may be eligible and already have your claim on file.
3. Evaluate financial obligations.
Review loan documents and vendor contracts to determine if a slow-down of business could trigger a default or penalty situation. Reach out to see if they are willing to make accommodations.
Consider refinancing existing debt. Interest rates have dropped substantially, so this could be an opportunity to lock in a lower rate. If you do refinance, one option is to structure the loan so that you avoid the first monthly payment. In addition, consider SBA loans to get the benefit of provisions in the CARES Act (see #6 below).
4. Consider new revenue opportunities.
- Telemedicine – View our recent webinar Telemedicine and COVID-19: Getting Started for details. Note that coding and coverage guidance for telemedicine changed in the last week, so double-check information from that section of the webinar before using it.
- Digital e-visits – Communication initiated by a patient with their provider via electronic patient portal (CPT 99241-99243). CMS will also cover digital e-visits when performed by clinical staff (HCPCS G2061-G2063); some commercial payers also cover these payments (CPT 98966 – 98968).
- Phone visits – CMS will cover telephone E/M services provided by a physician (G2012, CPT 99441-99443) and telephone assessment and management services provided by a qualified nonphysician health care professional (CPT 98966-98968) for both new and established patients. Some commercial payers are expanding coverage for telephone visits as well.
- Remote patient monitoring – As an example, remote patient monitoring can be used to monitor a patient’s oxygen saturation levels using pulse oximetry (CPT codes 99091, 99453-99458).
Take into account that even though current waivers may allow telemedicine visits to be billed on parity to in-office visits, for most allergy practices E&M visits account for only 17-25% of the revenue stream. Determining this percentage for your practice will help estimate the drop in revenue for up to 90 days after things start to return to normal due to the lag in payments from the time your practice ramps back up.
5. Review opportunities to reduce expenses.
Contact your vendors, suppliers and landlords to determine whether they will provide abatements or accommodations.
- Malpractice insurance
- EHR / IT expense
- Medical waste
- Medical, Office, and Allergen Extract suppliers
Closely monitor “Buy & Bill” for biologics if you do this in your practice.
This category is usually a high cash flow, low margin part of an allergy practice. Know your margins and watch inventories closely, especially if you have patients who fail to come in.
Evaluate staff furloughs.
Before considering furloughs, look at patient flow and reducing hours and/or days to get to a minimum level of services that will reduce costs but can keep the doors open. Consider workflow changes in advance to ensure the practice continues to function smoothly. Evaluate the SBA Payroll Protection Program detailed in #6A below, which has no SBA fees and can provide forgiveness of up to 8 weeks of payroll based on employee retention.
If your practice needs to furlough or terminate non-essential employees, consult legal counsel to determine how to do so legally. The U.S. Department of Labor has released COVID-19 resources, and also has guidance on employee furloughs and unemployment benefits.
6. Consider loan, grant and advance payment funding options.
There are a number of free or low-cost funding options now available to medical practices that are worth reviewing.
Practice relief options in Coronavirus Aid, Relief, and Economic Security (CARES) Act:
- Grants for health care, Medicare- or Medicaid- enrolled providers to cover the revenue loss experienced due to the COVID-19 pandemic.
- Small Business Loans (which can be forgiven!) under the Payroll Protection Program (PPP) to cover the cost of employee salaries, rent and other business expenses if the provider keeps his/her practice open during the pandemic. Find the application here.
- Small Business Debt Relief Program will provide immediate relief to small businesses with existing non-disaster SBA loans. Under it, SBA will cover all loan payments on these SBA loans, including principal, interest, and fees, for six months. This relief will also be available to new borrowers who take out loans within six months of the President signing the bill into law.
- Advance payments from Medicare against future billing. See this summary from the AMA for details.
We strongly recommend you read the U.S. Senate’s Small Business Owner’s Guide to the CARES Act for detailed, helpful information on these programs. Last Monday’s Advocacy Insider article has helpful information as well.
SBA Economic Injury Disaster Loan (EIDL):
These loans must be applied for through the SBA portal and are for a maximum of $2 million. But if you apply for the EIDL applications, in some cases you cannot also apply for the same payroll costs under the larger PPP funding opportunity. However, you may be able to use the funds for payroll costs in a different time period. (e.g. April and May vs. June and July). Consult the SBA site for further information. While the EIDL loans are for only $2 million, PPP loans could be up to $10 million.. While the EIDL loans are for only $2 million, PPP loans could be up to $10 million.
Other funding options:
Some large banks have said they will extend loans from 90 days up to six months depending on the loan. Also, if you have an existing line of credit, you could borrow against that as a temporary solution.
For more ideas, read the AMA’s Tips for keeping your practice in business during the COVID-19 pandemic.