ASCs’ Response to COVID-19: Nine Things to Consider

March 31, 2020

Recommendations by the Centers for Medicare & Medicaid Services (CMS) to postpone non-essential medical, surgical and dental procedures as well as state guidance on elective procedures create economic and legal challenges as many ambulatory surgery centers (ASCs) limit the number of cases performed in their facilities or temporarily close their doors. For more information on CMS’s recommendations, please read the McGuireWoods LLP alert CMS Recommends Postponing Non-Essential Procedures During Pandemic – Seven Key Points and for more information on state guidance on elective procedures, please read the McGuireWoods LLP alert State Governors’ “Stay-at-Home” and Prohibition on Elective Procedures Orders which will be continuously updated as new state orders are issued.

Below are nine things ASCs should consider while they reduce their hours or temporarily close. Because many of these considerations are state-specific, we strongly encourage ASCs to check with state department of health websites for instructions and key updates and to work with state ASC regulators and associations. While state regulators are being more timely and flexible than ever during this pandemic, many ASCs will face difficult choices that do not fall squarely within black and white rules. In making tough determinations that may fall into a gray area, we urge healthcare providers to consider CMS recommendations on postponing non-essential medical and dental procedures and other states’ various guidance, which include considering the use of medical equipment and supplies such as personal protective equipment and other resources that may be necessary or helpful to address the COVID-19 situation.

Every step of the guidance below may not always be feasible to take in these turbulent times. Many ASCs face tough decisions on a rapid basis and sometimes will feel compelled to proceed with an action plan without having every legal element fully vetted. Hopefully the full community of stakeholders, from insurance companies to patients and beyond, will be forgiving of healthcare providers doing the best they can in difficult times. This article offers best practices for ASCs to take when reducing hours or temporarily closing.

1. Review state licensure and CON. ASCs need to address any state licensure or certificate of need (CON) requirements triggered by reducing hours or closing. For example, many states require notification or permission before an ASC may substantially change or temporarily cease operations. Notwithstanding these general requirements, since CMS announced its recommendations to postpone non-essential procedures, some states have issued specific guidance easing their standard rules and protocols for closure or reduction in hours.

2. Quality reporting requirements. CMS announced that it is temporarily easing Medicare quality reporting requirements during the COVID-19 pandemic. CMS has extended reporting deadlines for providers participating in the Merit-Based Incentive Payment System or the Medicare Shared Saving Program Accountable Care Organization and made reporting data submissions for the fourth quarter of 2019 optional for hospital and post-acute care reporting programs such as the ASC Quality Reporting Program. Participating ASCs should review CMS’ exceptions and extensions for upcoming reporting and data submission requirements. For a more detailed summary of CMS’s exceptions and extensions for upcoming quality reporting and data submission requirements, please read the McGuireWoods LLP alert CMS Eases Quality Reporting Requirements Amid COVID-19 Crisis. Some states may also modify annual reporting obligations or accelerate reporting requirements in the near future. For example, ASCs licensed in Texas must now make weekly reports of the number of functioning ventilators and other respiratory support equipment held by the ASC .

3. Contract with local hospital to use ASC space or expand services. A temporarily closed ASC may consider allowing a nearby hospital to use its facility to help manage the influx of hospital patients. Many states’ licensure and CON laws either do not permit an ASC to allow another provider to use its space or place restrictions on space-sharing arrangements. ASCs should confirm with their state regulatory agencies whether hospitals in their state will be permitted to use the ASC facility during this time and what additional obligations may be required. CMS has also announced that it will allow ASCs to contract with hospitals to provide hospital services and temporarily permit such facilities to be used for patient care and quarantine site subject to certain state approvals.

If an ASC desires to enter into such an arrangement, there are a number of other practical and legal considerations to address. For example, the ASC should:

  •  confirm that its lease permits subleasing the space and/or obtain any necessary landlord consents;
  • document the hospital’s use of the space and the allocation of any liability while the space is being used by the hospital;
  • ensure that all ASC drugs and medical records on the premises are secured and inaccessible to hospital staff members while the facility is being used by the hospital.
  • contact its liability insurance provider to confirm that the hospital’s use of space will not invalidate coverage; and
  • ensure the arrangement between the hospital and ASC is documented in a simple format (such arrangements could also include use of equipment and staff, but such additions to the arrangement add complexities).

Alternatively, an ASC may consider expanding its services beyond surgical services and temporarily enrolling and billing under Medicare as a hospital during the pandemic. While such ASCs must comply with their state’s emergency preparedness or pandemic plans and be approved by state regulators, some states such as Texas have already taken steps to permit ASCs to expand services and to keep patients for longer periods of time. These changes announced by CMS will permit ASCs to be used for patient care and quarantine sites.

4. Review standard procedures for interacting with patients. ASCs that continue to service patients during the COVID-19 pandemic should consider how their standard procedures for interacting with patients might need to change. For example, ASCs should consider requiring patients to have temperature checks before allowing them to enter the facility, spacing out seating in patient waiting areas, limiting the number of nonpatients who may enter the facility, instituting a verbal check-in policy, and enhancing patient disclosures and informed consents to address additional risks related to procedures performed during the pandemic.

To prevent the spread of disease, ASCs should implement new recommendations issued by the Occupational Health and Safety Administration (OSHA) for employers preparing for COVID-19 in the workplace. OSHA recommendations include developing an infectious disease preparedness and response plan, implementing basic prevention measures for minimizing the spread of COVID-19 and implementing workplace controls such as using high-efficiency air filters. For more information on new OSHA recommendations, please read the McGuireWoods LLP alert OSHA Issues New COVID-19 Preparedness Guidance for Employers.

ASCs should also consider reminding their physician medical staff members that telehealth services utilization may be possible to care for patients while ASC operations are limited or suspended. In response to COVID-19, CMS relaxed some of the traditional requirements for receiving Medicare reimbursement of telehealth services. For more information on the relaxed requirements for providing telehealth services to Medicare patients, please read McGuireWoods LLP alert HHS Acts to Support Telehealth Services in Response to COVID-19: Six Key Takeaways.

5. Employment matters. How an ASC addresses employment issues will vary depending on whether an ASC chooses to remain operational during the COVID-19 pandemic. ASCs that remain operational should develop a plan to protect and secure their workforce members in compliance with applicable federal laws, as discussed in a prior McGuireWoods LLP alert Considerations for Employers Addressing the COVID-19 Outbreak. When developing plans to remain operational, ASCs should consult new COVID-19 guidance issued by OSHA as discussed above and the Centers for Disease Control and Prevention healthcare professionals page, which includes guidance on how providers can best protect themselves and care for infected patients. Additionally, an ASC’s existing sick leave policies and practices may, without accommodation, discourage employees from self-isolating when needed or violate the Families First Coronavirus Response Act (FFCRA) if an employer with fewer than 500 employees fails to provide special paid emergency family and medical leave or paid sick leave in certain COVID-19 related circumstances. For a detailed summary of the essential elements of the FFCRA, please read the McGuireWoods LLP alert Essentials of the Families First Coronavirus Response Act.

Because the privacy and security rules of the Health Insurance Portability and Accountability Act (HIPAA) still apply to protected health information (PHI), ASCs with workforce members working remotely should review requirements for securing PHI and limit technology used by remote workers to technology identified in the ASC’s security rule risk assessment. ASCs should also encourage workforce members to use cellphones and other remote technology only where privacy can be maintained. In addition, ASCs should monitor legislative efforts making their way through Congress that would change federal leave laws and potentially make tax credits available.

An ASC planning to cease operations should consider what obligations it has to its employees. ASCs should consider whether a cessation in operations triggers compliance with the notice requirements of the WARN Act or comparable state laws that require advance notice of a reduction in an employer’s workforce. While the federal WARN Act allows an employer to provide less than 60 days’ notice due to unforeseeable business circumstances, employers should consider giving as much notice as possible prior to ceasing operations or conducting a mass layoff that would potentially trigger WARN Act obligations. Some states have different notice requirements for employers that cease operations or conduct reductions in force, so those laws should be consulted as well. ASCs should also consider reducing employees’ salaries going forward. But before making any prospective reductions in employee pay, ASCs should ensure that any reduction in pay complies with applicable wage and hour laws as well as any notice requirements under state law or the terms of any employment agreement. Finally, ASCs should determine whether their employees may have access to federal or state unemployment or sick leave benefits during the pandemic.

6. HIPAA. Even though HIPAA still applies to PHI, compliance may be relaxed in certain circumstances to allow ASCs to respond effectively during the COVID-19 pandemic. In fact, the Department of Health and Human Services Office of Civil Rights (OCR) indicated in a published notification that it would exercise enforcement discretion with respect to telehealth services provided during the pandemic regardless of whether a provider uses telehealth services to diagnose or treat COVID-19. For instance, OCR explained that providers like ASCs could use certain telecommunication technologies not typically authorized for furnishing telehealth services to patients such as Apple FaceTime, Facebook Messenger video chat, Google Hangouts video and Skype. OCR also released a guidance bulletin reminding covered entities and their business associates of their obligations under the HIPAA privacy rule. To better understand what HIPAA standards may be eased during this time, ASCs may want to review guidance issued by OCR in connection with the coronavirus as discussed in more detail in the McGuireWoods LLP alert HHS Limited Waiver and Guidance on HIPAA and the Privacy Rule During COVID-19 Pandemic.

7. Review existing financial commitments. In an effort to mitigate losses, ASCs should review whether they can make changes to existing financial commitments in contracts with vendors and other third parties. For example, ASCs should consider contacting vendors and negotiating payment plans to ensure continuous delivery of supplies during partial openings. ASCs temporarily closing during the pandemic will also need to review existing contracts to determine if the ASC must still make payment regardless of whether its business is operational. If payment must be made, ASCs may be able to recoup or reduce contractual losses stemming from COVID-19 related issues as discussed in a prior McGuireWoods LLP alert Contract Implications Amid COVID-19 Concerns: Force Majeure, Impossibility, and Frustration of Purpose.

8. Secure necessary financing. ASCs should consider drawing on existing credit lines before reserves are depleted due to the significant impact COVID-19 is having on the U.S. stock market, credit markets and local economies. ASCs should also determine their eligibility for small business loans offered through government-sponsored emergency loan programs for U.S. businesses suffering losses from the COVID-19 pandemic. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) permits small businesses to receive loans from lending institutions that are 100 percent guaranteed by the federal government. The CARES Act establishes a new paycheck protection loan program that qualifying ASCs can use to cover payroll costs, group healthcare benefit costs during paid sick or medical family leave, insurance premiums, employee salaries and commissions, scheduled mortgage interest payments, rent, utilities, and interest on existing debt. Such paycheck protection loans are also subject to cancellation/forgiveness of all or a portion of the principal amount of the loan if an ASC meets certain full-time equivalent employment and compensation requirements. For a more detailed summary of the CARES Act, please read the McGuireWoods LLP alert COVID-19 Paycheck Protection Loans for Businesses.

9. Assess your insurance coverage. ASCs should assess their existing insurance policies for ways to manage coronavirus risk through insurance. For instance, an ASC’s property and casualty policy may provide business interruption coverage for loss of access to covered property due to government action taken to slow or minimize the spread of the coronavirus. An ASC’s commercial general liability policy could provide protection from lawsuits brought by patients or staff who contract COVID-19 and allege the virus was contracted on the premises of the ASC. In addition to assessing the coverage provided by an ASC’s existing insurance policies, ASCs should review the notice requirements for making a claim under its policies and watch for COVID-19 exclusions in any insurance policies up for renewal. For additional ideas on managing coronavirus risk through insurance, please read the McGuireWoods LLP alert Managing Coronavirus Risk Through Insurance.

Please contact the authors for additional guidance on preparing for changes to ASC operations as a result of the COVID-19 pandemic. McGuireWoods has published additional thought leadership related to how companies across various industries can address crucial coronavirus-related business and legal issues, and the firm’s COVID-19 Response Team stands ready to help clients navigate urgent and evolving legal and business issues arising from the novel coronavirus pandemic.