Hospital group CEOs pitch more federal aid, looser Medicare loan terms

Dive Brief:

  • The heads of the three biggest hospital lobbies stumped for more federal aid and looser repayment terms in a massive Medicare loan program on Monday, as the coronavirus, and its deleterious economic effects, continue to slam U.S. providers.
  • At a conference on the healthcare system’s response to COVID-19, the CEOs of the American Hospital Association, the Federation of American Hospitals and America’s Essential Hospitals said congressional funds have been invaluable, but won’t be enough to keep providers afloat if the coronavirus doesn’t let up soon.
  • The provider executives also noted a looming deadline to repay accelerated Medicare loans, Aug. 1, is too soon given the ongoing economic stress on hospitals. If participating providers who applied for loans early in the program are unable to begin paying them back, they could lose all their Medicare fee-for-service payments, which make up roughly a fourth of a U.S. hospital’s revenue, on average.

Dive Insight:

Along with being an unprecedented public health disaster, the pandemic has fomented a difficult economic situation for providers, who have bled cash prepping for COVID-19 patients as revenues flatlined following deferral of lucrative elective procedures.

Congress benchmarked some $175 billion across a series of relief legislation this year but the pot isn’t large enough to make hospitals and doctor’s offices in the U.S. whole, according to Rick Pollack, head of 5,000-member-hospital AHA, Bruce Siegel, CEO of AEH, which lobbies for safety net facilities, and Chip Kahn, CEO of FAH, which represents for-profit hospital chains.

If there’s a significant surge of COVID-19 in the fall, as many epidemiologists predict, “there will have to be infusions of a lot more money,” Kahn said. The average number of daily cases continues to climb across more than half the country, especially in the South and West.

“Is the money enough? No,” Siegel said. “I think this emergency is going to go on a lot longer than any of us would like.”

HHS faces criticism for how it disbursed the tranche of congressionally allocated funds, with some wealthy hospitals receiving billions while smaller peers serving higher numbers of vulnerable populations got significantly less.

The department switched up its allocation strategy earlier this month to get more funds to Medicaid and safety net facilities. But the process overall “hasn’t been perfect,” Kahn said, “Many providers — not just safety net hospitals, but dentists and pediatricians and others have been left out.”

The Democrat-led House of Representatives passed the $3 trillion HEROES Act mid-May that would allocate another $100 billion for provider reimbursement. Though the White House and Republican Senate leaders called the bill a nonstarter, President Donald Trump has said he’s open to signing another stimulus package, though specifics are unclear. 

The executives also want the Trump administration to adjust the terms of the Medicare Accelerated and Advance Payment Programs, which speeds Medicare payments to providers in times of emergency based on historical payments. The system has helped to alleviate short-term financial pressure, but could come back to haunt participating providers due to the tight repayment window.

Most providers can request up to 100% of their Medicare payment amount for a three month period, and begin paying it back 120 days after CMS issues the payment. Medicare fee-for-service payments will be zeroed out until the borrowed funds are repaid, the provider chiefs said.

For providers that got in on the ground floor of the program late March, that deadline is in fewer than 40 days, while the economic headwinds have yet to let up.

“The idea of having that money repaid the way it’s structured — not only is that going to be a healthcare disaster, it’s going to be an economic disaster,” Siegel said.

CMS stopped receiving new applications from doctors, non-physician practices and durable medical equipment supplies on April 27 after sending out roughly $100 billion in loans. The agency has continued to review new asks from hospitals but said it would be stricter with approvals.

The heads of the provider lobbies urged CMS to reopen the program, while pushing back the deadline, lowering interest rates (which can be as high as 10%) and consider loan forgiveness for struggling facilities.

“That money’s gone,” Kahn said. “Paying it back is going to have to be done with future dollars.”

A CMS spokesperson told Healthcare Dive the agency is balancing statutory requirements to “promptly and aggressively” collect debts to preserve the beleaguered Medicare trust fund, with the needs of providers amid the pandemic.

CMS continues to monitor the ongoing situation and will notify practitioners and suppliers if additional flexibilities will be made available to them,” the spokesperson said.

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