News briefs November 2020: Trends in hospital volumes and margins, and other forces shaping healthcare finance

Hospitals get relaxed Medicare repayment terms, brief reprieve from DSH cuts in federal funding bill

Hospitals enjoyed some relief in a continuing resolution signed into law by President Trump on Oct. 1, which relaxes some provisions of Medicare advance payment loans and briefly delays $4 billion in cuts to Medicaid Disproportionate Share Hospital (DSH) payments. The measure generally extends existing federal funding levels for healthcare and other programs, including DSH payments, through Dec. 11.

Changes to the Medicare Accelerated and Advance Payment Program, which in the spring made hospitals eligible to receive six months of advance payments, include allowing hospitals to request that:

• Recoupment of payments be delayed until one year from issuance
• A graduated recoupment schedule be implemented in which 25% of Medicare payments are to be withheld for the first 11 months of recoupment, with 50% withheld during the following six months
• The time frame for full repayment be extended from one year to 29 months from the date of the first payment
• The continuing resolution also reduces the interest rate on outstanding balances remaining after the 29-month repayment period from 10.25% to 4%.

For providers wanting to use the leeway provided in the new legislation, additional guidance is expected from CMS.

The new legislation also provided an 11-day extension, through Dec. 11, for a range of Medicare and Medicaid policies known as extenders. 

Federal assistance rule changes draw increasing concern from hospitals

Uncertainty over mid-September rule changes has led many lower-income hospitals to either not spend their federal COVID-19 grants or scramble to pay back money they spent.

A Sept. 19 notice from the U.S. Department of Health and Human Services (HHS) changed CARES Act Provider Relief Fund (PRF) reporting requirements from those outlined in a June 19 FAQ.

As part of those requirements, HHS initially defined lost revenue as “any revenue that … a health care provider lost due to coronavirus.” It stated that hospitals could “use any reasonable method of estimating the revenue during March and April 2020 compared to the same period had COVID-19 not appeared. .… It also would be reasonable to compare the revenues to the same period last year.”

The new definition of lost revenue was “represented as a negative change in year-over-year net patient care operating income.” The new guidance also said that after covering the cost of COVID-19-related expenses, hospitals generally will be able to apply PRF payments toward lost revenue only up to the amount of their 2019 net patient operating income.

In a Sept. 25 letter to HHS, Rick Pollack, president and CEO of the American Hospital Association, urged HHS to revert to the earlier guidance: “The PRF funds have helped [hospitals] continue to put the health and safety of patients and personnel first, and in many cases, ensure they are able to keep their doors open. HHS’s Sept. 19 guidance jeopardizes this position and will come at the cost of access to care for patients and communities.” 

Public health emergency extended, $20 billion more in provider aid coming

The federal public health emergency (PHE) was extended into January, and an additional $20 billion in federal grants was announced to support healthcare providers through the pandemic.

On Oct. 2, Alex Azar, secretary of the U.S. Department of Health and Human Services (HHS), issued the latest 90-day extension of the PHE. The extension took effect Oct. 23.

Initially issued Jan. 31 (retroactive to Jan. 27), the PHE was previously renewed on April 21 and July 23.

The latest renewal came three weeks before the PHE was set to expire — far earlier than the last renewal, which came just days before the expiration. Provider advocates said they were worried the last renewal was too close to the expiration.

The PHE has allowed for numerous waivers from CMS, including those allowing hospitals and health systems to expand access to COVID-19 testing and telehealth, create additional workforce capacity and establish additional treatment locations.

HHS also announced the release of a new round of $20 billion in provider relief funding for which providers could start to apply Oct. 5.

The funding is the third “general distribution” round issued through the $175 billion Provider Relief Fund (PRF). HHS has disbursed more than $100 billion of the PRF funding, which was provided through two pandemic response laws.  

Hospitals failing to meet reporting requirements face a loss of Medicare and Medicaid access

Hospitals began receiving letters Oct. 7 detailing their compliance with data-reporting requirements related to COVID-19. Facilities were given 14 weeks to comply or lose access to Medicare and Medicaid, said CMS Administrator Seema Verma.

CMS implemented an Aug. 28 interim final rule with comment, which made daily reporting of COVID-19-related data and other data a condition of participation in Medicare and Medicaid.

Hospitals must report 31 data elements daily and six elements weekly, according to an Oct. 6 FAQ from the U.S. Department of Health and Human Services. The reporting requirements broadly apply to all types of hospitals, or more than 6,000 facilities. An exception is that psychiatric and rehabilitation hospitals must report five of the 31 elements weekly instead of daily.

Hospital advocates, including the Federation of American Hospitals (FAH), have condemned the approach.

“It is both inappropriate and frankly overkill for CMS to tie compliance with reporting to Medicare conditions of participation,” said Chip Kahn, president and CEO of FAH.

But federal officials downplayed the challenge, noting that most hospitals already report some of the data daily, and said making compliance a condition of participation was their only legal option to enforce the requirement.

“It’s important to note that termination from Medicare and Medicaid is the only sanction at our disposal for hospitals,” Verma said.