David Usher, CFO of a 12-bed rural hospital in western Kansas, sits on $ 1.7 million he’s afraid to spend.
Money loaned by the federal government is intended to help hospitals and other health care providers weather the COVID-19 pandemic. Yet some hospital administrators have called it a payday loan program that now has to be abruptly paid off at a time when institutions still need help.
Coronavirus cases have “recently increased and it’s quite worrying,” said Usher, chief financial officer of Edwards County Medical Center in Kinsley, Kansas. He would like to use the federal loan money to build a negative pressure room. These rooms are a common and effective tool for separating infectious patients from those in the rest of the hospital.
But it is not sure whether it is safe to spend this money. Officially, the full reimbursement of the the loan is due this month. Otherwise, depending on the terms of the loan, federal regulators will stop reimbursing hospitals for Medicare patient treatments until the loan is fully repaid.
When will the creditor come to call?
The federal Centers for Medicare & Medicaid Services have yet to begin trying to recoup their investment, with the coronavirus still affecting communities nationwide, but hospital leaders fear it will come and call for repayment any day now.
Hospital officials across the country say there has been no communication from CMS on whether or when to adjust the repayment deadline. A CMS spokesperson did not respond to our questions during publication time.
“It’s great to have the money,” Usher says. “But if I don’t know how much I can keep, I can’t spend the money wisely and efficiently on the installation.”
Usher took out the Medicare Accelerated and Advance Payments program loan. The program, which existed long before the pandemic, was generally used sparingly by hospitals when faced with emergencies such as hurricanes or tornadoes. It has been extended for use during the coronavirus pandemic – part of the billions approved in federal relief funds for health care providers this spring.
A full repayment of a hospital loan is technically due 120 days after receipt. If it is not paid, Medicare will stop reimbursing claims until it collects the money it is owed – a point spelled out in the program’s rules. Medicare reimburses almost $ 60 billion in payments to health care providers nationwide under Medicare’s Part A, which makes payments to hospitals.
More than 65% of the country’s small rural hospitals – many of which were operating in deficit before the pandemic – jumped on Medicare loans when the pandemic hit because these were the first funds available, says Maggie Elehwany, former vice president of government affairs for the National Rural Health Association.
CMS suspended new loan applications to the program at the end of April.
“The pandemic just lasted longer than expected in March,” said Joanna Hiatt Kim, vice president of payment policy and analytics for the American Hospital Association. Professional association sent a letter to CMS at the end of July to request a postponement of the recovery.
On Monday, the House Appropriations Committee included partial relief for all hospitals in a new government funding plan. The committee’s proposal would extend the start of the reimbursement period for hospitals and the time they are allowed to take to reimburse.
The continuous resolution which includes this language on helping hospitals (among many, many other things) is still being worked out, although it faces its own deadline: it must be approved by the House and the Senate within the next nine days or the federal government faces a shutdown.
“Still in the midst of a crisis”
Tom Nickels, executive vice president of AHA, says his organization appreciates the House committee efforts to deal with loans in the new bill, but total loan cancellation is still required.
Senator Jeanne Shaheen, a Democrat from New Hampshire, called for changes to the loan repayment period for months and said Monday that “our job is far from over.”
“We are still in the midst of this crisis, both from a health and economic standpoint,” Shaheen said.
Meanwhile, hospital administrators like Peter Wright are holding their breaths, waiting to see if, in order to settle the debt, Medicare will stop making payments to hospitals, even as facilities continue to fight the coronavirus in their communities. .
“The feds, if you owe them money, they take it,” says Wright, who oversees two small hospitals for Central Maine Healthcare in Bridgton, Maine. He says his health care system took the money because “we had no other choice, it was a cash flow issue.”
For many hospitals, Medicare payments represent 40% or more of their income. Not being reimbursed by Medicare would be crippling – much like a household losing almost half of its income.
“We have no idea what we’re going to do if we have to pay him back as quickly as they say,” Wright says.
In the Kentucky countryside, hospital manager Sheila Currans said she had “hesitated” for about a week, trying to decide whether to use the loan program for her hospital – she knew it. would have to pay him back and feared that might prove difficult.
“It was a desperate time,” said Currans, general manager of Harrison Memorial Hospital in Cynthiana, Ky. In early March, her hospital was the first in the state to treat a COVID-19 patient, she said.
The hospital immediately quarantined dozens of staff at the time and stop the elective procedures. Once COVID-19 was confirmed in the community, there was a “horrible fear” among residents of being infected, Currans says, and this also prevented people from seeking outpatient care.
“In March and April and most of May, I was in a complete spiral,” Currans says, and by the end of April his hospital was losing millions of dollars. To deal with the pandemic, she put staff on leave and turned a wing of the hospital into a “cough clinic” intended exclusively for patients whose symptoms suggested they might be infected with the coronavirus.
Currans says the hospital is still seeing cases of COVID-19 appearing, but other patients are also starting to return for services, such as in outpatient clinics.
As for the hospital’s finances, “it’s still not a great time,” Currans said, adding that the Medicare loan and other federal government supports “have helped us – at least for the sake of it. moment – to survive it “.
She hopes that the repayment request will be pushed back to 2021 or, perhaps, that the loan will be canceled.
“I know it’s a pipe dream,” Currans says. “But it was a historic event.”
Kaiser Santé news is an independent, non-profit program of the Kaiser Family Foundation and is not affiliated with Kaiser Permanente.
Sarah Jane Tribble spent over a year and a half report on a Kansas town that lost its only hospital. This month, KHN and St. Louis Public Radio will launch “Where It Hurts,” a podcast exploring the often painful cracks that develop in America’s healthcare system. You can listen to Episode 1 of the first season of the podcast, “Without mercy“, September 29.
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