$100 billion COVID-19 bailout

Hospital groups are asking Congress to forgive more than $100 billion in loans the Trump administration has handed out to help providers maintain cash flow during the COVID-19 pandemic.

Provider lobbyists successfully secured $175 billion in grant funds over the last two COVID-19 relief packages, but they are arguing that isn’t enough. As Congress gears up for another major legislative push, providers are asking lawmakers to forgive or relax terms on another $100 billion in Medicare accelerated and advance payments that the Trump administration has already sent out. 

CMS expanded Medicare advance and accelerated payment programs in March, and has since given out $100 billion in loans. But the agency abruptly pumped the brakes on the program, suspending payments to Medicare Part B suppliers and “reevaluating”funding requests in Medicare Part A. CMS said they chose to suspend the program because HHS had begun distributing the $175 billion in grant funds.

Providers are now turning to Congress to overrule the decision and enact changes to make the program even more favorable. Their primary request is that Congress make the advances forgivable. 

The National Rural Health Association said that some rural hospitals were already operating on negative margins before the pandemic, and may have trouble paying back loans. The group asked lawmakers to make the loans forgivable if they are used for patient care, staff salaries, utilities, or mortgage payments.

Rex Jones, CEO of Magnolia Regional Medical Center in Magnolia, Ark., said he decided to apply for an advance payment but is trying not to spend any of the money unless absolutely necessary. Magnolia reported losses in 2016, 2017 and 2018 according to data from CMS cost reports.

“Our concern was that when you are taking the money out from an advance on an organization with negative margin, there’s no way to pay it back,” Jones said.

The American Hospital Association and American Nurses Association also asked Congress to make the advances forgivable in a letter dated Friday. But making the loans forgivable would favor providers that have a more Medicare-heavy payer mix, and would disadvantage safety-net hospitals that are also operating on thin margins. 

If lawmakers don’t accede to turning loans into grants, providers want more favorable repayment terms. CMS can begin recouping the loans by garnishing Medicare payments after 120 days. The funds then transition into high-interest loans if they aren’t paid back in a year for hospitals, or 210 days for physicians and suppliers. 

The Greater New York Hospital Association argued that hospitals may not be back to regular capacity by July or August.

“Providers must begin to repay their Medicare advance while they continue to treat COVID-19 patients, or while they are in a precarious financial situation following a COVID-19 patient surge,” GNYHA wrote.

Specifically, the Federation of American Hospitals asked lawmakers to increase the amounts of the advances, extend repayment deadlines, decrease the rate at which CMS can garnish payments, and lower interest rates.

It isn’t just hospitals who want changes to the program, as physicians also received advances. The American Medical Association generally concurred with FAH’s recommendations, and also asked that HHS be allowed to make more than one advance payment.

“We fear physician practices may not resume normal operation in the immediate term and will need additional cash flows to remain afloat for patients after the pandemic is over,” physician groups wrote in an AMA-led letter.

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