Hospitals Oppose Using Medicare, Provider Relief Funds on Infrastructure

Leading healthcare industry groups are calling on lawmakers to leave Medicare and unspent provider relief funds alone when finding ways to offset spending from a proposed infrastructure deal.

Released last week, the Bipartisan Infrastructure Framework would earmark $1.2 trillion to transform physical infrastructure across the country, including investments in transportation, universal broadband, clean energy, as part of President Biden’s Build Back Better vision.

To fund the projects, the Framework proposed to use a variety of sources, including unused relief funds from 2020 emergency relief legislation, which includes the CARES Act’s Provider Relief Fund, and an extension of mandatory sequester. The Medicare sequestration was temporarily suspended during the COVID-19 pandemic to give providers more access to upfront funds.

However, hospital groups, including the American Hospital Association (AHA), Association of American Colleges (AAMC), and Federal of American Hospitals (FAH), are asking lawmakers to not take funds away from providers still struggling from the pandemic.

“[W]e are opposed to the use of an extension of mandatory sequestration, as well as unspent COVID-19 provider relief funds, as financing sources for any infrastructure package,” they wrote in a June 29th letter to Majority Leader Chuck Schumer and Republican leader Mitch McConnell.

Hospitals anticipate ongoing challenges with caring for patients as the country starts the transition to a post-pandemic world.

“Congress recognized that hospitals and health systems needed relief from Medicare cuts during the pandemic and we appreciate the recently provided delay through the end of this year in the two percent mandatory reductions,” the groups explained in the letter.

“Unfortunately, the Bipartisan Infrastructure Framework lists a continuation of mandatory sequestration as an offset for the infrastructure agreement. Medicare funds should not be used to pay for roads and bridges. We cannot sustain additional cuts to the Medicare program.”

The groups also pointed out that “Congress recognized the importance of providing relief to health care providers by assigning funds to them over the last year and a half in multiple COVID-19 legislative packages.”

“The need for these funds remains strong, as many health care facilities are still recovering from the impact of the pandemic, and unfortunately caseloads have increased in some areas of the country due to new virus variants and a lack of vaccinations,” their letter stated.

Hospitals could lose as much as $122 billion in revenues this year as facilities continue to fight COVID-19 and try to reengage patients who have put off medical care during the pandemic. The $178 billion Provider Relief Fund and other emergency funding from 2020 legislation have helped hospitals maintain smooth operations despite the losses. In fact, new data from consulting firm Kaufman Hall showed that its hospital operating margin index for over 900 hospitals was 3.5 percent in May 2021 when factoring in federal aid. Hospital margins are still very narrow, but without the funding, the operating margin index dropped to 2.6 percent.

Healthcare providers are still waiting on additional distributions of dollars from the Provider Relief Fund, as well as $8.5 billion in funds for rural healthcare providers from the American Rescue Plan, according to hospital groups.

“We would ask that none of these COVID-19 health care relief funds be used for the purpose of funding an infrastructure package, given the ongoing need for health care providers to offer assistance to their patients and communities,” the groups wrote in the letter.