FAH Wants More Time, Lower Rates on Advance Medicare Payments

The Federation of American Hospitals (FAH) is demanding more time to repay advanced Medicare payments made to hospitals during the COVID-19 pandemic.

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In a new campaign launched last week, the association representing for-profit hospitals called on Congress to extend the repayment start date for payments made through the Medicare Accelerated and Advance Payment Programs into 2021 and to waive or limit the interest rate attached to the upfront payments. And these changes must be made immediately, the group warned.

“As we approach August 1st, many hospitals and health care providers across the country will no longer receive Medicare Fee-For-Service payments. Despite being in the midst of a global pandemic, Congress has not adjusted the terms of repayment for the Medicare Accelerated and Advance Payment Programs and now providers – and the patients they serve – are at risk,” the FAH said on the webpage.

The Medicare Accelerated and Advance Payment Programs allow hospitals and other healthcare providers to receive some of their typical Medicare fee-for-service reimbursements upfront during times of emergency or extreme financial distress.

The federal government and CMS decided to reopen the established programs earlier this year to offset the revenue losses hospitals and other healthcare providers incurred by shutting down elective care and ramping up critical care units during the COVID-19 pandemic. Policymakers also altered the terms of the upfront payments to extend how long providers have to repay the reimbursements before Medicare starts garnishing future payments.

But that time is approaching for hospitals that used the program early on to keep afloat during the pandemic, FAH stressed. When the time comes, hospitals will lose approximately 25 percent of their total payments from all payers until the borrowed Medicare payments are repaid.

“This lifeline could become an anchor that sinks the recovery of hospitals across the country,” Chip Kahn, president and CEO of FAH, said on the website.

Most health systems don’t anticipate revenue levels to get back to pre-COVID levels until at least the second quarter of 2021, according to recent surveys conducted by AMGA. And nearly a quarter of health system respondents said they can’t predict when their revenues will return to normal.

Congress needs to further extend the repayment period for hospitals and other providers still being impacted by the financial implications of COVID-19, FAH reasoned. In addition, the group asked Congress to:

• Reduce the amount of repayment taken from each Medicare claim during repayment from 100 percent to 25 percent
• Resume the programs, which was paused on April 27th
• Increase the amount that can be advanced to hospitals from three or six months of Medicare payments to 12 months of Medicare payments
• Allocate the funds from general Treasury revenues rather than from the Medicare Hospital Insurance Trust Fund
• Authorize loan forgiveness in cases of hardship

“COVID-19 continues to wreak havoc on patients, their communities and the health care providers that serve them,” Kahn stated. “These changes to the Medicare Accelerated and Advance Payment Programs must be made quickly so we can continue to move forward in the fight against COVID. To delay jeopardizes our progress and threatens to put hospitals, clinicians, and other health care providers right back where they started – on the brink.”

Congress has debated altering the programs to reflect the ongoing COVID-19 situation. In April, Senate Democratic Leader Chuck Schumer and House Speaker Nancy Pelosi proposed in an interim emergency package to lower the interest rate of advance payments made to healthcare providers and lengthening the repayment schedule of the loans.

Other industry groups, including the American Academy of Family Physicians, have urged Congress in the last couple of months to restart and modify the programs to continue much-needed financial support for healthcare providers.

However, these adjustments have yet to be implemented despite timing running out on hospitals, FAH stated.