Hospital Stimulus Funds to Pay for Uninsured COVID-19 Treatment

Some of the $100 billion in coronavirus stimulus money earmarked for hospitals will pay for COVID-19 treatment of the uninsured, HHS Secretary Alex Azar recently announced.

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During a Coronavirus Task Force briefing on Friday, Azar stated that HHS will use some of the funds from the Coronavirus Aid, Relief and Economic Security (CARES) Act to pay hospitals Medicare rates for the care of uninsured COVID-19 patients. The department will use the same mechanism used for paying providers for COVID-19 testing for the reimbursement of uninsured COVID-19 treatment.

However, as a condition of reimbursement, hospitals cannot balance bill uninsured patients for COVID-19-related care, Secretary Azar said.

Congress passed and President Trump signed the CARES Act on March 27, providing more than $100 billion for hospitals and other healthcare providers. The funds are to help cover provider costs for COVID-19, which recently upended operations for healthcare organizations.

The Trump administration has yet to address how it plans to distribute the funds to hospitals and other healthcare providers except for how it will use some of the money to pay for uninsured COVID-19 treatment. HHS Secretary Azar did not offer more details at the April 3 briefing.

Using some of the funds to pay for the expected surge in uninsured coronavirus patients is one of the administration’s first steps to distributing the funds and ensuring access to care for the growing number of uninsured individuals. About 3.5 million American workers have already lost employer-sponsored healthcare coverage due to COVID-19, according to a new estimate from the Economic Policy Institute.

The loss of private health insurance coverage spells trouble for healthcare providers. Hospitals and other organizations rely on revenues from commercial payers to offset the financial losses stemming from Medicare and Medicaid patients. Reimbursement from the public payers fell short by a total of $76.8 billion in 2017, the most recent year for which the American Hospital Association (AHA) had complete payment data.

COVID-19 is putting more stress on hospital operating margins, as the pandemic forces organizations to cancel procedures that normally drive revenue like elective surgeries. Hospitals are also bracing for a sudden influx of COVID-19 patients, resulting in significant disruptions to the workforce, supply chain, and revenue sources.

Hospitals and health systems have been calling on Congress and HHS to expedite the distribution of funding authorized the CARES Act.

The latest move from the federal government, however, would not provide the immediate financial assistance hospitals are looking for. Instead, HHS plans to cover uncompensated costs incurred by uninsured COVID-19 patients after the fact and at rates lower than commercial payers.

“The emergency relief fund in the CARES Act was intended to provide hospitals with an infusion of emergency relief as providers incur substantial expenses in preparing and dealing with fighting this battle against COVID-19,” AHA’s president and CEO Rick Pollack said regarding the latest announcement.

Pollack pushed for the Trump administration to explore options to increase coverage for the treatment of the uninsured with COVID-19, such as opening a special enrollment period for the Affordable Care Act’s marketplaces or expanding Medicaid. These options would be preferable to using emergency funds designated for hospitals from the CARES Act.

“Because hospitals and health systems, and our dedicated caregivers, are on the front lines of this pandemic, we continue to urge the release of the CARES Act emergency relief funds as soon as possible,” Pollack stressed. “This critical funding will help ensure that our health care providers can continue to be there for everyone and have the support and resources that are needed to deliver care to their patients and communities.”

Hospitals prefer prospective payments, the Federation of American Hospitals (FAH) indicated in a March 30 letter to HHS Secretary Azar.

“The CARES Act provides the Secretary with the flexibility to issue final, prospective payments for lost revenue and expenses, and the FAH urges you to do so by making payments on a prospective basis, ensuring predictable, expeditious provider payments,” association representing leading tax-paying hospitals stated.

“Retrospective payments would lag behind COVID-19 expenses and losses, reducing the benefit to providers, and a pre-payment strategy would involve a costly reconciliation process at a time when providers lack operational capacity for recoupments and reconciliations.”

The Trump administration’s plan for distributing the remaining hospital funds from the coronavirus stimulus package has yet to be released. But the HHS Secretary Azar hinted on Friday that more information is forthcoming.

“We will soon have more specifics on how the rest of the $100 billion will go to providers,” he told the media at the briefing. “We’re working to ensure that this funding is distributed in a way that is fast, fair, simple, and transparent.”