AHA Wants More Payback Options for Accelerated Medicare Payments

The American Hospital Association (AHA) is calling on CMS to reconsider repayment options for hospitals that accepted accelerated Medicare payments at the start of the COVID-19 pandemic.

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Specifically, the hospital group is calling on CMS Administrator Seema Verma to allow period interim payment (PIP) hospitals to carry out their accelerated payment repayment at cost settlement, per initial CMS communications about the COVID-19 support option.

“For the past four months, PIP hospitals have had the expectation – communicated by CMS – that their accelerated payment repayment would occur at final cost settlement, which generally would be many months from now,” Thomas P. Nickels, AHA’s executive vice president, told CMS Administrator Seema Verma in an Aug. 3rd letter.

“However, with very minimal lead time, the agency is substantially changing the recoupment process for these providers, such that many will be required to begin repaying these funds within the next few weeks,” Nickels wrote. “This change will cause significant financial management challenges for these hospitals during a time when the pandemic is becoming even more uncertain.”

PIP hospitals receive Medicare reimbursement biweekly based on the facility’s estimate of Medicare payments for the current cost reporting period.

CMS extended eligibility for accelerated Medicare payments to PIP hospitals during the COVID-19 public health emergency to help offset substantial financial losses from the novel coronavirus.

According to AHA, CMS indicated during a call with hospitals in April that PIP hospitals would get the accelerated Medicare payments in addition to their periodic payments and the reconciliation process for the accelerated payments would occur at the final cost report process for the first cost reporting after the repayment period.

Additionally, the accelerated payment fact sheet written by CMS stated, “For the small subset of Part A providers who receive Period Interim Payment (PIP), the accelerated payment reconciliation process will happen at the final cost report process (180 days after the fiscal year closes).”

However, Medicare Administrative Contractors (MACs) recently told AHA hospitals that CMS has directed them to implement the same repayment process for PIP hospitals as non-PIP hospitals, meaning PIP hospitals would have their periodic payments held back until the accelerated Medicare payments were repaid.

“The result is that PIP hospitals will go several months without any Medicare inpatient reimbursement, which is contrary to the entire purpose of the PIP program – to provide hospitals with a steady and predictable revenue stream,” Nickels wrote. “Moreover, hospital inpatient and outpatient volumes are down nearly 20% and 35%, respectively, from 2019, and most do not expect volume to return to baseline levels in 2020.”

In light of ongoing hospital volume declines, other hospitals should also have more repayment options, AHA added.

“[M]any of our members have expressed concerns about the upcoming accelerated payment recoupment process, which will bring about a complete loss of Medicare reimbursement for providers during the repayment period,” Nickels stated in the letter.

The group wants, for example, CMS to allow hospitals to make direct payments to MACs in lieu of the contractors holding back Medicare reimbursements.

“This will allow additional flexibility as hospitals across the country continue to be saddled by the effects of COVID-19. Specifically, allowing the option for hospitals to repay some of their accelerated payment via direct payment to their MAC will offer more predictability for hospitals’ financial planning,” Nickels said.

Hospitals are projected to lose $323 billion in 2020 because of persistent declines in visit volumes, inflated costs for personal protective equipment and other supplies, and other pandemic-related expenses, AHA recently reported.

CMS advanced nearly $60 billion to over 21,000 Part A providers at the start of the pandemic, in addition to $40.4 billion to almost 24,000 Part B providers, to address the financial impact of COVID-19 on providers.

The program was later shut down for providers and modified for hospitals after Congress allocated $175 billion in emergency relief funds for healthcare organizations. But hospitals are still calling for additional financial relief, especially considering the current trajectory of positive COVID-19 cases, which could lead to a second wave of the novel coronavirus in the coming months.

While the AHA is advocating for more flexible repayment options, the group is also urging CMS to consider full forgiveness of accelerated payments for all hospitals.

“Providers will continue to face historic challenges throughout this extended public health emergency and beyond, as we expect the immense financial strain facing hospitals and health systems due to COVID-19 will continue through at least the end of 2020,” Nickels wrote in the letter. “Forgiving hospitals’ accelerated payments is necessary for providers to recover and rebuild while delivering the care that patients and communities are depending on.”