The American Hospital Association (AHA) is calling on CMS to re-evaluate payment options for hospitals that accepted accelerated Medicare payments at the early stage of the COVID-19 pandemic.
The hospital group requested CMS Administrator Seema Verma to allow all hospitals to elect to receive periodic interim payments (PIP) or accelerated payments, per initial CMS communications about the COVID-19 support option.
Thomas P. Nickels, AHA’s executive vice president, told CMS Administrator Seema Verma in an Aug. 3rd letter: “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.”
PIP hospitals receive Medicare reimbursement biweekly
Based on the facility’s estimate of Medicare payments for the current cost reporting period, PIP hospitals are receiving Medicare reimbursement biweekly.
CMS expanded eligibility for accelerated Medicare payments to a broader set of hospitals, health professionals, and suppliers during the COVID-19 public health emergency to help financial losses.
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.
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).”
CMS has directed Medicare Administrative Contractors (MACs) 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, recently communicated by MACs to AHA hospitals.
Thomas P. Nickels, AHA’s executive vice president wrote, “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. 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.”
The AHA estimates an additional $120.5 billion in total financial losses from July 2020 through December 2020 should hospitals and health systems reach baseline patient volumes by July 2021, or an average of $20.1 billion per month. These estimates are in addition to the $202.6 billion in losses the AHA estimated between March 2020 and June 2020 bringing the total projected losses to hospitals and health systems in 2020 to at least $323.1 billion.
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.
Additionally, Nickels wrote in the letter: “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. Forgiving hospitals’ accelerated payments is necessary for providers to recover and rebuild while delivering the care that patients and communities are depending on.”
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