David Usher, chief financial officer for a 12-bed rural hospital in western Kansas, is sitting on $1.7 million he’s scared to spend.
The money lent from the federal government is meant to help hospitals and other health care providers weather the COVID-19 pandemic. Yet some hospital administrators have called it a payday loan program that is now brutally due for repayment at a time when the institutions still need help.
Coronavirus cases have “picked up recently and it’s quite worrying,” says Usher, who is the chief financial officer for Edwards County Medical Center in Kinsley, Kansas. He would like to use the federal loan money to build a negative-pressure room. Such rooms are a common and effective tool for keeping contagious patients apart from those in the rest of the hospital.
But he’s not sure it’s safe to spend that cash. Officially, the total repayment of the loan is due this month. Otherwise, according to the loan’s terms, federal regulators will stop reimbursing the hospitals for Medicare patients’ treatments until the loan is repaid in full.
The federal Centers for Medicare & Medicaid Services has not yet begun trying to recoup its investment, with the coronavirus still affecting communities nationwide, but hospital leaders fear it may come calling for repayment any day now.
Hospital leaders across the country say there has been no communication from CMS on whether or when it will adjust the repayment deadline. A CMS spokesperson did not respond to our questions by publishing time.
“It’s great having the money,” Usher says. “But if I don’t know how much I get to keep, I don’t get to spend the money wisely and effectively on the facility.”
Usher took out the loan from Medicare’s Accelerated and Advance Payments program. The program, which existed long before the pandemic, was generally used sparingly by hospitals when they were faced with emergencies such as hurricanes or tornadoes. It was expanded for use during the coronavirus pandemic — part of billions approved in federal relief funds for health care providers this spring.
A full repayment of a hospital’s loan is technically due 120 days after it was received. If it is not paid, Medicare will stop reimbursing claims until it recoups the money it is owed — a point spelled out in the program’s rules. Medicare reimburses nearly $60 billion in payments to health care providers nationwide under Medicare’s Part A program, which makes payments to hospitals.
More than 65% of the nation’s small, rural hospitals — many of which were operating at a deficit before the pandemic — jumped at the Medicare loans when the pandemic hit because they were the first funds available, says Maggie Elehwany, former vice president of government affairs for the National Rural Health Association.
CMS halted new loan applications to the program at the end of April.
“The pandemic has simply gone on longer than anyone anticipated back in March,” says Joanna Hiatt Kim, vice president of payment policy and analysis for the American Hospital Association. The trade association sent a letter to CMS in late July asking for a delay in the recoupment.
On Monday, the House Appropriations Committee included partial relief for all hospitals in a new government funding plan. The committee’s proposal would extend the start of the repayment period for hospitals and the amount of time they are allowed to take to repay.
The continuing resolution that includes this language about relief for hospitals (among many, many other things) is still being hammered out, though it does face its own deadline: It must be approved by the House and the Senate within the next nine days or the federal government faces a shutdown.
