CARES Act Offers Mix of Relief, Confusion for Struggling Hospitals
Revenue cycle leaders are facing canceled elective services, a surge of newly uninsured patients, massive expenses preparing for an influx of COVID-19 patients, and largely discontinued point-of-service collections. Now, some hospitals are getting a much-needed boost of cash from the Coronavirus Aid, Relief, and Economic Security (CARES) Act.1
The $100 billion in funding for hospitals and other healthcare providers sounds like a staggering amount of money, and it is. Yet, for some hospitals, the money they will receive “does not come close to addressing the shortfalls they are experiencing,” says Helaine I. Fingold, JD, a healthcare attorney in the Baltimore office of Epstein Becker Green. Also, says Fingold, “certain operational burdens attach to providers that accept these funds.” Some important requirements for hospitals:
• Hospitals cannot balance bill patients for COVID-19-related treatment.2,3 “Importantly, the details matter. There are some open questions around the breadth of this requirement,” says Jack Hoadley, PhD, a research professor emeritus in the Health Policy Institute of Georgetown University’s McCourt School of Public Policy in Washington, DC.
According to a Department of Health and Human Services (HHS) announcement, hospitals may not collect amounts from “a presumptive or actual COVID-19 patient” beyond what they would be charged for an in-network service.4 “These terms are not specifically defined,” Hoadley notes.
For one thing, it is unclear if a patient who is not tested, but is undergoing treatment, counts as a “presumptive” COVID-19 patient. The same question pertains to someone whose test returns negative. It is unclear if balance billing is prohibited on that patient for services before the test returned negative, or if balance billing is allowed after the negative result returns. “Hospitals may be wise to avoid balance billing in any of these ambiguous situations,” Hoadley offers.
For revenue cycle leaders, there is just too much uncertainty. Fingold says one basic issue must be cleared up: Does the patient’s COVID-19 diagnosis need to be confirmed with a Centers for Disease Control and Prevention-approved lab test to be protected from balance billing? Or, is it enough if the doctor suspects a COVID-19 infection (but, perhaps, is ruling out other possible diagnoses)?
Many patients recover from COVID-19 but remain hospitalized with complications. “Does the prohibition on balance billing end when the emergency is lifted? Or, does it continue to protect these patients?” Fingold asks.
None of this stops hospitals from balance billing other patients. “That said, there are limits to what providers who participate in Medicare can balance bill,” says Jack A. Meyer, PhD, an independent healthcare consultant and former principal in the Washington, DC, office of Health Management Associates.
One HHS announcement says the Trump administration is “committed to ending surprise bills for patients.”5 To date, four congressional committees have passed bills that would end surprise billing.6 “Because there are significant differences across these bills, it may be hard to reach agreement on a long-term solution this year,” Hoadley says. Still, he adds, “momentum is continuing to build toward action to prevent surprise billing on a permanent basis.”
• Hospitals must certify payments will be used only to “prevent, prepare for, and respond” to COVID-19, and as reimbursement for lost revenues attributable to COVID-19. “We are working with clients to interpret this language so as to determine how they may use the available funds,” Fingold reports.
Hospitals are wondering if they can use the funds to pay salaries of physicians or other employees. Another burning question is whether funds can be used to pay for care of all patients with COVID-19-like respiratory symptoms who end up being diagnosed with something else (e.g., asthma or chronic obstructive pulmonary disease). Even if people do test positive, it is unclear if the hospital receives reimbursement for the whole stay, or just the portion after the diagnosis is made. “Hospitals may wonder how to draw the line,” Meyer adds.
Hospitals want to know if they can be reimbursed for costs associated with hiring additional nurses to care for non-COVID-19 patients if nurses who normally care for these patients were redeployed to the intensive care unit (ICU). “There may not always be a clear line between ‘These dollars are for COVID and nothing else, while those dollars are not related at all to COVID,’” Meyer observes.
A prime example is hospitals booking hotel rooms for staff who do not want to return home and expose family members to the virus. Some hospitals are leasing entire hotels nearby just for this reason. “Those are not healthcare treatment dollars,” Meyer acknowledges. “But it is certainly important to treating COVID.”
In general, hospitals have good reason to worry about how they will fare under the CARES Act. Robert A. Berenson, MD, says the initial $30 billion given out was “rough justice. It went to everybody who did Medicare business last year.”
Some providers’ income plummeted due to COVID-19, but others were barely affected. The legislation did not target hospitals as opposed to other providers. In particular, the act did not target the hardest-hit hospitals. “It in no way distinguished between hospitals in hotspots that have been completely overwhelmed from hospitals that are really just watching and waiting,” says Berenson, an institute senior fellow at the Urban Institute in Washington, DC. HHS has since announced that $10 billion would target hospitals in the hardest-hit areas.5
Hospitals’ financial situations vary widely. “A lot depends on things like payer mix,” Meyer says. Some hospitals see about two-thirds Medicaid patients, about 10% Medicare, a small percentage with private insurance, and the rest are uninsured. Other facilities are in an entirely different situation, with about 10% Medicaid and almost no uninsured, with the vast majority of patients commercially insured. Likewise, some hospitals are seeing just a few coronavirus patients, while others are treating hundreds. In terms of the CARES Act, Meyer says the main question for hospitals is, “Are they pushing and scrapping to get some of that money? I am told that it’s not easy to do.”
Political influence is a factor. “Hospitals should be asking, ‘Who do we have that’s good at state and federal relationships, that goes to our congressional delegation, that knows people at HHS, or that worked for the secretary of health at the state level,’” Meyer offers.
Out of necessity, hospital leaders are more consumed with problems of the moment than political maneuvering. They are converting regular inpatient beds to ICU beds, providing some quick training to allow additional nurses to work in the ICU, and finding creative ways to obtain urgently needed supplies.
“In many cases, they are more worried about all the components of meeting the demand, such as tests, masks, gloves, and ventilators, more than the decline in revenue,” Meyer says.
The stakes are high for hospitals that already were struggling financially. “Due to postponement of all the elective procedures, and also some other factors, some are burning through their reserves,” Meyer laments.
Some hospitals face large amounts of debt and sparse cash reserves, while others are performing quite well. “Some hospitals have billions of dollars sitting in cash and investments,” Berenson notes. “On the other hand, some safety net hospitals are barely getting by.” Here are some of the most pressing issues affecting revenue cycle departments:
• Some money in the CARES Act will pay hospitals for providing COVID-19 treatment to the uninsured. Hospitals will be paid for services provided to the uninsured. That is good news for uninsured people, and, to some extent, hospitals, since it means receiving at least a little reimbursement.
Yet it also means less money goes toward recouping all the money lost because of canceled elective procedures. “Use of these funds for treatment of the uninsured lowers the amount available to help shore up providers from the impact of lost revenue,” Fingold says.
• Hospitals will receive 20% additional Medicare reimbursement for COVID-19 patients. “Many hospitals are saying that the increase will not fully address the costs of caring for the COVID-19 patients,” Fingold cautions.
• Some revenue from elective services is going to be lost forever. Eliminating routine and elective services is the single biggest financial hit for many hospitals. “Elective surgery, which is sort of the basic engine of financial viability for hospitals, isn’t getting done,” Berenson says. Many patients will undergo procedures and surgeries once life returns to normal, but not all will. “You can’t just move it forward six months and say all that revenue will come back. Some percentage of it will come back,” Berenson predicts. “But certainly not all.”
REFERENCES
- HHS.gov. HHS to begin immediate delivery of initial $30 billion of CARES Act provider relief funding, April 10, 2020.
- Hoadley J, Lucia K, Keith K. Keeping surprise billing out of coronavirus treatment. Health Affairs Blog. April 2, 2020.
- Health Resources & Services Administration. COVID-19 claims reimbursement to health care providers and facilities for testing and treatment of the uninsured. April 2020.
- Schwartz K, Tolbert J, Pollitz K, Neuman T. Update on COVID-19 funding for hospitals and other providers. Kaiser Family Foundation, April 24, 2020.
- HHS.gov. HHS announces additional allocations of CARES Act Provider Relief Fund. April 22, 2020.
- Hoadley J, Fuchs B, Lucia K. Update on federal surprise billing legislation: New bills contain key differences. To the Point (blog), Commonwealth Fund. Feb. 20, 2020. https://bit.ly/2SdlLhQ
A $100 billion injection of relief funding for certain hospitals and other healthcare providers is just what the doctor ordered. However, for others, the money they will receive does not come close to addressing the shortfalls they are experiencing.
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