Providers Blast Medicare Spending Cuts in COVID Relief Package

COVID Relief Medicare Spending Cuts

The latest $1.9 trillion COVID-19 relief package includes several provisions advantageous to healthcare providers but will leave them to face significant Medicare spending cuts in the future.

Passed by the House yesterday, the American Rescue Plan Act of 2021 will funnel $8.5 billion to reimburse rural healthcare providers for expenses and lost revenues attributable to COVID-19.

The package will also allocate over $100 billion to support COVID-19 vaccine and testing, including $10 billion for bolstering supplies through the Defense Production Act and over $15 billion for expanding vaccine distribution and administration, and $47.8 billion to continue implementation of an evidence-based testing strategy.

Other key healthcare provisions in the American Rescue Plan include:

  • Maintaining Medicaid Disproportionate Share Hospital (DSH) payments during the public health emergency
  • Increasing access to healthcare coverage by expanding eligibility and federal support for coverage on the health insurance marketplace
  • Covering the costs of Consolidated Omnibus Budget Reconciliation Act (COBRA) premiums for laid off workers through Sept. 30, 2021
  • Offering states incentives to expand Medicaid eligibility
  • Continuing Medicaid and CHIP coverage of COVID-19 vaccines
  • Establishing a minimum Medicare wage index for hospitals in all-urban states starting Oct. 1, 2021
  • Making additional allocations to support skilled nursing facilities

Leading healthcare industry groups are praising the package’s many healthcare provisions, particularly policies that support healthcare coverage for more Americans and widespread vaccination. But these benefits will come at a cost to healthcare providers, the groups are saying.

Implementation of the American Rescue Plan will trigger automatic spending cuts as a deficit control measure, resulting in $36 billion in Medicare spending cuts in fiscal year 2020 alone, AMGA (American Medical Group Association) states.

“Cutting billions from the Medicare program now would undermine healthcare providers who have heroically rallied all year to care for their patients and communities,” Jerry Penso, MD, MBA, president and CEO of AMGA, said in the statement yesterday.

Healthcare providers have lost hundreds of billions of dollars in revenue over the past year combating the ongoing pandemic and complying with new rules, such as temporary stops to elective care to prevent the spread of the virus.

Providers are expected to incur even more financial losses this year as they expand COVID-19 vaccine and testing outreach and set up strategies for vaccinating patients.

The American Hospital Association (AHA) is predicting hospitals alone to be down by up to $122 billion in 2021. That is on top of the estimated $323 billion in losses the previous year.

“Now is not the time for Congress to forget the sacrifices our providers have made during the pandemic,” Penso stated. “We call on Congress to quickly remedy this problem and support the provider community.”

The American Medical Association (AMA) has also already asked Congress to prevent the triggering of Medicare spending cuts as part of implementation of the COVID-19 relief package.

The American Rescue Plan Act also fails to deliver additional distributions to the Provider Relief Fund, which was a top priority for hospital groups.

Last month, AHA had requested that Congress include a $35 billion infusion to the Provider Relief Fund as part of the final legislation. Previous relief packages allocated a total of $178 billion to the fund created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act to give providers grants to offset healthcare-related expenses and losses from the COVID-19 pandemic.

“The AHA is disappointed that the bill does not deliver more overall funding for the Provider Relief Fund, which has been crucial in supplying hospitals, health systems and other providers with resources during the pandemic,” Rick Pollack, president and CEO of AHA, said in a statement last week after the passage of the Senate version.

“We are also concerned that this bill does not include an extension of relief from Medicare sequester cuts, which will go back into effect at the beginning of next month, and also fails to provide loan forgiveness for Medicare accelerated payments for hospitals,” Pollack continued.

On Wednesday, the leader of the Federation of American Hospitals (FAH) commended lawmakers for passing the COVID-19 relief package.

“President Biden has focused like a laser on enacting his COVID-19 relief package; now it is a reality,” Chip Kahn, FAH president and CEO, stated on the group’s website.

“The American Rescue Plan is a substantive step towards all Americans having the security of health care coverage. It makes ACA health coverage more affordable, ensures that the newly unemployed can retain their insurance through COBRA and offers new incentives for states to expand Medicaid to low-income adults,” Kahn said.

Kahn also praised the allocation to rural providers and additional funding for vaccine distribution and testing.

The American College of Physicians (ACP) also extolled the healthcare coverage provisions, saying increased funds for Medicaid and extending Medicaid coverage will “improve health care in the United States related to not only COVID-19 but health in general as well.”

“The health of Americans and our health care system have been under incredible pressure over the past year as we have dealt with the COVID-19 pandemic. The health-related provisions in this new COVID-relief law will help relieve that pressure on both patients and physicians,” added Jacqueline W. Fincher, MD, MACP, president of ACP.

The American Rescue Plan is headed to the president’s desk to be signed into law.

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