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Continuing Resolution Includes Helpful Provisions for Essential Hospitals

As the current fiscal year draws to a close, House Democratic leaders released text of a continuing resolution (CR) to maintain government funding through Dec. 11. The House is expected to vote on the CR by midweek, sending it to the Senate for consideration.

The CR includes two policy priorities for essential hospitals. First, it would delay until Dec. 12 implementation of the $4 billion cut to Medicaid disproportionate share hospital (DSH) funding for fiscal year (FY) 2021. Congress previously addressed the impending DSH reductions in the Coronavirus Aid, Relief and Economic Security (CARES) Act, which canceled the $4 billion cut scheduled for FY 2020 and moved the FY 2021 cut to Dec. 1 while reducing the amount by $4 billion.

Second, the CR would make several changes to the recoupment and repayment terms for the Medicare Accelerated and Advance Payment (AAP) Program, which was expanded as part of the CARES Act to help health care providers mitigate the sudden and unexpected financial hardship caused by COVID-19. Although AAP provided a much-needed immediate infusion of financial relief to essential hospitals, the repayment terms and timeline presented significant challenges for health care providers still responding to the public health emergency. Under current law, the Centers for Medicare & Medicaid Services (CMS) would recoup the loan by withholding other Medicare reimbursements from providers beginning four months after loan receipt. Providers have one year to fully repay their loans or they would be subject to a 9.5 percent interest rate on their balance.

The House CR would modify the AAP program by:

  • delaying initiation of the recoupment process until one year after receipt of the loan;
  • restructuring the recoupment timeline so that 25 percent of Medicare Parts A and B reimbursement for “items and services” will be withheld during the first 11 months of the repayment period and 50 percent for the subsequent six months;
  • requiring repayment of all loans within 29 months;
  • reducing the interest rate to 4 percent;
  • capping the maximum amount a provider can receive in AAP funding at $10 million per year; and
  • requiring additional provider-level reporting on the loans disbursed through AAP, as well as the amount yet to be recouped.

These modifications would apply from passage of the CARES Act through the end of the COVID-19 public health emergency. Notably, the CR text indicates providers must request these terms apply to their loans. The House legislation would provide CMS discretion to restart AAP loans, which were halted in April, and allows the agency to apply these modified terms to loans issued moving forward.

America’s Essential Hospitals called for both AAP reform and relief from the Medicaid DSH cuts among the association’s COVID-19 advocacy priorities.

Additionally, the CR would maintain funding for the National Quality Forum, community health centers, and other Medicaid programs and mitigate an increase in Medicare Part B premiums.

The contents of the CR could change as House and Senate leaders continue negotiations.

Contact Vice President of Legislative Affairs Carlos Jackson at cjackson@essentialhospitals.org or 202.585.0112 with questions.

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About the Author

Nikki Hurt is a manager of legislative affairs at America's Essential Hospitals.

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