Covid-19 'Has Not Left Rural America': Healthcare Advocates Urge Congress to Save Small Hospitals as Pandemic Loans Come Due

"We're trying to stress to members of Congress that the Covid-19 pandemic has not left rural America," Mason Zeagler, government affairs senior associate at the National Rural Health Association (NRHA), said Wednesday during a virtual conference. "They need relief."

Despite warnings from advocates and calls for more robust direct aid, Medicare expanded its Accelerated and Advance Payment Program in April, distributing $34 billion to providers. Nationwide, 65% of small, rural hospitals accepted a loan, which is essentially an upfront payment for services normally reimbursed through Medicare. But as rural hospitals--many already near the brink of collapse pre-pandemic--see the repayment deadline looming, many administrators are wondering how they'll deliver the money on time. Missing a payment in full, per the loan program, could mean Medicare would stop reimbursing the defaulting facility, creating even more financial instability.

"The pandemic has simply gone on longer than anyone anticipated back in March," Joanna Hiatt Kim, vice president of payment policy and analysis for the American Hospital Association (AHA), told Kaiser Health News.

The AHA sent the Centers for Medicare and Medicaid Services (CMS) a letter in late July asking for a delay in the recoupment.

The AHA wrote:

The requirement to begin repaying these funds in the next few weeks will place hospitals and health systems in financial jeopardy while they work to recover from this unprecedented pandemic. 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.

While there will be efforts to make improvements to the [Accelerated and Advance Payment Program] as part of the next Covid-19 relief package, Congress may not have this legislation completed until after Aug. 1, and we therefore ask that CMS delay the start of the repayments until legislators have the opportunity to make changes to the programs.

We urge you to promptly exercise the authority available to CMS to adjust the repayment schedule to allow our facilities to respond to Covid-19, plan for the future, and continue to provide the vital care expected by our patients and our communities.

According to reporting from NPR, Medicare reimburses nearly $60 billion in payments to healthcare providers nationwide under Medicare's Part A program, which makes payments to hospitals.

As Kaiser Health News reported Tuesday, more than 65% of the nation's small, rural hospitals jumped at the Medicare loans when the pandemic hit because they were the first funds available, said Maggie Elehwany, former vice president of government affairs for the NRHA. CMS halted new loan applications to the program at the end of April.

Prior to the bill's passing last spring, the NRHA criticized the program in a brief, warning "most rural hospitals will have extreme difficulty or will not have the ability to repay" and noting that rural healthcare facilities do not operate with the cash-on-hand that more urban centers do.

"Already financially fragile hospitals (nearly half of all rural hospitals were operating at a financial loss prior to the Covid-19 outbreak) are now facing catastrophic cash shortages," the NRHA wrote. The rate of rural hospital closures, already at crisis levels pre-Covid-19, will soon escalate to cataclysmic rates."

Now, as the 120-day repayment deadline nears, and despite a measure passed by the U.S. House Appropriations Committee Monday that would extend the deadline and the time allotted for repayment, a looming government shutdown could prevent both the House and Senate from debating and voting on the bill, according to Kaiser Health News.

Tom Nickels, executive vice president at the AHA, told Kaiser Health News that while the Hospital Association appreciates the House committee's effort to address the loans in the new bill, "full forgiveness of the loans is still needed."

For many hospitals, Medicare payments make up 40% or more of their revenue, reports Kaiser Health News. "Not being reimbursed by Medicare would be crippling--akin to a household losing nearly half its income."

Peter Wright, who oversees two small hospitals for Central Maine Healthcare in Maine told Kaiser Health News that his healthcare system took the money because "we had no other choice; it was a cash flow issue."

"We have no idea what we're going to do if we have to pay it back as quickly as they say," Wright said.