fah hospital policy blog

Perspectives on health policy affecting America’s hospitals and the patients we serve.

Extending a Financial Lifeline to Caregivers

November 11, 2020 | FAH Policy Blog Team

Category: Health Care Delivery, Medicare, Sequester

Frontline health workers bravely fight COVID-19 every day, but that battle could soon be made harder by an onerous budget law enacted almost eight years ago – the Medicare sequester.

In early 2020, as the pandemic spread from coast to coast, Congress acted quickly. The CARES Act, enacted with bipartisan support in March, provided critical funding for health care providers that allowed them to properly prepare for a surge and treat our nation’s sickest COVID-19 patients.

Now as COVID cases hit unprecedented levels in our country, an important provision of the CARES Act is set to expire, and it could add to the financial crisis facing America’s hospitals and caregivers.

The CARES Act suspended the Medicare sequester for all of 2020 but come January 1st – if Congress doesn’t act – all health care providers could face an ill-timed resumption of the two percent cut to their Medicare reimbursement.

The pandemic has brought a slew of financial challenges for medical professionals and facilities, which include increased cost of labor to ensure adequate staffing, procurement of personal protective equipment (PPE), significant reductions in patient volume resulting from orders to cancel non-emergent procedures and the high cost of caring for COVID patients.

This is hitting community hospitals hard, jeopardizing access to care for patients from rural America to our largest urban centers. According to local news reports, administrators at Fairview Health in St. Paul, MN cited COVID-19 as a major contributor to its rapid downsizing of hospital and clinic operations as it faces a $250 million operating loss. This includes the closure of a 90-bed hospital in St. Paul that had been converted in March to treat COVID-19 patients. NPR reported that in Carroll County, Iowa, St. Anthony Regional Hospital has had to invest in expanding their COVID-19 unit three times.

Hospitals aren’t the only ones facing a fiscal catastrophe. A recent FAH report, created in conjunction with FTI Consulting, highlighted how the effects of COVID are rippling across the health care spectrum. They include:

  • The American Medical Association (AMA) found that 81 percent of physicians report revenue lower than in February, right before the pandemic began. In addition, almost two in five medical practice owners reported a 50 percent or greater increase in spending on PPE.
  • The American Physical Therapy Association (APTA) found that physical therapists and physical therapist assistants experienced declines in weekly income by up to 45 percent, with 62 percent of physical therapists reporting declines in referrals compared to pre-pandemic levels.
  • A survey by the Larry A. Green Center and the Primary Care Collaborative found that 35 percent of primary care providers reported revenue and income that was significantly below pre-pandemic levels, with some reporting in-person patient volumes that are 30 to 50 percent below benchmark. Other providers reported they are at risk of closure by December 2020.

These challenges are only growing as the virus spreads.

We are seeing record setting infections, with the average for the past week topping 100,000 new daily cases reported and total reported cases now more than 10 million nationwide. These infection rates signal renewed stress on our health care system as we enter the winter months with the virus more likely to spread from indoor transmissions.

This is proof that the crisis is far from over and that is why FAH is leading an effort with 29 other major health care organizations in asking Congressional leaders to extend the moratorium on the Medicare sequester through the end of the public health emergency (PHE).

This financial lifeline is vital to all caregivers - from those on the front lines of the COVID fight to the primary care doctors treating common illnesses.  

Delaying these arbitrary Medicare payment cuts through the duration of the PHE is critical to making sure all patients have access to the treatment they need and deserve.