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May 05, 2020 (Cleveland, OH)

COVID-19 Hospital Reimbursement Update

COVID-19-Hospital-ReimbursementThere has been considerable activity at both the state and federal levels regarding relief funding and other reimbursement-related policy changes in response to the coronavirus pandemic. Following is an overview of the most substantial COVID-19 hospital reimbursement and funding initiatives.

  • CARES Act Funding: The federal government is moving ahead with distribution of the emergency funds allocated in both the CARES Act and the bill that followed it, which together call for $175 billion for providers. The first $30 billion distributed to hospitals was done so based on Medicare fee-for-service reimbursement. With the next tranche of $20 billion, the administration is targeting providers that were disadvantaged under the first distribution, including those with higher proportions of Medicaid and Medicare Advantage patients. In addition, $10 billion each was targeted at hot spots and rural providers. On May 1, the U.S. Department of Health and Human Services (HHS) announced the distribution of an additional $22 billion, with $12 billion going to hospitals with at least 100 COVID-19 inpatient admissions through April 10 and $10 billion going to providers in rural areas.
  • Advanced and Accelerated Medicare Payments: The Centers for Medicare and Medicaid Services (CMS) announced April 26 it would immediately suspend advance payments to Medicare Part B suppliers and reevaluate new and existing applications for Medicare accelerated payments to Part A providers. CMS said it intended the accelerated and advance payments as a quick way of making funds available in an immediate response to COVID-19, but will now be utilizing the Provider Relief Fund to distribute monies called for in the CARES Act and other legislation passed in recent weeks.
  • Reimbursement for Uninsured COVID-19 Patients: HHS announced last week that providers will be able to request reimbursement through a new web portal starting May 6 if they have treated or tested an uninsured patient for COVID-19. Healthcare providers who have conducted COVID-19 testing or provided treatment for uninsured individuals on or after Feb. 4, 2020, can electronically request claims reimbursement through the program and will be reimbursed generally at Medicare rates, subject to available funding.
  • DRG Add-On Payment: Medicare discharges dating back to Jan. 27, 2020, with a diagnosis of COVID-19 will receive an additional 20% payment added to the DRG rate. This add-on will apply to patients treated at rural and urban inpatient prospective payment system (IPPS) hospitals.
  • Sequester Suspension: The CARES Act temporarily suspends the 2% payment decrease that has applied to all Medicare fee-for-service claims due to sequestration since 2013. The suspension is effective for claims with dates of service from May 1 through Dec. 31, 2020.
  • DSH Cut Delay: The CARES Act also delayed the federal Medicaid disproportionate share hospital (DSH) funding cut that was scheduled to take effect May 22, 2020. The legislation eliminated the $4 billion in Medicaid DSH cuts in fiscal year (FY) 2020 and reduced the cut for FY 2021 to $4 billion from $8 billion. Implementation of the FY 2021 cut is delayed until Dec. 1, 2020. 
  • Franchise Fee: The final payment for this year’s franchise fee was due April 30. While the state did not implement a delay in this payment, it has noted that hospitals essentially have a 45-day grace period. If paid during that window, no penalty will accrue.
  • Medicaid Recalibration and Rebasing: The Ohio Department of Medicaid has stated the recalibration and rebasing of Medicaid payments will not occur on July 1 as planned.

In addition, a number of filing deadlines have been extended:

   Original Filing Date   Revised Filing Date 
 Medicare Cost Reports for FY Ending December 31, 2019  May 31, 2020  July 31, 2020
 Medicare Occupational-Mix Survey  July 1, 2020  August 3, 2020
 Medicaid Cost Reports for FY Ending December 31, 2019  June 30, 2020   August 31, 2020

The Center will continue to monitor both federal and state activities and share information as it becomes available with the hospital Reimbursement Forum

For more on COVID-19 hospital reimbursement and funding initiatives, contact us.