House passes $2.2 trillion HEROES Act 2.0, including $50 billion in provider relief funds

House passes $2.2 trillion HEROES Act 2.0, including $50 billion in provider relief funds

By a narrow 214-207 margin, House Democrats passed a $2.2 trillion stimulus bill on Thursday called the HEROES Act. 2.0, essentially a slimmer version of the $3 trillion HEROES Act that was passed in May and blocked by Republicans due to the cost.

The new measure includes another $50 billion in provider relief funds and improvements to Medicaid disproportionate share hospital (DSH) funding. It aims to address hardships caused by the COVID-19 pandemic by including a second round of $1,200 stimulus checks and extended $600 weekly unemployment benefits, as well as emergency funds for state and local governments totaling $436 billion.

On top of that, it allocates $225 billion for schools and childcare and Paycheck Protection Program funding. It also includes assistance for airlines and the restaurant industry.

Also included is a $100-per-month increase in SNAP benefits in most states, rental assistance and an Affordable Care Act premium subsidy. That means those who have lost jobs during the COVID-19 pandemic would be eligible for the maximum health insurance premium subsidy under the ACA, a $1,386 benefit.

The bill passed the House despite opposition from 18 Congressional Democrats.

Ultimate passage seems unlikely, however. Newsweek reported that Senate Majority Leader Mitch McConnell has signaled doom for the new package in the Senate, with Republicans in favor of a much smaller, $500 billion package. That’s about half of the $1 trillion they had proposed for their HEALS Act legislation.

WHY THIS MATTERS

The bill matters to hospitals, especially those caring for a large share of Medicaid patients.

“With the addition of $50 billion in Provider Relief Fund aid and improvements to Medicaid disproportionate share hospital (DSH) funding, this bill would help ease the heavy financial pressures our hospitals face. We also welcome the bill’s recognition of the need to account for race, ethnicity, gender, and other demographic data to reduce persistent disparities in health, such as those amplified by the pandemic,” Beth Feldpush, senior vice president of Policy and Advocacy for America’s Essential Hospitals said.

Pelosi has spent the week trying to negotiate an agreement with Treasury Secretary Steve Mnuchin, the main GOP negotiator, and according to Politico the two are still in talks, with some hope that a deal could be reached today. Today is the final day the House is slated to be in Washington before returning home to campaign for the upcoming election, though Democratic leaders said they would keep lawmakers at the Capitol through the weekend if a deal is close to fruition.

McConnel has signaled little hope for a new deal.

THE LARGER TREND

A legislative relief package passed the House in May, but at an estimated cost of $3.5 trillion, the original HEROES Act got nowhere in the Senate. That bill also proposed providing subsidies for laid-off workers to remain on their employer-provided health insurance plans through COBRA, the Consolidated Omnibus Budget Reconciliation Act that extends benefits, and would have created an open enrollment period for plans under the Affordable Care Act.

Other relief has been in the form of regulatory measures, the biggest being the flexibility to use telehealth.

ON THE RECORD

“In a family of four, this is a lifeline for workers and families who are facing this coronavirus disaster,” said House Speaker Nancy Pelosi in a floor speech on Thursday. “For a family of four earning $24,000, Heroes 2 would mean direct payments, a $3,400 direct payment; unemployment benefits, $600 per week enhanced UI benefits; tax credits, up to $5,920 through the EITC and a fully refundable $4,000 (Child) Tax Credit, equaling additional $1,200 in refunds.”

Source: House passes $2.2 trillion HEROES Act 2.0, including $50 billion in provider relief funds

The financial hit to nonprofit hospitals hinges on federal aid and restarting elective surgeries

The financial hit to nonprofit hospitals hinges on federal aid and restarting elective surgeries

While the effects of the COVID-19 coronavirus are many and varied, Moody’s Investors Service has added one more item to that list: credit risk. While nonprofit hospitals are unlikely to miss debt service payments, the huge revenue hit caused by the postponement and cancellation of nonemergency and elective services will weaken financial performance, causing many hospitals to breach financial covenants during the fiscal year.

The stimulus and emergency-response funding from the federal government will blunt some of those losses, but hospitals won’t be fully compensated. Financial recovery from the public health crisis depends on restarting elective services, but the pace and timing with which that happens will vary greatly by geography depending on when restrictions are lifted.

A number of other variables will also affect patient volume, including hospitals’ access to rapid coronavirus testing, supply chains, government policy, potential surges in more coronavirus cases, job losses and related changes in insurance coverage, and consumer fears about returning to a hospital.

WHAT’S THE IMPACT?

States and local governments are lifting restrictions at different paces, and Moody’s said that will impact hospitals’ ability to ramp up nonemergency services. While there’s pent-up demand among consumers, patient volumes will likely undergo a lengthy recovery period, driven by factors such as testing capacity, the need for adequate supplies and patients’ unease with accessing the healthcare system.

While some states have recently begun to lift restrictions, as many as half of them – representing nearly 45% of the U.S. population – mandated suspension of nonemergency care and elective surgeries as the scope of the pandemic grew. Governors are weighing a variety of factors, including the local trend in coronavirus cases and hospitalizations, when considering the timing and scope of permitting certain medical services to reopen.

Hospitals in a number of states have already begun resuming some services, and similar actions in other states are likely to follow in the coming days and weeks, said Moody’s. Regions that have endured relatively few coronavirus cases, or where governors have not mandated the cessation of elective procedures, will likely be the first to begin offering a full scope of services. Many healthcare systems in a variety of states are making plans to resume some services later this month or in early June, and are petitioning local regulatory authorities for permission to reopen.

Greater availability of testing – particularly with rapid results – will aid the reopening of services for several reasons. First, many states and local health authorities will look for a sustained decline in the number of new infections before allowing services to resume, which will require greater testing capability to determine. Second, hospitals need sufficient testing capability in order to screen patients and provide a safe environment for patients and staff.

The federal government has delivered cash to hospitals – about 20 to 30 days’ worth of cash, on average, Moody’s found. This infusion has helped the industry avoid a liquidity crunch in recent weeks, but hospitals will need to repay the government for advances on Medicare reimbursement, which will cause cash flow stress starting in August or September for most hospitals.

The effects of the coronavirus will be long-lasting. The pandemic is materially reducing cash flow, and while the federal stimulus money and reimbursement for emergency preparedness will stem some of the bleeding, job losses will likely affect the healthcare industry’s performance by ushering in significant losses in insurance coverage. Subsequent outbreaks will potentially curtail the services being offered.

This means a significant impact on hospitals’ finances will likely continue into 2021. It’s too early to fully determine the scope of this effect, but Moody’s estimates that lost revenue due to the initial suspension and subsequent phased-in reactivation of services could reach 10% or more of revenue on an annual basis.

Although a portion of this lost revenue will be recouped through $175 billion in grants provided under federal stimulus packages, the grants will likely not fully compensate hospitals for lost revenue and increased costs.

Health systems with covenant measurement dates in June or September are most at risk of violating covenants. The ability to meet coverage tests depends on the pace of reactivation of services, and whether federal grants can be included in covenant calculations.

WHAT ELSE YOU SHOULD KNOW

How quickly the economy recovers will have a significant impact on hospital finances. Moody’s expects the U.S. economy to shrink by 5.7% this year, reflecting a severe contraction in the second quarter and a gradual recovery in the second half of the year.

Hospitals will also face difficulties in fully restoring productivity. Hospitals – along with other sectors of the economy – will need to adopt new safety protocols that will add time and costs to office visits and procedures. These changes, including additional screening and testing measures, the use of PPE and enhanced cleaning measures, are likely to slow productivity.

THE LARGER TREND

The predictions echo those made by Moody’s a month ago, when it prognosticated difficult credit conditions for public and private debt issuers.

Combined with other fiscal and regulatory actions, the rescue package should help to contain some of the economic damage and help with recovery once the pandemic is under control, the report found. But because the shock is so profound, it won’t be enough to prevent a serious recession or widespread unemployment.

Larger systems that have regional diversification and strong absolute and relative liquidity will be better able to weather the pandemic. Many larger systems have access to capital in the form of bank lines or revolvers, while others have quickly established new bank lines of credit.

Source: The financial hit to nonprofit hospitals hinges on federal aid and restarting elective surgeries

More ACOs turn to telehealth to combat COVID-19 financial crisis

More ACOs turn to telehealth to combat COVID-19 financial crisis

Source Image: da-kuk/iStock/GettyImagesPlus

A recent survey of ACOs found most are turning to telehealth to weather the financial storm caused by the COVID-19 outbreak.

Accountable care organizations are racing to implement telehealth and remote patient monitoring to coordinate care and stay afloat financially during the COVID-19 outbreak, a new survey found.

The survey of 20 ACOs led by researchers with Hamilton College and Within Health, a startup that helps ACOs with radiology workflow, explored strategies that ACOs are using to mitigate shared losses and how they plan to weather the financial crisis caused by the outbreak.

Half of the ACOs surveyed expect that preventive health measures will be the hardest to meet due to COVID-19. Under the Medicare Shared Savings Program, an ACO must meet a series of metrics that include preventive health screening for smoking, cancer or vaccines to get a share of any savings.

ACOs are on the hook for paying back Medicare if they don’t meet spending or quality targets, but also get a share of any savings they generate.

However, with COVID-19 throwing a massive wrench into healthcare utilization and spending, ACOs are forced to readjust their projections.

The survey found that a quarter of ACOs are abandoning the financial risk model altogether and moving towards traditional Medicare fee-for-service because they can’t hit the quality metrics, said Kareem Malek, the chief operating officer for Within Health.

“They are focused on bringing in revenue on fee-for-service and billing Medicare for reimbursable expenses like telehealth and in-home monitoring,” he said. “Some ACOs are going as far as to renegotiate or terminate contracts with vendors and providers.”

All respondents said they are implementing telemedicine solutions, with 16% relying on AI and automation to identify and reach out to high-risk patients.

The Centers for Medicare & Medicaid Services has waived certain telehealth payment requirements to be better enable such services.

“Every single ACO is implementing a telehealth solution, particularly platforms with strong specialists already integrated,” Malek said.

ACOs are also revisiting their operating model to shift resources and reduce headcount, the survey found. All of the ACOs are also pressing CMS to mitigate shared losses for not just 2020 but also 2021. Another 58% suggested extending deadlines for submitting quality reporting data.

CMS has provided some regulatory relief for ACOs and other value-based care programs. The agency also will not use quality data on services performed from Jan. 1 to June 30 in the calculations on quality reporting and value-based purchasing programs.

The agency also extended the deadline for both ACOs and physicians in the Merit-based Incentive Payment System for submitting 2019 data from March 31 to April 30.

But ACOs are asking for a mulligan for the entirety of 2020 from repaying any shared losses, which CMS declined to do.

Source: More ACOs turn to telehealth to combat COVID-19 financial crisis

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