Rural, safety-net hospitals need federal cash fast, Congress is warned

Without swift federal intervention and funding, many rural and safety-net hospitals may close, two hospital associations warned this week. 

The global pandemic, coupled with an economic downturn, has placed a significant burden on hospitals across the U.S.

Millions of workers have lost their health insurance, which is forcing hospitals to provide costly uncompensated care. At the same time, hospitals are witnessing a dramatic decline of routine care and procedures that help pad their margins and are forced to spend money to prepare for a potential COVID-19 surge, The Federation of American Hospitals wrote in a brief this week.

"These extraordinary pressures are putting hospitals, particularly in rural areas, at increased risk of closure. Absent swift federal intervention, many of these hospitals may never reopen and communities may lose access to vital services," The Federation of American Hospitals wrote. 

The hospital association representing 300 safety-net facilities, America's Essential Hospitals, added that its member hospitals have also seen increased expenses due to the COVID-19 pandemic. For example, many have built out alternative care sites and paid higher prices to procure scarce personal protective gear in preparation for the COVID-19 pandemic. 

These pressures are creating a financial crisis for safety-net facilities that already operate on razor thin margins, America's Essential Hospitals President and CEO Bruce Siegel, MD, wrote in a letter to congressional leaders

"Even in better times — and we are far from better times — essential hospitals operate barely in the black and with cash reserves typically measured in days rather than weeks or months. They operate with an average margin of 1.6 percent, just one-fifth that of other U.S. hospitals,  offering no cushion for the crushing financial blow COVID-19 will deliver."

Dr. Siegel urged lawmakers to ease the burden on safety-net facilities as it works to develop supplemental legislation to ease the financial hit from COVID-19. 

What the associations are asking:

1. Boost hospital emergency funds; target funds to safety-net facilities.  HHS this week began distributing $30 billion in emergency funding to hospitals based on Medicare fee-for-service revenue. The money is allocated to hospitals and other providers based on historical share of revenue from the Medicare program, rather than the burden caused by the coronavirus or number of uninsured patients treated. Dr. Siegel said that distribution puts safety-net facilities, which see below-average Medicare volume and disproportionately high Medicaid and low-income volume, at a disadvantage.

2. Give public safety-nets access to payroll tax credits. Public hospitals are excluded from taking advantage of a payroll tax credit established by the Families First Coronavirus Response Act. The credit helps employers offset the costs of providing paid sick leave and family medical leave to employees. 

"We call on Congress to address this unintended consequence by extending the tax credit to public hospitals," Dr. Siegel wrote.

3. Consider some Medicaid policy changes. Dr. Siegel said Congress should temporarily increase Medicaid disproportionate share hospital payments by at least 3 percent; prevent CMS from finalizing the Medicaid Fiscal Accountability Regulation, which seeks to cut Medicaid spending; direct CMS to create a waiver to ease Medicaid rules; and require CMS to fast track approvals for states to access more funding.

Access the full list of requests to Congress here. 

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