STATE OF THE HEALTHCARE INDUSTRY: UPDATES FOR RURAL STRATEGY TAKEAWAYS

Speaker: Eric Shell

COVID-19 Updates

Emergency Cash Flow Planning Resources that Rural Healthcare and Rural Providers should be accessing immediately:

  • Prepare a Cash forecast
  • Immediately file for Accelerated/ Advanced payments to support operations for the next 90 days
  • Recognize receipt of your organization’s Public Health and Social Services Emergency Fund (PHSSEF) Grant $50B distributed on 4/10 and 4/24, $10B targeted rural allocation on 5/7, $10B targeted COVID-19 Hot Spot Allocations, $10B targeted allocation on 6/9 and an additional $3B on 7/9 to safety net providers, and $1B targeted allocation on 7/9 for certain rural providers and other providers from small metropolitan areas, and submit information to support incremental costs of COVID-19 patients, lost revenue due to deferring elective services, and claims information for uninsured COVID-19 patients.
  • Recognize that additional grant revenue under the PHSSEF program will be distributed via an additional $75B with the passage of the PPP and Health Care Enhancement Act
  • Recognize the Small and Rural Hospital Improvement Program (SHIP) grant
  • Recognize the receipt of the Rural Health Clinic (RHC) funding for testing
  • If applicable, reach out to local Small Business Administration (SBA) lenders and submit application to receive PPP Forgivable Loan Program funds.
  • For organizations not eligible for the SBA PPP program, evaluate payroll tax credits and deferrals
  • File Federal Emergency Management Agency Request for Public Assistance document and begin tracking eligible costs.
  • Evaluate Economic Injury Disaster Loan (EIDL) and Emergency Economic Injury Grants (EEIG)
  • Evaluate Main Street Lending program as a source of additional capital
  • Request 12-month principal and interest deferral on USDA Community Facilities Direct Loans
  • CAHs to prepare interim prospective cost report and submit to Medicare Audit Contractors (MACs)- file updated Medicare rates with Medicare Advantage (MA) plans
  • Negotiate Periodic Interim Payments (PIPs) with third party payers
  • Work with bank to open and/or expand lines of credit

Financial Projection:

  • Send the financial production graph to rural hospital CFOs to drop assumptions Link- here

Public Health and Social Services Emergency Grant Fund (PHSSEF)

  • List of Qualifying expenses for the PHSSEF include all non-reimbursable expenses attributable to COVID-19 including:
    • Building or retrofitting new ICUs
    • Increased staffing or training
    • PPE
    • The Building of Temporary Structures
    • Foregone Revenue from cancelled procedures
      • Revenue losses associated with fewer outpatient visits, canceled elective procedures or services, or increased uncompensated care
      • “HHS encourages the use of funds to cover lost revenue so that providers can respond to COVID-19 by maintaining healthcare delivery capacity.
  • HHS Guidance on June 10, 2020
    • Providers have until June 3, 2020 to submit the following into portal and apply for a portion of the additional $20B general distribution:
      • An accounting of their annual revenue by submitting tax forms or financial statements and agree to program Terms and Conditions
    • Providers that do not submit will not longer be eligible to receive additional funding from the general distribution fund

Small Business Association Payroll Protection Program

  • If applicable, submit application to the SBA PPP
    • Loans
      • 5 times borrower’s average monthly payroll costs, not to exceed $10M (Payroll costs include salary, wages, vacation, payment for group healthcare benefits, and state and local taxes assessed on the compensation)
      • Excluded costs include compensation of an individual in excess of an annual salary of $100K, as prorated for the period 2/15/20-6/30/20
    • Flexibility Act, signed on 6/5
      • Extends covered period for forgiveness from 8 weeks to 24 weeks or 12/31
      • Extends the period for allowable uses of the loan from 6/30 to 12/31
      • 75% payroll requirement for amount to be given reduced to 60%
      • Loan deferral has been extended from 6 months to the date on which the amount of forgiveness is determined or 10 months after the last day of the covered period if the borrow fails to apply for forgiveness
      • Loan maturity extended from 2 years to 5 years
      • Borrowers who applied for loan forgiveness can also take advantage of Section 2032 of Cares Act (Payroll tax delayed payment)

Critical Access Hospitals (CAHs) Interim Cost Reports

  • File updated Medicare rates with Medicare Advantage plans to ensure appropriate revenue received from MA plans
  • Work with updated report so they do not lose money

Enhanced COVID Patient Payments

  • Recognize enhanced COVID patient payments:
    • Enhanced COVID patient payments:
      • 120% for inpatients – 20% add-on for patient admitted with COVID-19 through Duration of emergency period
      • Telehealth Services- During emergency period, removes criteria that established patient and allows beneficiary to be seen in their home, allows for FQHCs and RHCs to act as distant sites
      • Discontinuation of Sequestration- Temporary lift on Medicare Sequester from 05/01/2020-12/31/2020
      • Delay Medicaid Disproportionate Share (DSH) reductions- Delay implementation of State DSH reductions through 11-30-2020
      • RHC Productivity Standards Waiver

Growing Patient Volumes

  • Target grow in patient care services
  • Recognize that your community has concerns about their safety in your hospital and proactively address these concerns
    • Actively communicate with community the steps your organization is taking to create a safe environment
    • Fully engage telehealth for clinic visits
    • Develop plan to restart elective surgeries/ procedures

Increase Hospital Capacity- CMS Hospitals Without Walls

  • CMS is giving providers flexibility during the pandemic to increase the number of beds for COVID-19 patients while receiving stable, predictable Medicare payments
    • Hospital systems that include rural health clinics can increase their bed capacity without affecting the rural health clinic’s payments
  • CMS is highlighting flexibilities that allow payment for outpatient hospital services – such as wound care, drug administration, and behavioral health services—that are delivered in temporary expansion locations, including parking lot tests, converted hotels, or patients’ homes (when they’re temporarily designated as part of a hospital).

Legislative/Regulatory Updates

Concerns about Price Transparency coming January 1, 2021

  • List of 70 services with negotiated costs with charge, median price, negotiated rates by payer, patient responsibility
  • Hospitals lost Price Transparency Lawsuit
  • Would raise Medicare payment rates for acute care hospitals

CAH Coinsurance Comparison

  • Posting coinsurance compared to hospital down the road that does not have coinsurance may cause damage to CAH hospitals (big damage to rural CAH hospitals)

Other Market Events

Biden-Sanders Healthcare Task Force (07/08/2020)

  • Biden-Sanders Unity Task Force outlines healthcare policy recommendations- Public Insurance Options, Crackdown on healthcare M&A (report recommends pursuing antitrust lawsuits against hospitals, insurance, and pharmaceutical companies to lower healthcare costs)
    • Also recommends lowering Medicare eligibility to the age of 60, ensuring free COVID-19 testing/ treatment/ vaccines to patients, allowing Medicare to negotiate drug prices ties to prices charged internationally / caping out-of-pocket drug costs, and paying healthcare workers at least $15/hour while addressing racial inequalities in healthcare

MedPAC March 2020 Report to Congress: Highlights

  • Medicare payroll tax to be immediately raised from 2.9% to 3.7% or Part A spending to be reduced by 18%
  • MedPAC recommends Congress update 2020 inpatient and outpatient payment rates by 2% for 2021
  • MedPAC recommends a Hospital Value Incentive Program (HVIP) that aligns with principles for quality measurement and replaces the current quality incentive programs
    • MedPAC recommends eliminating penalties associated with the current quality incentive programs which will have the effect of increasing payments by 0.5%
  • MedPAC recommends that the 2021 payment rate for physician and other health professional services be updated by the amount specified in current law

MedPAC March 2020 Report to Congress: Medicare Challenges

  • Long-running Medicare Challenges Include:
    • Medicare’s payments for some types of providers are excessive
    • Medicare pays higher prices in some care settings that others—for the same service
    • Medicare undervalues primary care and overvalues specialty care
    • Medicare is required to pay providers’ insurance claims, regardless of clinical appropriateness
    • FFS Medicare lacks strong incentives to improve population-based outcomes and the coordination of care

Bipartisan Policy Center Rural Health Task Force Policy Recommendations (04/20200

  • BPC Rural Health Task Force has developed recommendations to stabilize the rural health care system over the long-term: healthcare experts, business leaders, and elected officials
  • Goals- stabilize rural health infrastructure, promote value-based and virtual care, and increase access to local providers

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