Stopgap Funding Supports Healthcare Providers, Includes Medicare Advance Payment Changes

September 30, 2020

Update (Jan. 13, 2021): Certain of the provisions discussed below were further extended in a massive year-end spending bill. To review more about the massive spending bill, our Jan. 13 alert summarizes 15 key healthcare provisions included in H.R. 133.

On Sept. 30, 2020, the U.S. Senate passed, by an 84 to 10 vote, the Continuing Appropriations Act, 2021 and Other Extensions Act, legislation that extends funding for the federal government through Dec. 11, 2020. The House of Representatives passed the measure, 359-57, on Sept. 22, 2020. President Trump is expected to sign the bill to avert a government shutdown when the new fiscal year begins on Oct. 1, 2020.

Among other items, the continuing resolution (CR) extends flexibilities to 2019 novel coronavirus (COVID-19) pandemic measures and other pandemic-related healthcare funding programs. It also extends several Medicare and Medicaid provisions through Dec. 11, 2020. Below are the details on six key healthcare provisions in the CR for providers:

  1. Revises the Medicare Accelerated and Advance Payment (AAP) Program. The CR includes a provision that delays repayment and revises the Centers for Medicare & Medicaid Services’ (CMS) AAP program, described in a March 30 alert. The AAP program, now suspended by CMS for new requests from Medicare Part B providers and suppliers (as discussed in this April 28 alert), allowed most Medicare Part A and Part B providers and suppliers to request up to 100 percent (or more for certain hospitals) of anticipated Medicare payment amounts for a three- or six-month period as a repayable advance. Such advances provided necessary liquidity for many providers during the early portion of the COVID-19 public health emergency. Without the CR, the AAP payments provided by CMS would need to be repaid by offsetting Medicare claims beginning 120 days after the payment was made to the provider or supplier, with interest beginning to accrue as soon as 210 days after the payment date.

    The CR allows providers (a) to extend repayment for a full year before recoupment of the AAP payment begins, and (b) to limit claim offsets to 25 percent of the full Medicare payment for 11 months followed by six months with claim offsets limited to 50 percent of the full amount. This change effectively provides a full 29 months to repay the AAP amount in full. Thereafter, the CR reduces the interest rate on the unpaid balance of any AAP amount to 4 percent, if the AAP payment was made between passage of the Coronavirus Aid, Relief, and Economic Security Act, Pub. L. 116-136 (CARES Act) and the end of the COVID-19 public health emergency. The CR provision is similar (albeit slightly less generous) to the COVID-19 relief bill passed by the House and discussed in a May 18 alert.
  1. Delays Medicaid Disproportionate Share Hospital (DSH) Reductions. The CR delays until Dec. 11, 2020, scheduled Medicaid payment reductions for DSH hospitals. This reduction of $4 billion for DSH hospitals is mandated under the Affordable Care Act (ACA) based on estimates that qualifying hospitals would serve more Medicaid patients after Medicaid expansion under the ACA, but Congress has delayed payment cuts several times in prior CR legislation, including the CARES Act, as discussed in a March 27 alert.
  1. Extends Health Center and Workforce Funding. The CR extends funding for Community Health Centers, National Health Service Corps and the Teaching Health Center Graduate Medical Education Program through Dec. 11, 2020. These programs support and expand access to primary care services in rural and urban settings. This includes the provision of funding to train and educate primary care providers as well as support for medical, dental and mental health providers in healthcare professional shortage areas. Healthcare providers who participate in these programs should be aware that funding for these programs will continue at least until Dec. 11, 2020.
  1. Clarifies Medicaid Drug Rebate Program for Medication-Assisted Treatment. The CR clarifies that any drugs and biologicals used for medication-assisted treatment will continue to be eligible for rebates under the Medicaid program. These drugs and biologicals must be covered by Medicaid beginning Oct. 1, 2020.
  1. Maintains Medicare Reimbursement for Rural Providers. Medicare reimbursement for physicians and other providers includes three geographic adjustments, including one based on the relative work geographic practice cost index of the region where the service is provided. The CR extends a “floor” for such adjustment at 1.0 until Dec. 12, 2020. This extended adjustment should help ensure rural healthcare providers avoid a decrease in their reimbursement during the COVID-19 pandemic.
  1. Provides for Additional Medicaid Extensions. The CR also extends three CARES Act provisions changing the Medicaid program. Specifically the CR further extends two Medicaid demonstration programs — the Medicaid Money Follows the Person demonstration project and the Medicaid Community Mental Health Services demonstration — as well as the Medicaid spousal impoverishment protections program. Under the CARES Act, all of these programs were to last through the end of November 2020, as discussed in an April 29 alert, but now last through Dec. 11, 2020.

Summary and Next Steps

The CR gives healthcare providers participating in federal programs some flexibility in repayment timelines for amounts received from CMS as part of the AAP program, including both a delayed start for repayments and a longer period to repay the full sum. This reflects the ongoing and long-term nature of the COVID-19 pandemic, which may impact future funding bills. Similarly, the CR extends certain Medicare and Medicaid provisions until December.

Congress will return after the election to determine how lawmakers will address funding the government beyond Dec. 11, 2020. One option is to do a short-term CR until February or March and permit the next Congress to deal with funding issues. The Senate has not acted on a specific appropriations bill as the House has already. It is expected that Senate Republicans will unveil their bills sometime this fall. These could be put together to create an omnibus bill to be considered by the Senate during the lame-duck session. However, this process bypasses the normal committee procedure. If Democrats control both the House and Senate and the White House in the next Congress, they may be interested in negotiating a long-term funding bill to take appropriations off the table for a year and allow them to focus on other issues.

McGuireWoods is continuously monitoring information released by Congress and the Trump administration regarding COVID-19 and current legislation. Please contact the authors or any of the McGuireWoods COVID-19 Response Team members for additional information on the accelerated and advance payment programs and additional CARES Act funding and their availability to healthcare providers.


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