Federal Funding Bill Relaxes Medicare Loan Repayment Terms, Delays DSH Cuts

House Democrats’ bill to extend funding for the federal government through mid-December included a provision that would relax repayment terms for COVID-19 Medicare loans.

CMS Administrator Seema Verma confirmed on Friday that the agency is delaying recoupment on the Medicare loans as lawmakers haggled over legislation to avoid a government shutdown weeks before an election. The bill would also extend funding for several Medicare and Medicaid policies including delaying cuts to disproportionate-share hospital payments until Dec. 11.

Hospitals have implored Congress to forgive or relax repayment terms for $100 billion in COVID-19 relief loans that Medicare gave out in the spring. CMS was supposed to start recouping the funds by cutting off providers’ Medicare fee-for-service reimbursement starting in August, but has not yet begun doing so.

Foley & Lardner Partner Judith Waltz, who is a former assistant regional counsel at HHS, said congressional action soon would be the most efficient path to resolving the issue, as it would likely be difficult for CMS to refund provider payments if they start recouping funds and Congress relaxes the repayment terms afterward.

“If this doesn’t pass, I’m not sure what CMS’ next move would be. They can’t just leave this indefinitely,” Waltz said.
The Federation of American Hospitals, which has been a key stakeholder pushing for revisions to the Medicare loan program said it supports the changes in the new spending bill.

“The ongoing pressures of the current crisis required a revision of the repayment terms,” FAH President and CEO Chip Kahn said.

The American Medical Association also praised the move, as physician practices also were able to apply for the program.

“Upon passage of the Continuing Resolution, patients should know that their physician is more likely to weather the pandemic’s economic challenges. Congress recognized the danger, and rightfully modified the program so physicians can keep seeing patients,” AMA President Dr. Susan Bailey said.

House Democrats’ bill would give providers one year after the Medicare Accelerated and Advance Payment Program loan was issued before recoupment would begin, an extension from 120 days under current law. The recoupment rate would also be lowered from its current100% level to 25% for the first 11 months of repayment, and 50% for the six months afterward. Hospitals would have 29 months after payments to begin to pay back the funds in full before interest would begin to accrue. The interest rate would be lowered from the current rate of 9.6% to 4%.

The accommodations should be sufficient to allay concerns for most healthcare providers concerned about repayment, Waltz said, although she acknowledged some practices may still close.

The legislation also creates a new deadline for funding for several healthcare policies, including delaying cuts to Medicaid disproportionate-share hospital payments and extending funds for programs such as the Money Follows the Person demonstration, diabetes programs and community behavioral health clinics. The policies are currently set to expire on Nov. 30.

The new deadline creates a potential vehicle for a last-ditch effort to ban surprise medical bills post-election as senior GOP lawmakers who have advocated for reform face retirement.

Medicare Part B premium increases would also be limited in 2021.

Republicans, however, were rankled that farm aid money they wanted was left out of the legislation and Senate Majority Leader Mitch McConnell (R-Ky.) said the bill “shamefully leaves out key relief and support that American farmers need.”

Federal government funding expires on Sept. 30. The Senate is also set to soon begin a tense battle over the Supreme Court nomination that President Donald Trump is expected to announce as soon as late this week.


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