Congress relaxes Medicare loan repayment terms


The Senate on Wednesday passed a bipartisan government funding bill that averts a shutdown and will relax Medicare loan repayment terms for healthcare providers.

The president is expected to sign the bill into law. The stopgap measure pushes the deadline for government funding and bankrolling several Medicare and Medicaid programs, including cuts to Medicaid disproportionate-share hospital payments, to Dec. 11. The bill passed the Senate on a 84-10 vote.

Healthcare providers scored a big win by convincing lawmakers to relax recoupment terms on $100 billion in Medicare loans that were supposed to come due starting in August.

“Essential hospitals welcome and need the relief this continuing resolution provides for Medicare loan repayments and Medicaid disproportionate share hospital payment cuts,” said America’s Essential Hospitals Senior Vice President Beth Feldpush.

CMS unilaterally decided not to cut off providers’ Medicare fee-for-service payments as legally required while lawmakers negotiated new terms.

American Hospital Association President and CEO Rick Pollack praised CMS for holding off on recoupment.

“We appreciate the responsible manner in which they managed the recoupment process by calibrating it with the impending congressional action. Their approach avoided potential confusion and significant administrative burden at a time when hospitals are focused on the pandemic,” Pollack said in a written statement.

The 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 current 100% 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 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%.

Analysts said some financially strapped hospitals may have had trouble repaying the loans under the prior terms, but took them out as a lifeline in the early days of the COVID-19 pandemic.

“Critically important that Senate passed CR bill. Includes fixes to MAAPP repayment terms that will greatly support frontline hospitals and providers facing COVID in coming months,” Federation of American Hospitals President and CEO Chip Kahn tweeted.

The American Medical Association also supported relaxing the loan repayment terms.

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 set to expire on Nov. 30.

Pollack said the AHA is pushing for DSH cuts to be delayed until the end of fiscal year 2021.

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.

However, many policies that the healthcare industry has lobbied for were left out of the streamlined budget stopgap bill and theoretically saved for a COVID-19 relief bill. Some priorities left out so far are more grants for healthcare providers and increased federal Medicaid matching funds.

Talks between House Democrats and the White House resurrected this week, though the two sides have not yet come to an agreement. The House delayed a vote on Democrats’ $2.2 trillion proposal that was scheduled for Wednesday evening to allow more time for negotiations, shortly before House lawmakers are scheduled to return to their districts on Friday.

“Our conversation will continue,” said House Speaker Nancy Pelosi (D-Calif.) said following a talks with Treasury Secretary Steven Mnuchin.

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