The past several months put America’s health care system through the wringer. Hospitals, doctors, and health care providers faced a perfect storm of events that pushed many to the brink of closure. Now, due to strict, unrealistic federal loan repayment requirements, many of those facilities and providers could go over the edge.
Between government instructions to suspend all but the most essential medical services and preparing for a surge in COVID-19 patients, America’s hospitals lost more than $200 billion between March 1 and June 30, according to the American Hospital Association. These losses represent a serious threat to patient access to comprehensive, high-quality health care.
Congress must intervene now.
The surest way to address this problem head-on is by updating the loan repayment requirements within the Medicare Accelerated and Advance Payments Program (MAAPP). This is a program that has been around for years but was only recently expanded to address the current health care crisis. Unfortunately, when expanding the MAAPP, Congress established some stringent loan repayment terms that could come back to bite the very hospitals and providers the program was intended to help.
Hospitals like Columbus Regional Health — where I worked for more than 30 years, including a decade as president and CEO — relied on MAAPP loans to get through the worst of the first wave of COVID-19. These loans were essentially three-to-six-month advancement payments for Medicare services. Most were distributed in March or April, with an extraordinarily short repayment time frame of 120 days.
That means, for most hospitals that received MAAPP loans, repayment must begin around Aug. 1. What’s more, until repayment is made in full, hospitals and health care providers will not receive any Medicare reimbursements. That provision alone would deal a severe blow to CRH, as Medicare fee-for-service payments comprise on average roughly 40 to 50 percent of the hospital’s revenue — well above the national average of 25 percent.
Complicating matters even further is the fact that, if MAAPP loans are not repaid in full in the given time frame — for acute care hospitals, one year, and for clinicians and other providers, seven months — then they begin accruing interest at a mind-boggling rate of 10 percent. This figure is far and away higher than the terms Congress prescribed for other industries.
These terms are quite simply unacceptable, especially at a time when hospitals and our entire health care system is still bracing for a resurgence of COVID-19. Compounding the financial woes facing America’s hospitals will only hinder the health care community’s ability to treat patients in a timely, effective manner.
Congress must work to update the outdated loan terms by extending the loan repayment start date, extending the repayment period, and, in cases of extreme hardship, forgive these loans so that doctors and hospitals across our state and country can remain fully prepared to take care of their communities.
Doug Leonard is the former president and CEO of the Indiana Hospital Association and Columbus Regional Health, and the current executive director of the Alliance for Substance Abuse Progress. Send comments to [email protected].
