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AHA, Health System CEOs Urge Senate to Extend Freeze on Medicare Sequester Cuts

Analysis  |  By Melanie Blackman  
   March 24, 2021

Rick Pollack was joined by CEOs of University Hospitals Health System, Mon Health System, and Our Lady of the Lake Regional Medical Center on a press call to discuss the financial effects of the pandemic on their organizations.

The American Hospital Association (AHA) held a press call Tuesday afternoon with three health system CEOs regarding the upcoming Senate vote to extend the moratorium on Medicare sequester cuts.

Last week, the House of Representatives passed H.R. 1868, a bill that would eliminate 2% cuts to all Medicare payments until the end of 2021. If the bill does not pass the Senate, cuts are scheduled to resume on April 1.

Rick Pollack, CEO of the AHA, is urging the Senate to extend the moratorium until the end of the COVID-19 public health emergency, citing diminished hospital and health system revenues.

"Clearly the time for Congress to act is now," Pollack said during the press call. "They've got to act now to stop the sequester from kicking in on [April] 1. In addition, we urge lawmakers to provide additional funding for the Provider Relief Fund and provide relief in terms of the repayment of loans from the accelerated [Medicare] payment program."

On the same day as the press call, Kaufman Hall released its National Hospital Flash Report for March, which found hospitals are continuing to struggle with thinning margins despite signs the COVID-19 pandemic may be subsiding.

Related: Kaufman Hall: February Hospital Margins 'Slim to Negative'

Kaufman Hall also prepared a new analysis, released by the AHA, which found that on average, 39% of hospitals will operate in the red in 2021. The study found in its worst-case scenario that on average, half of hospital operating margins would operate in the red in 2021.

Last summer, the AHA released a report projecting hospitals could see losses of $323.1 billion or more in 2020 due to the pandemic, and projected hospitals could lose more than $20 billion per month due to a decline in patient volumes.

Hospitals and health systems are still facing financial woes due to the pandemic, including three provider organizations that joined Pollack on the press call.

Cliff Megerian, MD, CEO of University Hospitals Health System, said during the call that while the Cleveland-based nonprofit organization is working hard to meet patients' needs and administer vaccines, its surgery and procedure volumes have not recovered to pre-pandemic levels, which is impacting them financially.

"If we incur Medicare cuts at this time, our recovery efforts would be significantly impacted, but more importantly, our communities would be harmed as well," Megerian said.

David Goldberg, president and CEO of Mon Health System, a rural, four-hospital system headquartered in Morgantown, West Virginia said during the call that like many other rural health organizations, Mon Health System has experienced financial strife during the pandemic. This has been partly due to patients putting off care and developing worsening conditions that put them in “bad shape.”

"We implore Congress to not put the sequester back into place," Goldberg said. "We implore Congress to keep working diligently on getting those [Provider Relief Funds] to us, so we can continue to be operational for the communities we serve, to stay accessible."

Scott Wester, CEO of Our Lady of the Lake Regional Medical Center, which is part of the Franciscan Missionaries of Our Lady Health System, and located in Baton Rouge, Louisiana, said the state has seen a 13% increase in Medicaid recipients over the last year, resulting in a financial crunch for providers.

“Costs are way up and we continue to see acceleration in our supply chain expenses as well," Wester said. "Having the cuts to Medicare continues to make us have to prioritize, especially more than ever."

Related: AHA: Hospital Losses Could Top $323B in 2020

Melanie Blackman is the strategy editor at HealthLeaders, an HCPro brand.

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