Federal officials say the object of the initial $30 billion blunderbuss distribution of funding was to get money to providers as fast as possible.
The federal government on Friday will begin doling out the remaining $20 million from a $50 billion CARES Act Provider Relief Fund dedicated to helping caregivers pay for the cost of the COVID-19 pandemic and related costs.
The first $30 billion was distributed with a blunderbuss starting with $26 billion on April 10 via direct deposits to any healthcare facilities and providers who got Medicare fee-for-service reimbursements in 2019. The remaining $4 billion of the expedited $30 billion distribution was sent on April 17.
Centers for Medicare & Medicaid Services Administrator Seema Verma told reporters this week that the object of the initial funding was to get money to providers as soon as possible.
"From a broad level, the first tranche of dollars was put out with the aim of getting dollars out very quickly into the healthcare system," she said. "That's something that we heard from providers across the board. They wanted to make sure we got this out quickly," she said.
Even caregivers who shut their doors because of the pandemic were eligible for the funds if they provided diagnoses, testing, or care to patients with possible or actual COVID-19. The kicker is that HHS says it "broadly views every patient as a possible case of COVID-19."
Under the dispersal formula, providers were given a share of the money based on their total Medicare FFS reimbursement in 2019, which totaled $484 million last year.
Using the HHS formula, a provider can estimate their relief payment by dividing their 2019 Medicare FFS (not including Medicare Advantage) payments by $484 million and then multiplying that ratio by $30 billion. For example, a hospital that billed Medicare for $121 million in 2019 would get $7.5 million in relief. ($121,000,000/$484,000,000,000 x $30,000,000,000 = $7,500,000)
The funding scheme for the initial $30 billion payout irked safety net hospitals, community health centers and rural providers who said the formula didn’t necessarily get money into the hands of the pandemic's front-line providers, and didn't do much to help providers whose businesses were all but shuttered because of the virus.
America's Essential Hospitals said it appreciates the money, but urged the federal government remove red tape and focus "on ensuring funds reach the essential hospitals on the front lines of this public health emergency and caring for many low-income and uninsured patients."
The safety net hospital association also asked for more time to acquire data requested by the Department of Health and Human Services.
"We call on the department to extend its data submission deadline until it has resolved these technical issues and clearly and publicly communicated how it will use this information," AEH said. "We also urge the administration to streamline access to the various COVID-19 funding sources by minimizing application processes and requirements that create administrative burden."
The Remaining $20B
Starting Friday, CMS will issue more-targeted distribution of the remaining $20 million, augmenting allocations so that the entire $50 billion general distribution is meted out proportionally to providers' share of 2018 net patient revenue.
Ten billion dollars will be given to hospitals in "hot spot" COVID-19 areas, such as in New York, New Jersey, and areas of California.
In distributing the money, HHS says it will consider other factors such as patient mix, reflected in Medicare disproportionate share payments.
The remaining $10 billion will go to rural hospitals and health clinics, which have been in financial straits long before the coronavirus was around.
The distribution will be based on operating expenses, using a methodology that distributes payments proportionately to each facility and clinic, which CMS has acknowledged "are more financially exposed to significant declines in revenue or increases in expenses related to COVID-19 than their urban counterparts."
"NRHA is grateful to President Trump for relief provided today to the rural health care safety net," National Rural Health Association CEO Alan Morgan said. "Hundreds of rural providers were on the brink of closure, and this relief is absolutely critical."
An additional $400 million will be allocated to the Indian Health Service, starting next week and based on operating expenses.
Lawmakers say at-risk ACOs are being held responsible "for the enormous costs that we expect to result from the COVID-19 pandemic, which are outside their control."
Senate leaders are asking the federal government to "waive the shared loss repayment" for Medicare at-risked accountable care organizations that are grappling with "costs beyond their control due to the COVID-19 pandemic."
In a letter sent Tuesday to Centers for Medicare & Medicaid Services Administrator Seema Verma, Senate Finance Committee members Bill Cassidy, MD, (R-LA), and Sheldon Whitehouse, (D-RI), said that the methodologies for at-risk ACOs in the Medicare Shared Savings Program and other Alternative Payment Models hold responsible physicians and hospitals "for the enormous costs that we expect to result from the COVID-19 pandemic, which are outside their control."
"Some stakeholders estimate that the ongoing COVID-19 pandemic could cost Medicare between $38.5 billion and $115.4 billion over the next year, depending on factors such as severity of disease and hospitalization rates," the two senators said.
"Healthcare providers in value-based arrangements will feel the impact of these costs twice: once at the onset and again when their spending is evaluated in the context of their performance in MSSP or another APM," the letter said.
A poll released this month by the National Association of ACOs found that more than half of ACOs in MSSP said they'll "likely" leave the program amid fears of getting stuck with massive financial losses to cover the cost of the COVID-19 pandemic. This year's application deadline for MSSP and APM is May 31, but ACOs can withdraw from the program before that with no penalty.
In their letter, Cassidy and Whitehouse thanked Verma for activating CMS's "extreme and uncontrollable circumstance policy," under which ACOs can get some relief during the pandemic. However, the senators said policy would only "partially address the costs associated with the COVID-19 pandemic and the total financial impact to ACOs."
CMS plans to prorate the 2020 annual losses based on the duration of the public health emergency. For example, if the emergency lasts six months, ACOs would be responsible for half of the losses for the year.
"The policy does not adequately adjust losses for ACOs in hard hit COVID areas and still holds ACOs accountable for the abnormally high costs of providing care during a global pandemic," the Senators said, adding that adjusting ACO benchmarks, risk scores and quality bonuses "will be impractical."
"Therefore, to ensure that risk-based ACOs that have taken on risk for the total cost of care due to longstanding encouragement and program requirements instituted by CMS are not unduly penalized by the COVID-19 pandemic, we urge you to waive the shared loss repayment for ACOs for performance year 2020," the letter said.
The two senators also recommended that CMS push back the May 31 MSSP termination date for at-risk ACOs "in order to provide immediate assurances to ACOs about CMS' intent to formalize in regulation a 2020 waiving of losses."
Less than 40% of physicians said they were treating COVID-19 patients. However, 60% of physicians who were not treating those patients said they'd be willing to.
More than 20% of physicians report that they've either taken a pay cut or been furloughed by the coronavirus pandemic, including 30% of physicians who are not treated COVID-19 patients, according to a new survey commissioned by The Physicians Foundation.
Of those physicians who've taken a financial hit or a furlough, 18% said they were treating COVID-19 patients, and 30% said they were not, according to the findings in an online survey of 842 physicians, conducted last week by Irving, Texas-based physician recruiters Merritt Hawkins.
"Prior to the pandemic, physicians were already facing a number of stress factors eroding their morale and potentially limiting patient access to their services," Merritt Hawkins said. "The coronavirus is likely to add to these stresses, and more attention therefore needs to be paid to physician well-being, both during the current crisis and after it has been contained to help ensure an adequate and engaged physician workforce."
Less than 40% of physicians said they were treating COVID-19 patients. However, 60% of the physicians who were not treating those patients said they would be willing to, which Merritt Hawkins said suggests "that the physician workforce has extra capacity to bring to bear on the pandemic, with (that) many doctors willing to assume the risk, responsibilities and (presumably) the rewards of treating those infected with the virus."
While two-thirds (66%) or respondents said they would continue to practice medicine as they are now, 34% said they would make changes, including 14% who said they'd seek a different practice, 7% who said they'd close their practice temporarily, 5% who said they'd retire, and 4% who said they'd leave private practice and work for a hospital.
The survey also found that 48% of physicians are using telehealth to access patients, up from 18% in a 2018 Merritt Hawkins survey.
"The emergence of the virus has clearly accelerated the use of technological platforms used to treat patients remotely," Merritt Hawkins said.
Thirty-six percent of the respondents were primary care physicians, and 66% were surgeons, diagnosticians, and other specialists, which corresponds with the percentages in the nation's physician workforce.
The merger, under which Akron, Ohio-based Summa would become a wholly owned subsidiary of Beaumont, was announced in January.
Beaumont Health and Summa Health have postponed their merger plans while the coronavirus pandemic rages, the two health systems announced.
"Both Summa and Valmont are all hands on deck with the COVID-19 crisis," Beaumont CEO John Fox told reporters Tuesday. "We didn't plan this, but we are deferring until we have a little more clarity about the impact of this crisis.
"They are doing the same things we're doing. We talk multiple times during the week as they try to navigate through their own version of the surge that they'll experience in northern Ohio," Fox said.
The merger, under which Akron, Ohio-based Summa would become a wholly owned subsidiary of Beaumont, was announced in January, about six months after the two health systems entered negotiations. Beaumont and Summa have combined revenues of $6.1 billion, operate 12 hospitals in Ohio and Michigan, and employ about 45,000 people.
Summa Health spokesman Mike Bernstein said the merger has cleared all federal and state regulatory hurdles and that Summa's board of directors "is working closely with Beaumont to finalize the path forward and the appropriate timing to combine our organizations."
"That said, the immediate priority is for both Summa and Beaumont to focus first and foremost on caring for our patients, employees, physicians and communities as we are impacted by the COVID-19 pandemic," Bernstein said.
"We must prioritize efforts to ensure the health and safety of all those we serve during this difficult time and we remain committed to finalizing all necessary details to close this transaction when appropriate."
Fox said he doesn't know how long the merger will be delayed.
"We can't turn a blind eye to the pandemic," he said. "Going through the merger process and all those activities we thought was an unnecessary distraction, given that we were working seven days a week, 16 hours a day to deal with the pandemic. And so was Summa. It's kind of like you had a plan to do something, but the house is now on fire. So, we're going to deal with the fire."
Fox's announcement Tuesday that the merger would be delayed followed his announcement that the health system would temporarily lay off 2,475 employees, eliminated another 450 jobs, and slashed executive pay to staunch the financial "hemorrhaging" created by the coronavirus pandemic.
In the first quarter ending March 31, Beaumont's net income was -$278.4 million, a plummet of $407.5 million over the first quarter of 2019. Operating revenue fell to $1.07 billion, a $78.2 million decrease over the $1.15 billion reported in the first quarter of 2019.
Net operating income for the first quarter of 2020 was –$54.1 million, a $91.7 million decrease compared to the same time last year.
The first-quarter losses mounted even though the virus impacted the health system for the last two weeks of March, and Beaumont officials warned the losses could be much worse in the second quarter.
In the first quarter of 2020, Beaumont's net income was -$278.4 million, a free-fall of $407.5 million over Q1 2019.
Beaumont Health has temporarily laid off 2,475 employees, eliminated another 450 jobs, and slashed executive pay to staunch the financial "hemorrhaging" created by the coronavirus pandemic.
Beaumont began caring for COVID-19 patients five weeks ago, and nearly all inpatient and outpatient surgeries and other non-COVID-19 medical services were shut down, while the number of patients seeking care unrelated to COVID-19 fell off after March 16.
In the first quarter ending March 31, Beaumont's net income was -$278.4 million, a plummet of $407.5 million over the first quarter of 2019. Operating revenue fell to $1.07 billion, a $78.2 million decrease over the $1.15 billion reported in the first quarter of 2019.
Net operating income for the first quarter of 2020 was –$54.1 million, a $91.7 million decrease compared to the same time last year.
The first-quarter losses mounted even though the virus impacted the health system for the last two weeks of March, and Beaumont officials warned the losses could be much worse in the second quarter.
In a media availability on Tuesday announcing the cuts, Beaumont CEO John Fox, who will take a 70% temporary pay cut to his base salary, likened the health system's dilemma to "a tale of two cities."
"An absolutely outstanding performance by clinical teams who I cannot be more proud of in terms of how they responded without hesitation and handled more COVID-19 positive patients than any other system in Michigan by far," he said. "The other piece of that is by doing the most, we are also hemorrhaging the most in terms of cash, and we have to deal with that piece of the puzzle."
Fox declined to say how much he earns, saying "I'm not going down that rabbit hole" to multiple media requests on Tuesday. The Detroit Free Press reported that Fox's compensation was $5.6 million a year in 2017. Other top executives at the Royal Oak, Michigan-based health systems will take temporary cuts of up to 45%.
In addition to the layoffs and the salary cuts, Fox said the health system was forced to permanently eliminate 450 positions, most in corporate and administrative services, owing to uncertainty in the healthcare sector "well after the COVID-19 initial surge subsides."
"We must adjust the way we operate our organization moving forward," he said. "This pandemic has changed the delivery of healthcare, and we will be treating patients with this virus until we get a vaccine."
Beaumont, the state's largest health system, has 38,000 employees and operates eight hospitals across southeast Michigan.
The collaborative is distributing hydroxychloroquine from the government's Strategic National Stockpile to healthcare providers in hard-hit areas.
The Department of Justice said this week it will not mount an antitrust challenge against AmerisourceBergen Corp. collaborations to obtain coronavirus-related medical supplies.
"We commend AmerisourceBergen's efforts to assist the United States in responding to the COVID-19 pandemic through improved supply of medicines to those most in need," Assistant U.S. Attorney General Makan Delrahim of DOJ's Antitrust Division, said in a media release.
The collaborative is facilitating distribution of hydroxychloroquine from the government's Strategic National Stockpile to healthcare providers in hard-hit areas. Under the arrangement, AmerisourceBergen is instructed on volumes and ship-to destinations, using its distribution network.
"We also appreciate AmerisourceBergen's intention to comply with the antitrust laws, regardless of circumstances. Division staff worked expeditiously to resolve its request for a Business Review Letter within our ambitious seven-day target," Delrahim said.
Verma calls for "a more tailored and flexible approach" with input from local leaders.
The Centers for Medicare & Medicaid Services is offering recommendations for how hospitals in areas with low incidences of COVID-19 can re-open for non-emergency procedures.
"Today, some areas of the country are experiencing fewer cases and lower incidence of the virus, necessitating a more tailored and flexible approach," CMS Administrator Seema Verma said.
"Every state and local official will need to assess the situation on the ground to determine the best course forward, but these guidelines provide a gradual process for restarting non-COVID-19 essential care while keeping patients safe," she said.
The recommendations, released Sunday, target communities that are in Phase 1 of the Guidelines for Opening Up America Again with low incidence or relatively low and stable incidence of COVID-19 cases.
CMS is calling for a "gradual transition," with providers coordinating with state and local public health officials, and accounting for the availability of personal protective equipment and other supplies, workforce availability, facility readiness, and testing capacity.
To get to Phase 1, states or regions need to pass gating criteria regarding symptoms, cases, and hospitals. However, CMS said recommendations are just that, and are not meant to be implemented by every state, county, or city right now. Ultimately, governors and local leaders will make decisions on whether re-openings are appropriate.
Emergency designations on care venues means that the now-empty, 185-bed hospital will treat only COVID-19 patients until the pandemic declaration has lifted.
Beaumont Hospital, Wayne "temporarily paused" this week in anticipation of a "second surge" of COVID-19 patients that the health system said could occur if social distancing restrictions are eased.
"Beaumont Hospital, Wayne is important to Beaumont Health and is not permanently closing. Rumors to that effect are false," the Royal Oak, Michigan-based health system said.
Wayne's "few remaining patients" were either discharged or transferred from the 185-bed, acute-care hospital this week, and staff were redeployed to other Beaumont hospitals or temporarily laid off.
Beaumont said the region was expecting a surge in COVID-19 patients two weeks ago and gained state approval to designate Wayne as a COVID-19-only hospital.
"Fortunately, the surge was more moderated, likely due to aggressive social distancing, the stay at home order and other factors mitigating the spread of the disease," Beaumont said.
However, Beaumont said, strict state designations on care venues means that the now-empty Wayne hospital will remain under the COVID-19-only status until the pandemic declaration has been lifted.
"This is in preparation for a second surge that could occur after the stay at home restrictions end," Beaumont said. "The pandemic remains very unpredictable. Beaumont Health is committed to responding to potential ongoing COVID-19 surges by relying upon our Wayne hospital and other resources."
"Beaumont is committed to reopening Beaumont, Wayne and making sure the services provided there both meet the community's needs and fit within our system’s overall strategic plan. However, we will only do that when it is safe to do so and when we have more clarity about the pandemic."
As of Friday afternoon, Michigan had reported 29,263 COVID-19 cases and 2,093 deaths.
Medicare's reimbursement for automated tests will increase from $51 to $100.
In an attempt to reduce lag times for COVID-19 diagnoses and get a better sense of the scope of the pandemic, Medicare said it will nearly double its payments for high-throughput commercial lab tests.
"CMS has made a critical move to ensure adequate reimbursement for advanced technology that can process a large volume of COVID-19 tests rapidly and accurately," CMS Administrator Seema Verma said. "This is an absolute game-changer for nursing homes, where risk of Coronavirus infection is high among our most vulnerable."
The higher $100 payment – an increase from $51 – will be paid to private sector labs, such as Roche, Hologic, Abbott and Cepheid, that have developed highly automated processes to increase testing capacity and achieve faster and more accurate results.
The high-throughput labs can process more than 200 tests each day.
A lack of testing kits and long delays in getting the results of COVID-19 tests were citied as a major reason for backups in hospital patient throughput in March, according to a study released this month by the Office of the Inspector General for the Department of Health and Human Services.
The scarcity of the tests, and the subsequent wait for results for patients and staff, which often took a week or longer, had a snowball effect on patient throughput, OIG said in its report.
MedPAC asks CMS not to use 2020 data to calculate baseline year spending for future benchmarks.
The Medicare Payment Advisory Commission is recommending that the Centers for Medicare & Medicaid Services scrap pandemic-skewed 2020 performance benchmarks for at-risk accountable care organizations.
"The COVID-19 public health emergency has likely affected—and will continue to affect, at least through 2020—Medicare spending in ways that are yet to be fully understood," MedPAC Chairman Francis J. Crosson, MD,said in a letter this week to CMS Administrator Seema Verma.
"This is particularly problematic for providers participating in ACOs, whose 2020 performance will be assessed using benchmarks established before the current emergency," Crosson said. "Given the dramatic shifts in care delivery that have occurred in 2020, attempting to adjust 2020 spending and benchmarks for COVID-19 will be impractical. It also may be inequitable."
Specifically, Crosson asked CMS to:
Not use 2020 data to determine ACO quality, bonuses and penalties; not use 2020 data to calculate baseline year spending for future benchmarks; and consider extending existing ACO agreement periods by one year.
Not use 2020 claims data to assign beneficiaries, because the use of telehealth could distort ACO assignment. Instead, MedPAC is recommending that CMS consider using 2019 and/or 2021 claims data to assign beneficiaries in 2021.
Provide an extension of the NextGen ACO model through 2023, which will give ACOs already in the model time to continue in the program without having to adapt to a new model during the pandemic.
Delay the start of the Center for Medicare & Medicaid Innovation Direct Contracting model, by at least one year, to give providers a change to understand the new model before committing to it.
NAACOS Objects
The MedPAC recommendations brought down the ire of the National Association of ACOs, which said "ignoring shared savings in 2020 would devastate Medicare ACO programs."
"In 2018, Medicare paid ACOs back roughly $900 million of the $1.7 billion they saved. ACOs used that money to pay for quality improvement programs, care coordinators, health IT, analytics and other infrastructure," NAACOS said.
"Without those funds, ACOs will no longer have resources to focus on improving quality and addressing chronic disease, which help improve patient care. The impact of the pandemic will play out differently from region to region and market to market. To gut the savings opportunity before the data are in is presumptuous at best."
Instead, NAACOS said, MedPAC should consider other options, such as holding at-risk ACOs harmless, allowing ACOs to forego less shared savings in exchange for less risk, or extending the dropout deadline to give ACOs the chance "to understand how COVID-19 will playout in the coming months.
"MedPAC has consistently underplayed the value ACOs bring to Medicare payment reform.," NAACOS said. "Let's hope CMS doesn't accept this advice that would have detrimental effects on Medicare's overall shift to value."
A poll released this week shows that 54% of ACOs in Medicare's Shared Savings Program would likely leave the program amid fears of getting stuck with massive financial losses to cover the cost of the COVID-19 pandemic.
The National Association of ACOs estimates that the COVID-19 pandemic could cost Medicare between $38.5 billion and $115.4 billionover the next year.
A separate study released last week by America's Health Insurance Plans estimated the cost of the pandemic for the nation's healthcare system at between $56 billion and $556 billion
