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The coronavirus stimulus package Congress rushed out last week to help the nation’s hospitals and health care networks hands the industry billions of dollars in windfall subsidies and other spending that has little to do with defeating the COVID-19 pandemic.
The $2 trillion legislation, which President Donald Trump signed Friday, includes more than $100 billion in emergency funds to compensate hospitals and other health care providers for lost revenue and other costs associated with COVID-19. The measure also calls for spending up to $16 billion to replenish the nation’s depleted stockpile of medical gear, such as ventilators, medicines and personal protective equipment, or PPE.
But health care businesses will get billions of dollars in additional funding not directly related to the pandemic, in some cases because Congress agreed to reverse scheduled cuts in the rates paid by Medicaid and Medicare, which the federal government had tried for years to impose.
“Anything that could tangentially be related to the crisis lobbyists tried to get stuffed in this bill ― particularly health-care-related items,” said Steve Ellis, vice president of Taxpayers for Common Sense, a nonpartisan watchdog group. While the stimulus package is “not as big” a “Christmas tree” as some other bills, Ellis said, “I’m sure we’ll find a few baubles and gifts along the way.”
Hospitals have won widespread praise as their doctors and other medical staffs labor under perilous conditions, including shortages of protective gear. And, perhaps not surprisingly, the industry emerged as a big winner in the stimulus negotiations. Not only can hospitals draw on the $100 billion fund to stem their losses and cover other costs, but they will also see a boost in one stream of revenue as Congress overturned some planned rate cuts.
More than 3,000 hospitals that treat outsize numbers of Medicaid or uninsured patients, for instance, will share in an $8 billion windfall through the stimulus provision that reverses cuts in their Medicaid payments for 2020 and 2021.
Separately, hospitals will rake in at least $3 billion more because of a temporary suspension of a 2% cut in Medicare fees, according to the Federation of American Hospitals, which represents more than 1,000 for-profit hospitals and health systems. The infusion of cash also benefits doctors, nursing homes, home health companies and others.
“That’s welcome news during this time of crisis,” said Joanne Cunningham, executive director of the Partnership for Quality Home Healthcare.
Also tucked into the stimulus: a rollback of planned rate cuts to clinical laboratories and some medical equipment suppliers.
At this stage, it is unclear how much these measures will add to the COVID-19 tab ― or if far more stimulus would be required for the health care industry to rebound.
Take the 2% rate cut known as “the sequester.” The Office of Management and Budget expected it would save Medicare $16.2 billion in fiscal 2021. But the stimulus bill rescinds that rate cut from May 1 through the end of this year. As part of the legislation, Congress said it would, in effect, recoup the payments later by adding another year to the sequester. Whether lawmakers will follow through on that is anyone’s guess.
Anders Gilberg, senior vice president of government affairs for the Medical Group Management Association (MGMA), expects the sequester relief to translate to a “huge” financial boost for more than 15,000 medical practices his group represents.
“This would never have been done under any other circumstances,” Gilberg said. “The situation was recognized as dire.”
Dr. Patrice Harris, president of the American Medical Association, said the stimulus offers “needed financial relief to hard-hit workers, health systems and physician practices. At this critical moment, physician practices need significant financial support to sustain themselves and continue to meet the health care needs of all Americans during this time.”
Similarly, American Hospital Association CEO Rick Pollack called the legislation “an important first step forward. But, he added, “more will need to be done to deal with the unprecedented challenge of this virus.”
In a nod to clinical laboratories, which have helped bail out the federal government’s early failure to supply enough COVID-19 tests, the stimulus delayed planned rate cuts in 2021 likely to amount to tens of millions of dollars in revenue. Medicare officials have been at odds with the lab industry for years over rates for lab tests.
While other health care interests praised the bill, the laboratory trade association said it comes up short.
Just before the Senate passed the stimulus bill Wednesday, American Clinical Laboratory Association President Julie Khani slammed Congress for not designating funding to support labs. She said labs were in “an untenable situation, absorbing growing, uncompensated costs for testing specimens with no assurance that they will be appropriately or fairly reimbursed for all the tests they are performing.”
She added a not-so-veiled threat, saying: “If Congress fails to designate essential emergency funding for clinical laboratories to support our efforts, labs will be soon be forced to make difficult decisions about whether they can keep building the [testing] capacity our nation needs.”
The lab association, in a statement to Kaiser Health News, said labs have absorbed “staggering” Medicare reimbursement cuts of as much as 30% for many common tests in recent years.
In public securities filings this year, lab giants Quest Diagnostics Inc. and Laboratory Corp of America Holdings, known as LabCorp, reported they expected rate cuts in 2020 totaling more than $150 million. LabCorp said it supported the views of the lab association. Quest did not respond to a request for comment.
While labs processing COVID-19 tests missed out on direct funding, they could be eligible for some of the $100 billion allocated for hospitals and other providers to cover their losses, congressional aides said.
And the stimulus measure states that even in the event a lab is out-of-network, health plans are expected to pay the price it sets — as long as the lab publishes that price online — or negotiate with the lab.
Given that laws in some states ban surprise billing in particular, this provision seems to favor the labs, said Katie Keith, a Georgetown University law professor and health policy expert. “No one just lets the provider set the price,” she said.
The lab association disputes that, saying that many health plans are expected to pay them less than the $51.50 government recommended for a COVID-19 test.
Just how the $100 billion in health care funding will be distributed and how much oversight will occur is another unknown.
Health and Human Services Secretary Alex Azar has the authority to decide how long the emergency provisions remain in effect. Tracking all that money will be a challenge as well.
Ellis, the taxpayer advocate, noted that no government agency “is ready to handle the rush of extra funding.” He said that the stimulus grants extra resources to inspector general offices to monitor spending.
“There will be waste, there will be abuse,” he said. “It’s about exposing and rooting it out.”
The HHS Office of Inspector General expects to receive $4 million to support this oversight, according to spokesman Donald White.
Some groups aren’t waiting to compete over the $100 billion. The MGMA sent a letter March 27 to Azar and the Centers for Medicare & Medicaid Services chief Seema Verma asking for more direct help. Gilberg noted that some medical practices, such as doctors who perform colonoscopies, have not been able to continue their work.
“Doctors and physician practices are having a lot of trouble right now,” Gilberg said. “They are literally shut down, and they are having financial troubles. Their operations have come to a full halt.”
KHN correspondents Rachana Pradhan and Emmarie Huetteman contributed to this report.
A high-ranking federal official in late February warned that the United States needed to plan for not having enough personal protective equipment for medical workers as they began to battle the novel coronavirus, according to internal emails obtained by Kaiser Health News.
The messages provide a sharp contrast to President Donald Trump’s statements at the time that the threat the coronavirus posed to the American public remained “very low.” In fact, concerns were already mounting, the emails show, that medical workers and first responders would not have enough masks, gloves, face shields and other supplies, known as PPE, to protect themselves against infection when treating COVID-19 patients.
The emails, part of a lengthy chain titled “Red Dawn Breaking Bad,” includes senior officials across the Department of Veterans Affairs, the State Department, the Department of Homeland Security and the Department of Health and Human Services, as well as outside academics and some state health officials. KHN obtained the correspondence through a public records request in King County, Washington, where officials struggled as the virus set upon a nursing home in the Seattle area, eventually killing 37 people. It was the scene of the first major outbreak in the nation.
“We should plan assuming we won’t have enough PPE — so need to change the battlefield and how we envision or even define the front lines,” Dr. Carter Mecher, a physician and senior medical adviser at the Department of Veterans Affairs, wrote on Feb. 25. It would be weeks before front-line health workers would take to social media with the hashtag #GetMePPE and before health systems would appeal to the public to donate protective gear.
In the email, Mecher said confirmed-positive patients should be categorized under two groups with different care models for each: those with mild symptoms should be encouraged to stay home under self-isolation, while more serious patients should go to hospital emergency rooms.
“The demand is rising and there is no guarantee that we can continue with the supply since the supply-chain has been disrupted,” Eva Lee, director of the Center for Operations Research in Medicine and HealthCare at Georgia Tech and a former health scientist at the Atlanta VA Medical Center, wrote that same day citing shortages of personal protective equipment and medical supplies. “I do not know if we have enough resources to protect all frontline providers.”
Reached on Saturday, Lee said she isn’t sure who saw the message trail but “what I want is that we take action because at the end of the day we need to save patients and health care workers.”
Mecher, also reached Saturday, said the emails were an “an informal group of us who have known each other for years exchanging information.” He said concerns aired at the time on medical protective gear were top of mind for most people in health care. More than 35 people were on the email chain, many of them high-ranking government officials.
The same day Mecher and others raised the concern in the messages, Trump made remarks to a business roundtable group in New Delhi, India.
“We think we’re in very good shape in the United States,” he said, noting that the U.S. closed the borders to some areas. “Let’s just say we’re fortunate so far. And we think it’s going to remain that way.”
The White House declined to comment. In a statement, VA press secretary Christina Mandreucci said, “All VA facilities are equipped with essential items and supplies to handle additional coronavirus cases, and the department is continually monitoring the status of those items to ensure a robust supply chain.”
Doctors and other front-line medical workers in the weeks since have escalated concerns about shortages of medical gear, voicing alarm about the need to protect themselves, their families and patients against COVID-19, which as of Saturday evening had sickened more than 121,000 in the United States and killed at least 2,000.
As Mecher and others sent emails about growing PPE concerns, HHS Secretary Alex Azar testified to lawmakers that the U.S. had 30 million N95 respirator masks stockpiled but needed 300 million to combat the outbreak. Some senior U.S. government officials were also warning the public to not buy masks for themselves to conserve the supply for health care providers.
U.S. Surgeon General Jerome Adams tweeted on Feb. 29: “Seriously people – STOP BUYING MASKS! They are NOT effective in preventing general public from catching #Coronavirus, but if healthcare providers can’t get them to care for sick patients, it puts them and our communities at risk!”
Still, on Feb. 27, the FDA in a statement said that officials were not aware of widespread shortages of equipment.
“We are aware of reports from CDC and other U.S. partners of increased ordering of a range of human medical products through distributors as some healthcare facilities in the U.S. are preparing for potential needs if the outbreak becomes severe,” the agency said.
Simultaneously, Trump downplayed the risk of the novel coronavirus to the American public even though the Centers for Disease Control and Prevention was warning it was only a matter of time before it would spread across the country. On Feb. 29, the CDC also updated its strategies for health workers to optimize supplies of N95 masks.
An HHS spokesperson said Saturday the department has been in “an all-out effort to mobilize America’s capacity” for personal protective equipment and other supplies, including allowing the use of industrial N95 respirators in health care settings and awarding contracts to several private manufacturers to buy roughly 600 million masks over the next 18 months.
“Health care supply chains are private-sector-driven,” the spokesperson said. “The federal role is to support that work, coordinate information across the industry and with state or local agencies if needed during emergencies, and drive manufacturing demand as best we can.”
The emails from King County officials and others in Washington state also show growing concern about the exposure of health care workers to the virus, as well as a view into local officials’ attempts to get help from the CDC.
In one instance, local medical leaders were alarmed that paramedics and other emergency personnel were possibly exposed after encountering confirmed-positive patients at the Life Care Center of Kirkland, the Seattle-area nursing home where roughly three dozen people have died because of the virus.
“We are having a very serious challenge related to hospital exposures and impact on the health care system,” Dr. Jeff Duchin, the public health officer for Seattle and King County, wrote in a different email to CDC officials March 1. Duchin pleaded for a field team to test exposed health care workers and additional support.
Duchin’s email came hours after a physician at UW Medicine wrote about being “very concerned” about exposed workers at multiple hospitals and their attempts to isolate infected workers.
“I suspect that we will not be able to follow current CDC [recommendations] for exposed HCWs [health care workers] either,” wrote Dr. John Lynch, medical director of employee health for Harborview Medical Center and associate professor of Medicine and Allergy and Infectious Diseases at the University of Washington. “As you migh [sic] imagine, I am very concerned about the hospitals at this point.”
Those concerns have been underscored with an unusual weekend statement from Dr. Patrice Harris, president of the American Medical Association, which represents doctors, calling on Saturday for more coordination of needed medical supplies.
“At this critical moment, a unified effort is urgently needed to identify gaps in the supply of and lack of access to PPE necessary to fight COVID-19,” the statement says. “Physicians stand ready to provide urgent medical care on the front lines in a pandemic crisis. But their need for protective gear is equally urgent and necessary.”