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Follow the Money – A Template for States to Track Federal Relief Funds by Hospital
/in COVID-19 State Action Center Blogs, Featured News Home COVID-19, Health System Costs, Hospital/Health System Oversight, Making the Case for Action, Population Health /by Trish RileyUpdated June 12, 2020
Last week, states received a minimum of $1.25 billion from the Coronavirus Aid, Relief, and Economic Security Act (CARES Act, Title V) to use at their discretion to address issues related to the pandemic. These dollars may be used to fund necessary COVID-19-related expenses that have not been addressed in their most recently passed state budgets and are limited to expenses that occur between March 1 to Dec. 30, 2020.
To make funding decisions amid many competing priorities, states could benefit from a snapshot showing all federal coronavirus relief funds that have already been received by hospitals and their affiliates within their states. It remains unclear if and when the federal government will make such information available and whether that data will be by hospital.
States need this information now to make equitable decisions in parsing out the new Title V funds and to ensure that adequate pandemic-related funding is available to safety net providers and others in great need. Importantly, the initial $50 billion sent to hospitals by the federal government was allocated on a formula based on Medicare fee-for-service payments, which leaves out a substantial number of providers.
In a recent letter to the Department of Health and Human Services (HHS), the Medicaid and Children’s Health Insurance Program (CHIP) Payment and Access Commission (MACPAC) identified the shortcomings of using Medicare data to base CARES Act hospital allocations. For example, those reimbursements do not generally account for important state providers, including those providing non-hospital-based mental health and substance use disorder services and home- and community-based care and pediatric services, all of which have been affected by the pandemic and serve significant numbers of each state’s Medicaid enrollees.
States can use or revise this downloadable template to capture how much in federal coronavirus relief funds each hospital has received to date to guide states’ future CARES Act.
This recently-updated NASHP chart details the amounts and required oversight of COVID-19 federal funds allocated to hospitals, providers, and states by the Families First Act, the CARES Act, and HR 266.
The National Academy for State Health Policy (NASHP), in consultation with state officials, has drafted a template that states can use or revise to seek timely information detailing which hospitals are already receiving federal coronavirus relief funds. The template seeks information about hospitals and their affiliates, which can include labs, physician practices, rural health and behavioral health clinics, surgery centers, and nursing homes.
Because the initial funding went directly to hospitals and not health systems, the NASHP template identifies funds received by individual hospitals. The template recognizes that hospitals are under great pressures and as a result is designed for ease of reporting. It is structured to facilitate speedy information gathering to assist governors and state legislators target newer federal relief funds as effectively and as soon as possible.
States, confronted with sharp revenue declines and a likely future of challenging budgets, need to make tough decisions about apportioning the new federal funds at their disposal and about future budget allocations. This template is designed as a “quick hit” to determine which hospitals – and other providers affiliated with them – are getting funding and how much each is receiving now and over the next months as new federal relief fund disbursements continue.
Governors may wish to issue executive orders or require hospitals to report their federal relief funding to date, using such a template, as a condition when requesting Title V funding in order to ensure the state has complete information about current spending before allocating additional dollars. Importantly, this template has a limited application to provide a snapshot of what facility is receiving new federal dollars now.
It does not assess hospitals’ remaining needs or shortfalls, nor how much hospitals presently have in reserves because data about those reserves are included in retrospective hospital-audited financial statements and does not include any hospitals’ expenditures from their reserves during the pandemic. Governors may wish to also ask hospitals to document information about shortfalls and needs prior to allocating new dollars.
NASHP will soon release model hospital transparency legislation and additional tools designed to provide more specific information about the financial condition of a state’s health care system. For now, this template can provide policymakers with a model from which to gain insights into which hospitals and their affiliates are receiving federal pandemic relief funds to help them make decisions about allocating CARES Act Title V funding.
Why States Need to Follow the Federal Money to Hospitals
/in COVID-19 State Action Center Blogs, Featured News Home COVID-19, Health System Costs, Hospital/Health System Oversight, Making the Case for Action /by Trish RileyStates must be sound stewards of taxpayer dollars and the need to do so now is particularly acute as states confront financial landscapes devastated by the pandemic. Federal investments are providing relief to unemployed workers, small businesses, schools and universities, hospitals, and other health care providers. Additional funding is directed to governors to parse out in a manner that further mitigates need. Their challenge is understanding that need in light of direct grants to providers so funds – whether from federal appropriation, state general funds, or other grants – can be put to the most effective use.
To date, much of the federal relief focuses on hospitals, acknowledging that they have risen to the challenge of the COVID-19 pandemic in heroic ways. Frontline staff, even when under-resourced and not fully protected, are risking their own health to protect ours and they deserve our thanks and praise. Congress has recognized hospitals and the challenges they face by appropriating billions of new dollars to support them. Those dollars come in a variety of ways – from a 20 percent bump in Medicare rates, supplies and medicines from the national stockpile, forestalling cuts in Disproportionate Share Hospital program payments and significant direct grants and loans.
This chart details the amounts and required oversight of COVID-19 federal funds allocated to hospitals, providers, and states by the Families First Act, CARES Act, and HR 266.
Demands are great and undoubtedly hospitals will be among those seeking additional financial assistance. Faced with a potential resurgence of disease next fall and winter, hospitals may choose to maintain surge capacity and seek higher reimbursement rates from both private and public payers. Some may report challenges to their sustained viability, an issue of particular concern in rural America. In addition to the federal funds flowing directly to hospitals and providers, each state is receiving, at a minimum, $1.25 billion in Coronavirus Aid, Relief, and Economic Security Act (CARES Act) funding to allocate within their states to address the pandemic.
State policymakers want to know where and how federal funds directly granted to hospitals are being spent and may want to condition additional spending to address policy priorities and protect consumers by, for example, requiring hospitals to bill uninsured and underinsured – who now are generally charged at the highest charges – at more affordable prices. Connecticut Gov. Ned Lamont’s April 5, 2020 executive order* may prove instructive.
States may wish to examine these issues as they deliberate future allocations to hospitals:
Cash flow: Hospitals have delayed elective procedures resulting in lost revenues and furloughed workers. Federal funds can be used to cover those losses, but how will lost revenue be calculated? Will hospitals’ calculus of these lost revenue use high and unjustified chargemaster rates? How will hospitals account for offsets to these losses as they slowly begin to perform elective procedures and bring in revenue?
Reimbursement increases: Medicare, and in some states Medicaid, have increased provider reimbursement for COVID -19 care. How will that be accounted for? Will hospitals roll back rate increases when pandemic hospitalizations flatten and federal funding is exhausted?
Grants and loans: How will a state know where and how these dollars are being spent?
National stockpile: What equipment, supplies, and drugs did hospitals receive from the stockpile? What additional equipment, supplies, and drugs required billing to payers?
Following the money trail matters as states budget for health care coverage for Medicaid, corrections, and public employees, including teachers and university employees and their dependents. It matters as state insurance regulators review rates and work to protect consumers from growing medical costs. And it matters as states face federal audits to ensure that the funds they receive were spent effectively. In the throes of the pandemic and current pressing needs, new money will necessarily be spent quickly – a potential recipe for error. For example, it was recently reported that federal funds went to health systems and included funding for hospitals in a system that had closed.
Upward pressure on hospital reimbursement may translate into insurance premium increases. Insurers have long budgeted reserves to minimize the impact of a pandemic and generally cannot make up for past losses in future rates. But if hospital costs increase, insurers will be compelled to raise rates.
Finally, it is not yet clear when or if the federal government will provide states with comprehensive reports identifying how much funding each hospital and provider group received from the various relief programs – critical information that states need to make decisions about future resource allocations.
In a crisis like this, the federal government’s efforts to get money out fast in order to come to the rescue makes good sense. Protecting hospitals and recognizing the stresses this pandemic brings remains a top priority. It’s not easy to raise questions about hospitals’ spending in the face of a pandemic and their extraordinary work to address it, but state governments need to know that those dollars are spent as efficiently and effectively as possible to serve as many people as possible.
State leaders need to understand the impact the pandemic has had on their local health care systems and how to most responsibly allocate scarce resources. To do so requires state action – through executive orders, licensing standards, or conditions on future funding – to make sure states have the information they need to balance the critically important services of hospitals against competing needs and profoundly reduced state revenues resulting from the pandemic.
The National Academy for State Health Policy is working with a group of state officials to design a reporting template that would be easy for over-burdened hospitals to complete and provide state policymakers with the information they need to make the tough budget calls before them.
*On April 21, 2020, Connecticut Gov. Ned Lamont issued a new executive order rescinding two provisions (2(a) and 2(b) in his April 5 order detailing financial protections for consumers who receive out-of-network care for COVID-19.
CARES Act Funds Help Consumers, but Create Health Coverage Eligibility Challenges for States
/in COVID-19 State Action Center Blogs, Featured News Home CHIP, COVID-19, Eligibility and Enrollment, Health Coverage and Access, State Insurance Marketplaces /by Anita Cardwell and Christina CousartThe Coronavirus Aid, Relief, and Economic Security Act (CARES Act) includes a Pandemic Unemployment Compensation benefit of $600 a week, which supplements traditional unemployment insurance (UI) benefits and provides an important source of additional financial support for individuals who qualify for these payments.
However, as highlighted in NASHP’s April 6, 2020 blog, Federal Guidance Needed to Clarify CARES Act Health Coverage Provisions, because these supplemental payments are counted as income for determining eligibility for marketplace subsidies – but not counted when determining eligibility for Medicaid and the Children’s Health Insurance Program (CHIP) – there could be challenges for both individuals and states.
States are required to use streamlined applications across their health coverage programs and several states (CT, DC, CO, MA, MD, MN, RI, VT, and WA) have developed fully integrated eligibility systems shared by their Medicaid and state marketplaces. States must closely coordinate across these agencies as any changes to application instructions or questions could have ramifications for eligibility determinations between the programs.
The Centers for Medicare & Medicaid Services (CMS) recently released guidance that provides information on ways that states can identify the $600 weekly payments that are to be disregarded when determining Medicaid and CHIP eligibility. While the guidance gives states implementation flexibility, the options offered could be burdensome for both state Medicaid and CHIP agencies and individuals. Some of the issues include:
- Complications in coordinating with state unemployment offices: The guidance suggests that state Medicaid and CHIP agencies can work directly with their state unemployment agencies to determine which individuals will qualify for the additional payments. Yet, implementing a plan to identify these individuals in close coordination with unemployment agencies that are already significantly stressed with handling increased consumer demand is expected to be challenging for states.
- Challenges in implementing system changes: CMS notes that state unemployment agencies have the option to include the supplemental payments within their regular UI payments, or make the supplemental payments separately, which could help identify the $600 supplement for health coverage purposes. Separating the supplemental $600 payment from an individual’s regular UI may create additional work for the unemployment agency at a time when they are least able to accommodate additional work, but it could help both Medicaid and CHIP agencies (and although not referenced in the guidance, the marketplaces) to account for those separated funds in eligibility calculations.
CMS suggests that if state Medicaid and CHIP agencies can identify and document that all UI recipients will receive the additional payments, they will be able to program their eligibility systems to automatically reduce all UI income by $600 per week until the additional payments end on July 31, 2020. While the guidance indicates that states can potentially receive a higher federal match rate for making these system changes, quickly implementing them on a temporary basis will be administratively difficult for states – and it also assumes that states will have the ability to determine that all UI recipients are eligible for the additional payments.
- Relying on individuals to correctly report income could create eligibility determination complications: CMS indicates that states can choose to provide instructions in application forms or in their call center scripts to direct individuals to not report the $600 per week additional payments in their income for Medicaid and CHIP eligibility determinations. States can also ask that individuals self-attest about whether or not their UI income includes the $600 per week of additional payments. But some individuals may still mistakenly report the supplemental payments or not provide the correct information about whether their UI income includes the additional payments, which could negatively affect their Medicaid or CHIP eligibility. It could also hamper the ability of states to make accurate eligibility decisions and could result in state eligibility determination workers having to conduct extensive outreach to clarify applicants’ income information.
An important, remaining issue is that the CMS guidance does not address how states should align Medicaid and CHIP eligibility determinations with the fact the CARES Act requires the $600 supplemental payments to be counted as income when assessing eligibility for marketplace subsidies. This is particularly concerning for low-income consumers who are deemed ineligible for Medicaid and then are deemed eligible for low or zero marketplace subsidies because the inclusion of the supplemental payments has pushed them into an even higher income threshold. Concerns also remain about whether consumers might face penalties for inaccurately reporting income because of confusion caused by the different reporting requirements.
Additional federal guidance from the Center for Consumer Information and Insurance Oversight is needed to ensure that states can make accurate and timely eligibility determinations and that individuals are efficiently enrolled in health coverage.
Federal Guidance Needed to Clarify CARES Act Health Coverage Provisions
/in COVID-19 State Action Center Blogs, Featured News Home Consumer Affordability, COVID-19, Health Coverage and Access, Health System Costs, State Insurance Marketplaces /by Christina Cousart and Anita CardwellAs unemployment rates rapidly rise and more individuals seek new health coverage options, states are preparing for an influx of new Medicaid and insurance marketplace enrollees. While the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provides significant support for a broad array of services, its $600 a week in additional unemployment compensation could pose costly complications for states and individuals.
The CARES Act includes an additional payment of $600 a week for individuals who qualify for Pandemic Unemployment Compensation, which is supplemental to traditional unemployment insurance (UI) benefits, and is available from Jan. 27 through July 31, 2020. The additional payments will be counted as income for determining marketplace subsidy eligibility calculations. However, while unemployment benefits are usually counted when determining modified adjusted gross income (MAGI)-based income for Medicaid eligibility, the CARES Act explicitly indicates that the additional unemployment insurance payments should not be considered as income when determining eligibility for Medicaid.
This discrepancy in income counting between marketplace and Medicaid coverage could impede states’ ability to make accurate, timely MAGI-based eligibility determinations during the time period the additional UI payments are available. States could be held financially responsible for these enrollment errors in future federal program evaluations. More importantly, if individuals are not enrolled in the appropriate program, they could end up paying more than they should for coverage and could even potentially face financial penalties if they later need to pay back any excess subsidies they received for marketplace coverage.
While a future legislative package could correct the inconsistency in the income-counting methodology, Congressional action is not expected soon. State health officials need additional guidance now from federal officials on these issues to avoid costly and complicated changes to eligibility systems and to ensure that individuals receive appropriate, timely health coverage during the current COVID-19 crisis.
The National Academy for State Health Policy (NASHP) and state officials have identified the following issues that will be important for the Centers for Medicare & Medicaid Services (CMS) or the Internal Revenue Service (IRS) to address in their future guidance to assist states in operationalizing this temporary change.
- Provide guidance for eligibility determination systems and processes: Will CMS provide guidance to states about how to update their eligibility determination systems if needed, and what modifications if any will be made to the federally facilitated marketplace to account for these changes?
- Model an approach based on existing processes for other income-counting differences: Currently, in MAGI-based eligibility determinations, some income such as educational awards or scholarships and certain payments that American Indian/Alaska Native individuals receive are not counted in Medicaid and CHIP eligibility determinations. However, for calculating marketplace subsidy eligibility, this income is counted if it is taxable. Should the $600 UI bonus be treated in the same way that states handle these current income counting differences?
- Provide states with sample application language: Will CMS provide additional guidance to states about how to update their applications, such as sample language, to ensure that consumers are properly reporting this supplemental income?
- Clarify how the UI payment increase will apply in certain states and circumstances: In states that have not implemented the Affordable Care Act’s Medicaid expansion, existing differences in eligibility rules between Medicaid and marketplace coverage can result in instances where an individual may initially appear to be ineligible for either Medicaid or marketplace subsidies. In these cases, states use what is referred to as the “gap-filling rule,” which involves following marketplace subsidy eligibility rules to determine an individual’s financial eligibility for Medicaid. How will the $600 UI increase be applied in eligibility determinations that trigger usage of the gap-filling rule?
- Allow for tax liability exemptions if consumers miscalculate income: Some state officials identified a particularly important issue to ensure that consumers do not face financial penalties if they mistakenly miscalculate their income when applying for coverage. For example, if individuals are not aware that they will have access to retroactive unemployment payments and, as a result, misreport their income, will the federal government allow for exemptions from any tax liability that may result from incorrect income reporting?
- Provide federal-level consumer education materials: Will CMS take any actions to help educate consumers about how unemployment benefits available through the CARES Act could impact eligibility for Medicaid or marketplace coverage?
While a future legislative package could correct the inconsistency in the income-counting methodology, Congressional action is not expected soon. State health officials need additional guidance now from federal officials on these issues to avoid costly and complicated changes to eligibility systems and to ensure that individuals receive appropriate, timely health coverage during the current COVID-19 crisis.
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