8/26/2021 Weekly Newsletter – Funding for Health Care Providers During the Pandemic: An Update

A purple background with the letter m in white.

What is Provider Relief Fund? 

  • Congress, states and the Administration adopted a number of policies to ease financial pressure on hospitals and other health care providers.
  • Intended to help alleviate the fiscal impact of revenue loss due to patients delaying non-urgent care, coupled with new costs associated with COVID-19

What is happening with Healthcare Spend? 

  • Health care spending plummeted early in the pandemic
  • Overall health spending was up 3.4% in the fourth quarter of 2020, as compared to 2019.
  • Spending on physician office visits was down 3.8% for the year
  • Hospital spending was relatively stable (0.1% higher than 2019)
  • Laboratory spending increased 9.1%

What is impact on Physicians?

  • Impacts vary based on type of service
  • Volume of total primary care visits (including telehealth) and elective services remained close to or just below the 2019 levels.
  • Skilled nursing facility volume remains below pre-pandemic levels.

What is sequestration

  • Automatic 2% reduction in Medicare payments required under budget rules. Now, more than one and a half years into the pandemic, Congress has provided additional financial protection by continuing to waive the automatic 2% reduction.
  • A separate Medicare sequestration of 4% would be triggered under statutory PAYGO at the end of the year, because the recently enacted American Rescue Plan (ARP) is projected to increase the deficit by $1.9 trillion.

What is the impact to Medicare/Medicaid?

  • Increase in Medicare COVID-19 inpatient reimbursement – Medicare has increased all inpatient reimbursement for COVID-19 patients by 20% during the public health emergency (PHE), which has recently been renewed through October 17, 2021.
  • Reimbursement for COVID-19 vaccination administration – Medicare increased its reimbursement for COVID-19 vaccine administration to $40 per dose
  • Medicaid options to support providers – As of July 1, 2021, 41 states increased provider payment rates for a range of provider types via Disaster-Relief State Plan Amendments (SPAs).
  • Additional funds in the ARP – The American Rescue Plan (ARP) includes $8.5 billion for rural health care providers to help cover lost revenue and costs associated with COVID-19. 

Information sourced via – Funding for Health Care Providers During the Pandemic: An Update | KFF