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Blog | Coronavirus

U.S. hospitals could face operating cost, revenue and uncompensated care issues due to the new coronavirus outbreak

Blog | Coronavirus

U.S. hospitals could face operating cost, revenue and uncompensated care issues due to the new coronavirus outbreak

  • The structure of the U.S. health system poses challenges for the nation’s coronavirus response plan, which relies on testing to identify cases, treatment of infected individuals and strategies to minimize spread, such as encouraging people who are sick to stay home, according to The Wall Street Journal.
  • About 33.6 million U.S. workers have no access to paid sick leave, according to the Labor Department, according to the Journal.
  • HFMA’s Chad Mulvany says it’s likely hospitals will experience increased operating costs (related to staffing, supplies, infection control) and uncompensated care costs and potentially decreased revenue (as a result of canceled elective procedures in hard hit areas) as a result of the outbreak.

The Wall Street Journal is reporting, “The structure of the U.S. health system poses challenges for the nation’s coronavirus response plan, which relies on testing to identify cases, treatment of infected individuals and strategies to minimize spread, such as encouraging people who are sick to stay home. About 33.6 million U.S. workers have no access to paid sick leave, according to the Labor Department. For example, about half of service workers, who often have direct contact with the public, lack paid sick leave, and immigrants are facing new regulatory barriers to getting health care. Treasury Secretary Steven Mnuchin said [March 3] that officials have begun to consider measures to support workers who may not have paid sick leave. ‘We’re looking at all different types of options on the table to address all these issues, he said. “As we come back later with recommendations, we will work with Congress.’”

Takeaway

Given the CDC believes community spread of the Coronavirus is unavoidable, it’s likely hospitals will experience increased operating costs (related to staffing, supplies, infection control) and uncompensated care costs, and potentially decreased revenue (as a result of canceled elective procedures in hard hit areas) as a result of the outbreak.

The recently passed supplemental appropriations bill has funding in it that states can flow to hospitals to help offset costs related to preparations. At the Federal level, the administration has suggested it may invoke a little used disaster funding tool — the National Disaster Medical System — that pays providers 110% of Medicare rates to cover the costs of uninsured patients. The NDMS pays claims on a first-come, first-paid basis until funding runs out.

Additionally, (as of March 6 at 1:00 ET) New York, California and Washington State have waived cost sharing for coronavirus testing and associated office visits for beneficiaries covered under its Medicaid program and individuals covered under health insurance plans subject to state regulation (e.g. non-ERISA plans).

Despite the additional federal funding and the moves by some states, hospitals should anticipate increased uncompensated care.

The first place to expect the increase is relatively obvious as it will result from COVID-19-related utilization (e.g. ED visits and hospitalizations) from individuals with HDHPs. While there is some signaling by America’s Health Insurance Plans (AHIP, the health plan trade association) that its members are considering potentially waiving co-pays for treatment, what that looks like will vary by market and plan absent legislative or regulatory intervention at the state and federal level.

The second place is less obvious — from individuals who have coverage but are working multiple part-time jobs to make ends meet and have outstanding balances from prior services. If we see businesses in some areas close for a time and these individuals are unable to work, they will likely be unable to make payments on their outstanding accounts.

Given the scrutiny hospitals and health systems have been under recently for account resolution practices, which will continue and may increase in the wake of COVID-19, providers would be well served to review their financial assistance and accounts resolution policies and practices to ensure that everyone who is eligible for financial assistance is receiving it. Beyond it being the right thing to do, I wouldn’t be surprised if as soon as the outbreak subsides, a reporter from a major national news outlet starts looking for patients who are now facing significant healthcare bills and were sent to collections as a result of either having contracted the coronavirus or were unable to work for an extended period of time due to the coronavirus. 

About the Author

Chad Mulvany, FHFMA,

is director, healthcare finance policy, strategy and development, HFMA’s Washington, D.C., office.

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