Kentucky’s hospitals and health care community has faced tremendous challenges throughout the Covid-19 pandemic. Many are now dealing with financial losses brought on by increased costs to prepare for fighting the virus as well as the elimination of most non-essential services during the height of the pandemic.
This entire situation has had an outsized impact on our rural hospitals, many of which already faced dwindling resources and increased needs. Kentucky hospitals need and deserve our support more than ever. That is why it is crucial for the Senate to act—and why we need Senator Mitch McConnell to lead the charge.
In the early stages of the pandemic, Congress and the Administration expanded the Medicare Accelerated and Advance Payment Programs (MAAPP). This helped give struggling hospitals access to loans based on three to six months of their standard Medicare fee-for-service payments. Now, however, overly rigid loan repayment terms threaten to undermine the good these loans did.
For example, once a hospital begins paying back their loans, they will not receive any Medicare payments until the loan is paid back in full. That is like cutting roughly 25 percent of an average hospital’s total annual payments. For rural providers, it is even more since patients in rural communities tend to be older, sicker, and less affluent than those in urban and suburban areas. To ease this burden, the amount of each Medicare payment withheld from hospitals during the repayment period should be reduced to no more than 25 percent.
The deadlines to begin and finish repayment must also be extended to give hospitals more flexibility, particularly since many are still treating Covid-19 patients while balancing other community needs. Currently, those deadlines for hospitals are 120 days to begin repayment and 12 months to complete it. They should be extended to 12 months and 36 months at a minimum.
Under current guidelines, hospitals will get hit with a roughly 10 percent interest rate on their loans if they fail to pay them back in the currently inadequate time frame. This is much higher than what Congress is requiring for many other industries that received funds through programs like the Paycheck Protection Program. Waiving this interest or reducing it to 1 percent would be much more reasonable.
Beyond the current health care crisis, Kentucky’s hospitals are a critical partner in the fight against cancer and other chronic, life-threatening diseases. That is why it is important for Kentucky hospitals to remain financially strong and secure, so they can continue fighting the pandemic as well as the range of other diseases Kentuckians rely on them to treat. The U.S. House recently took the first step by passing a government funding bill that included updates to MAAPP’s terms. It’s time for the Senate to act. Senator McConnell should help update MAAPP loan repayment terms along the lines of the House-passed legislation to ensure our hospitals and providers can continue to provide Kentuckians with the care they need.
Caroline Johnson is a Kentucky cancer advocate.