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To The Point

Broadening Medicare’s Accelerated and Advance Payment Program to Save Health Care Providers That Serve Our Most Vulnerable Populations

vulnerable senior waiting for the doctor

In the United States, we finance health care with insurance coverage. People with insurance coverage seek needed care, and in caring for them, providers generate operating revenue. What happens when people stop using health care, as in our current situation with COVID-19? The pandemic has created a massive health system paradox. On one hand, COVID-19 has had an explosive impact on the need for health care; on the other, out of fear of disease spread and system stress, patients have stopped seeking care and providers nationwide have delayed or cancelled other necessary health services and visits. This has had a devastating impact on a wide range of health care needs from childhood immunizations to cancer treatment, and on providers ranging from community health centers to the nation’s leading hospitals. Of particular concern is the impact on primary care, which accounted for more than 54 percent of all patient care visits in 2016. Primary care plays a foundational role in the health care system. The risk of its collapse has broader health and health care implications, not only for preventive care but also for management of serious and chronic health conditions in order to avert preventable hospitalization and death.

We have faced this problem on a small scale before. National disasters like Hurricane Katrina have devastated health care in entire regions. In 1986 Congress established a special Medicare “accelerated payment” program for Medicare Part A (i.e., hospital) providers. The program was designed to use health insurance (in this case, Medicare) to rapidly move funding to providers facing severe economic threat because of large-scale interruption. The program was then extended to include an “advance payment” program to Part B (i.e., doctors and other outpatient care) providers. Together the “accelerated and advance payment” program created a model for using health insurance to quickly stabilize the health care system and help it recover. Through advance and accelerated payments, Medicare can replace lost provider revenue. Payments may then be forgiven in part or repaid over time as health care use returns to normal levels. Medicare advance payments can be made over a three-to-six-month period before care is delivered, improving critical cash flow and enabling providers to remain in operation.

When Congress established the Medicare accelerated payment program, it did not take steps to allow state Medicaid programs to respond in a similar manner, although on occasion the federal government has allowed states to use this approach (known as retainer payments) via special demonstration authority. But the Medicaid statute contains no state option to institute retainer payments when the federal government declares a public health disaster, even though the current crisis underscores how much we rely on states to take necessary actions to keep the health care system afloat.

The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, adds the Medicare accelerated and advance payment program to the actions the Secretary for Health and Human Services can take during a public health emergency declared under Section 1135 of the Social Security Act. Again, however, the law leaves Medicaid unaddressed, although the Centers for Medicare and Medicaid Services is allowing states to make interim payments that would have to be reconciled within a short time frame against future care, with no possibility of forgiveness. But the vast uncertainty of the current crisis makes short repayment time frames unworkable.

Because of Medicaid’s unique role in serving vulnerable populations, a comprehensive retainer payment policy is essential. Health care providers — those serving underserved rural communities and urban areas devastated by the pandemic — rely heavily on Medicaid revenue. These providers include community health centers, rural health clinics, primary care medical and dental practices, home health agencies, behavioral health clinics, and small community hospitals.

The National Association of Medicaid Directors (NAMD) asked the Trump administration on April 6 for permission to use a retainer payment system; the answer appears to be no. NAMD made a similar request to Congress. In its letter to the Office of Management and Budget, NAMD stressed the threat to its most important Medicaid providers and concerns that the small business loan program simply would not reach providers quickly enough. (That program now appears to have been exhausted.) For this reason NAMD has recommended a series of guardrails to ensure that the program is: appropriately targeted to providers for which Medicaid is “a predominant payer,” subject to future audit, contingent on maintenance of staffing, and managed in ways that avoid duplication of payment.

Medicaid retainer payment is a critical tool in allowing states to save the hospitals, clinics, pharmacies, home health agencies, nursing homes, and other providers on which more than 70 million beneficiaries depend. The most immediately visible health care crisis has been keeping hospital emergency care stable. But without a Medicaid retainer payment program, the COVID-19 pandemic could cause the collapse of the health care system that serves America’s most vulnerable patients.

Publication Details

Publication Date: May 13, 2020
Citation:

Sara Rosenbaum and Morgan Handley, "Broadening Medicare’s Accelerated and Advance Payment Program to Save Health Care Providers That Serve Our Most Vulnerable Populations," To the Point (blog), Commonwealth Fund, May 13, 2020. https://doi.org/10.26099/a7xx-n898

Experts

Harold and Jane Hirsh Professor of Health Law and Policy, Milken Institute School of Public Health at the George Washington University
Senior Research Associate, Milken Institute School of Public Health, George Washington University