As HHS Inches Closer to Medicaid Relief, CARES Act Continues to Cause Nursing Home Confusion

When Congress set aside $175 billion in aid for health care facilities affected by the COVID-19 pandemic, the federal agencies in charge of doling out those dollars elected to prioritize speed over structure, sending cash influxes directly to providers with little advance warning or fanfare.

On one level, this strategy makes sense. In the midst of a world-historic crisis, operators struggling with ballooning expenses and unprecedented care demands can’t wait weeks for relief — or dedicate precious staff hours to navigating a dense web of bureaucracy.

But a “shoot first, ask questions later” strategy to distributing health care relief has predictably raised many questions after the first shots, some of which operators and advocates still can’t answer weeks after the first rounds of Medicare funding began to hit providers’ bank accounts.

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Those dollars thus far consist solely of relief based on Medicare reimbursements. The Department of Health and Human Services (HHS) has released a total of $50 billion, across two separate “tranches,” to Medicare providers, with the exact amounts tied to previous payment levels.

“They got those dollars out pretty quickly — and it was nice in one sense, that you didn’t have to submit an application and wait four weeks,” Nicole Fallon, vice president of health policy and integrated services at provider organization LeadingAge, told SNN. “You can’t bemoan that at all. We’re all building the airplane while we’re trying to fly.”

The first batch, sent out in mid-April, was tied to 2019 reimbursement levels, while the second tranche was based on net patient revenue recorded on 2018 cost reports, according to Fallon.

The decision to tie the relief waves to different benchmarks has already caused concerns for operators with lower total Medicare revenue in 2018 as opposed to 2019.

Speaking on her company’s first quarter earnings call on Tuesday morning, Omega Healthcare Investors (NYSE: OHI) senior vice president of operations Megan Krull noted that the first Medicare tranche “was ultimately netted against the second tranche,” resulting in about $150,000 to $175,000 per building in the real estate investment trust’s (REIT) portfolio.

Mark Parkinson, president and CEO of the American Health Care Association, raised the specter of potential clawbacks in the second Medicare relief round during a phone press conference last week.

“If a provider was heavily focused and dependent on Medicare funding, and therefore received a pretty good amount of money in the first round of payments two weeks ago, it’s entirely possible that they will have a negative payment in the payment that went out last Friday — and there are a number of skilled nursing providers that are in this situation,” Parkinson said. “We don’t know if HHS is actually going to claw back the money from the first payment or not. I think they’re considering that, and haven’t decided yet.”

As of Monday, Fallon had not heard of any providers losing money in the second round of Medicare relief, or any clawbacks of funds in general. But the rumblings of “negative payments” reflect just one of the potential pitfalls that operators face when confronting their relief money.

Contrary to a public statement from Centers for Medicare & Medicaid Services (CMS) administrator Seema Verma, the funding comes with a variety of conditions to which providers must agree; if leadership declines to accept the terms, the organization is then required to return the money.

But so far, HHS and CMS have not explained how operators should logistically send that cash back if they cannot accept the terms, Fallon said.

She knew of one anecdotal case in which an ownership group received relief funds, based on their 2019 reimbursements, for a facility they had sold and no longer controlled.

“They’re trying to figure out how to give it back, the previous owners,” Fallon said.

What’s more, the second round of Medicare funding came with an additional wrinkle: Operators must provide the federal government with a detailed list of lost revenues related to COVID-19 in March and April.

But for providers that offer a range of services — such as a parent organization with a nursing facility, home health agency, and senior living property — it’s unclear whether non-Medicare expenses count toward that eligible total.

“They want to report the right thing, but there’s been no clarity beyond that it’s March and April lost revenues,” Fallon said. “There’s no clarity beyond that, and there’s no clarity on which expenses will be counted.”

A lack of Medicaid relief also continues to frustrate operators; the program covers more than 60% of the nation’s nursing home residents, and generally accounts for more than half of any given facility’s revenues.

The federal government has indicated that future distributions from the $175 billion in available CARES Act funding will go to Medicaid providers, but so far, there has been no firm timeline for when those operators can expect aid — and how much cash will be set aside.

“With Medicaid, HHS has not said anything about the specific amount going out the door to those providers at this point,” Fallon said Monday.

HHS late last week asked states to compile information about their Medicaid rates for 2018 and 2019, our sister site Home Health Care News reported Tuesday. The request could indicate movement toward a formal Medicaid relief round, though some leaders pointed out the difficulty in meeting the edict: HHS issued the call for Medicaid data on Friday, May 1, and gave providers a Tuesday deadline to submit the information.

Parkinson this week sent a letter to HHS secretary Alex Azar and Federal Emergency Management Agency (FEMA) administrator Peter Gaynor, asking the leaders for $10 billion in relief specifically for nursing homes.

Under Parkinson’s proposed relief plan, operators would receive an initial payment based on bed count, with additional funding for properties with positive COVID-19 cases; facilities with 50 licensed beds or fewer would see base payments of $50,000, going up to $200,000 for properties with more than 200 beds.

Based on a $10 billion allocation, Parkinson estimated that the funds could tide operators over for four months.

“Of the 15,000 SNFs in the U.S., the average initial payment would be around $120,000 for a total of $1.8 billion,” he wrote. “Of those, roughly 5,000 have COVID-19 positive residents today, so the cost of the additional payment would be $600 million.”

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