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The CARES Act Economic Stimulus Package and Its Effect on Medicare

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The economic stimulus checks being issued by the federal government in response to the novel coronavirus (COVID-19) outbreak impact the pocketbooks of millions of Americans. But what will it mean for Medicare?

The Coronavirus Aid, Relief and Economic Security (CARES) Act earmarked billions of dollars for hospitals and other providers. Here are three specific ways the bill will affect Medicare. 

Increased rates of reimbursement for hospitalizations

The CARES Act grants a 20 percent increase in reimbursement to hospitals for inpatient stays resulting from COVID-19 infection. This will help boost hospitals’ financial resources as they treat patients infected with COVID-19.

Suspension of the Medicare sequester

The annual Medicare sequester is a result of the Budget Control Act of 2011, which implemented automatic, across-the-board reductions in federal spending. The sequester is an annual 2% cut in Medicare payments that hospitals, doctors and other health care providers receive. 

As a result of the COVID-19 outbreak, the CARES Act has suspended the annual sequester through the end of 2020, giving providers greater budgetary resources to fight the outbreak without financial policy restrictions.

Expansion of the Medicare Hospital Accelerated Payment Program

Advanced and accelerated Medicare payments provide emergency funding to hospitals based on disruptions in Medicare claims submission or claims processing, such as during a natural disaster or a situation like the current COVID-19 outbreak.

The Hospital Accelerated Payment Program expedites payments to hospitals during these times of increased need.

The CARES Act also expanded the program to all Medicare providers in the U.S. during the COVID-19 pandemic, to include children’s hospitals, critical care hospitals and cancer hospitals.

The accelerated payments can also be requested by doctors, durable medical equipment suppliers and other Medicare providers.