Hospitals Ask Medicare for Loan Forgiveness During COVID Crisis

• by Christian Worstell
• August 24, 2020

Published August 12, 2020

Follow our Medicare Coronavirus News page for related information on coronavirus (COVID-19) and its impact on Medicare beneficiaries.

The federal government doled out Medicare loans totaling $100 billion to U.S. hospitals this spring to help combat financial strain caused by the COVID-19 pandemic. 

With the loans set to be repaid beginning in August, those hospitals are now asking for loan forgiveness, which would release them from the expectation to repay their loan amount.

These Medicare hospital loans were part of the $2.5 trillion in coronavirus relief funds disbursed by Congress to governments, businesses, workers, hospitals, schools and individuals since March 2020.

Medicare Accelerated and Advance Payment Program expansion

The Centers for Medicare & Medicaid Services (CMS) provided the $100 billion to health care providers by expanding the Medicare Accelerated and Advance Payment Program (AAP Programs).

Under the original conditions of the extended funding, new Medicare payments to a hospital would be withheld beginning Aug. 1 until the loans are paid back. If the loans aren’t fully repaid within a year, providers would face a hefty 10% interest charge on top of the principal. 

The American Hospital Association claims that without additional assistance, half of all U.S. hospitals will be operating at a loss for the remainder of 2020, with a median operating margin of -7%.¹

Congressional Republicans and Democrats negotiate further coronavirus relief for hospitals

Republicans and Democrats in Congress have expressed willingness to restructure the Medicare hospital loans but not to forgive the loans outright.

• House Democrats have proposed granting hospitals more time to pay back the loans with an interest rate of 1%.
  
  
• Republicans in Congress have proposed pushing back the date to begin paying back the loans to January and extending the overall time to pay them back. 

Hospitals previously received $100 billion in grants that do not have to be repaid under the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in March. Republicans have proposed an additional $25 billion in grants for hospitals. 

By the end of July, the number of hospitalizations in the U.S. due to COVID-19 had reached nearly 300,000, averaging more than 2,000 new hospitalizations per day since the beginning of April.

Learn more about Medicare news and how the COVID-19 pandemic affects beneficiaries.

¹ KaufmanHall. (July 2020). The Effect of COVID-19 on Hospital Financial Health. Retrieved from https://www.aha.org/system/files/media/file/2020/07/KH-COVID-Hospital-Financial-Health_FINAL.pdf.

About the author

Christian Worstell is a senior Medicare and health insurance writer with MedicareAdvantage.com. He is also a licensed health insurance agent. Christian is well-known in the insurance industry for the thousands of educational articles he’s written, helping Americans better understand their health insurance and Medicare coverage.

Christian’s work as a Medicare expert has appeared in several top-tier and trade news outlets including Forbes, MarketWatch, WebMD and Yahoo! Finance.

Christian has written hundreds of articles for MedicareAvantage.com that teach Medicare beneficiaries the best practices for navigating Medicare. His articles are read by thousands of older Americans each month. By better understanding their health care coverage, readers may hopefully learn how to limit their out-of-pocket Medicare spending and access quality medical care.

Christian’s passion for his role stems from his desire to make a difference in the senior community. He strongly believes that the more beneficiaries know about their Medicare coverage, the better their overall health and wellness is as a result.

A current resident of Raleigh, Christian is a graduate of Shippensburg University with a bachelor’s degree in journalism.

If you’re a member of the media looking to connect with Christian, please don’t hesitate to email our public relations team at Mike@tzhealthmedia.com.

 

 

​

Read less