Hospital Reimbursement for Uninsured COVID-19 Cases May Total $42B

April 08, 2020 - Hospital reimbursement for the treatment of uninsured COVID-19 patients could account for more than 40 percent of the $100 billion earmarked for hospitals in the latest coronavirus stimulus package, according to estimates from the Kaiser Family Foundation.

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In a new issue brief, researchers from the Kaiser Family Foundation estimated total hospital reimbursement to range from $13.9 billion to $41.8 billion depending on the rate of and severity of COVID-19 hospitalizations among the uninsured population.

That reimbursement range is based on Medicare reimbursement for hospitals admissions for similar conditions, including respiratory infections and inflammations with major comorbidities or complications, which averaged $13,297 in reimbursements, and, in more severe cases, respiratory system diagnosis with ventilator support for greater than 96 hours, which averaged $40,218.

Researchers also estimated that up to 2 million uninsured individuals could require hospitalization for COVID-19. Although, that number could be as low as 670,000 hospitalizations.

READ MORE: Hospitals Furloughing Staff, Altering Physician Pay Due to COVID-19

The estimates also accounted for the 20 percent increase in Medicare reimbursements for COVID-19 hospitalizations. The add-on was authorized by the coronavirus stimulus package signed into law on March 27.

However, total hospital reimbursement for the treatment of uninsured COVID-19 patients would come from the billions in dollars in emergency spending for hospitals included in the coronavirus stimulus package.

Earlier this week, HHS Secretary Alex Azar announced the department’s intention to use emergency funding from the Coronavirus Aid, Relief and Economic Security (CARES) Act to reimburse hospitals \for treating uninsured COVID-19 patients. Hospitals would get the Medicare rate for treatment.

The announcement was met with criticism from hospitals, including the American Hospital Association (AHA) which argued the emergency funding for healthcare providers from the CARES Act should not go toward providing coverage for treatment of the uninsured.

“The emergency relief fund in the CARES Act was intended to provide hospitals with an infusion of emergency relief as providers incur substantial expenses in preparing and dealing with fighting this battle against COVID-19,” stated Rick Pollack, the AHA’s president and CEO.

READ MORE: How Much Will the COVID-19 Pandemic Cost Hospitals?

“At the same time, given that virtually all regular operations have come to a halt--such as elective or scheduled procedures--there are limited revenues coming in, causing major cash flow concerns that threaten the viability of hospitals. This is also creating a historic financial crisis, threatening the ability to keep our doors open for both the insured and uninsured alike.”

HHS intends for the new hospital reimbursement policy to help hospitals cover the costs of COVID-19 treatment, but whether the payments will be enough to cover hospitals remains unclear.

“Given the uncertainty of our estimates of the total funding that will be needed to reimburse hospitals, and the fact that infections may come in several waves over the next year, it is unclear whether the new fund will be able to cover the costs of the uninsured in addition to other needs, such as the purchase of medical supplies and the construction of temporary facilities,” said the researchers from Kaiser Family Foundation.

The policy could account for an even greater portion of the $100 billion in emergency funding for hospitals, stated the researchers who considered their estimates to be conservative. More of the emergency funding may need to go toward hospital reimbursement for uninsured COVID-10 patient care if, for example, high wage areas like New York experience a larger surge of uninsured COVID-19 patients.

Hospitals in states that chose not to expand Medicaid could also receive a larger share of the $100 billion fund if HHS moves forward with using the money to pay hospitals for treating the uninsured population for COVID-19. Uninsured COVID-19 patients in these states are less likely to be eligible for Medicaid coverage for their hospital stay.

READ MORE: Hospitals to Lose $1K Per COVID-19 Case Despite Medicare Rate Bump

“This would leave less funding for hospitals in states with lower uninsured rates that did expand Medicaid and, in some cases, also instituted new open enrollment periods in state-based exchanges,” researchers stated.

The policy also leaves questions open for the insured population and the hospitals treating them. Researchers were still unclear as to whether the government will still pay for treatment if patients ultimately tested negative for COVID-19 or if uninsured COVID-19 patients would still responsible for treatment from hospital-based physicians.

A previous analysis from Kaiser Family Foundation from that non-hospital charges for COVID-19 hospitalizations among the privately insured made up about 10 percent of the total bill and averaged several thousands of dollars or more for patients who required a ventilator.

Uninsured patients would also still receive large medical bills for seeking COVID-19 care outside of the hospital even if those outpatient care settings are lower cost.

“Ultimately, while this policy will help uninsured patients and discourage them from delaying care if they develop COVID-19, it is not a substitution for comprehensive health insurance,” researchers stated.

The AHA has also urged policymakers to consider more coverage-specific options. The association recently advised opening a special enrollment period for the Affordable Care Act’s marketplaces, expanding Medicaid, and using the National Disaster Medical System or other federal emergency programs to cover care.

Member hospitals and health systems also back proposals to establish a separate fund to specifically address the costs of treatment for the uninsured population.

HHS has yet to release more details on how it plans to distribute emergency funds from the CARES Act. But the head of the department said on Friday that he plans to distribute the money “in a way that is fast, fair, simple, and transparent.”