The 20% Medicare cut coming for hospitals

As the U.S. prepares to end the COVID-19 public health emergency, hospitals are facing a major cut in Medicare payments used to treat patients diagnosed with the disease.

Since January 2020, hospitals nationwide have received a 20 percent increase in the Medicare payment rate through the hospital inpatient prospective payment system to treat COVID-19 patients — that policy ends May 11.

The sunsetting of the three-year policy is a key concern for the AHA because of its financial implication for hospitals already struggling with increased labor costs and inflation. 

From January 2020 to November 2021, payments for the 1 million traditional Medicare patients hospitalized with COVID-19 totaled $23.4 billion, or more than $24,000 per patient, according to lobbying and law firm Brownstein.

The end of the policy also has the potential to increase medical costs for patients hospitalized with COVID-19. If patients must pay higher costs for COVID-19-related services, they may be less inclined to get tested or even seek treatment.

"It means there will be less testing in this country, and likely less treatment because not everyone can afford it," Jose Figueroa, MD, assistant professor of health policy and management at the Harvard T.H. Chan School of Public Health, told Time Jan. 31. "Will this change the trajectory of the pandemic? It's something we are going to have to watch."

As of Feb. 8, the nation's seven-day COVID-19 case average was 40,404, a 1 percent decrease from the previous week's average. The rate of decrease has slowed in the last two weeks — the CDC's last weekly report published Feb. 3 reported a 6.7 percent drop in cases.

The seven-day hospitalization average for Feb. 1-7 was 3,665, a 6.2 percent decrease from the previous week's average and down from an 8.4 percent drop in cases a week prior.

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