Providers brace for financial hits as COVID-19 uninsured fund ends

Safety-net hospitals, federally qualified health centers, and laboratories may have to cut staff and hours and limit patient access if Congress and President Joe Biden cannot come to an agreement over further COVID-19 pandemic relief.

The COVID-19 Uninsured Program is an early casualty of the budget impasse between lawmakers and the White House, which initially requested $22.5 billion for an ongoing COVID-19 response.

Laws enacted by Biden and by President Donald Trump authorized this program, which began in 2020, to ensure providers be paid for administering COVID-19 care to U.S. residents without health coverage, who number an estimated 28 million.

The federal government has paid out more than $17 billion to providers for testing, treating, and vaccinating the uninsured. The Health Resources and Services Administration ran out of money for the program on March 22 and stopped reimbursing providers for COVID-19 testing and treatment. Starting Tuesday, HRSA will no longer pay providers for vaccinating uninsured individuals.

“If we’re put in a position of having to chase payment that might not materialize, then it becomes more a question of, ‘As a lab, do I continue to offer this service?'” said Tom Sparkman, senior vice president of government affairs and policy at the American Clinical Laboratory Association.

Last year, the trade association’s members performed 8 million tests on uninsured patients, Sparkman said. During the omicron wave in January and February, these labs performed 1 million tests on patients who lacked coverage.

Without reimbursement, Curative will no longer be able to offer free testing in some of the 18 states where it operates, a spokesperson wrote in an email.

The company debuted in early 2020 with a focus on sepsis patients but pivoted to COVID-19 testing when the pandemic started. Curative did not respond to interview requests about the policy’s financial impact or where it will no longer provide no-cost testing to uninsured people.

Quest Diagnostics will begin charging uninsured individuals $100 per test, the company announced. In 2021, COVID-19 testing accounted for one-fifth, or $2.8 billion, of the company’s $10.8 billion in revenue.

Hospitals have the financial resources to weather the uninsured fund ending, but unpaid bills nevertheless will be a burden, said Rick Kes, a healthcare partner at RSM. Unlike retail clinics and labs that can refuse patients, hospital emergency departments must provide care to people regardless of their ability to pay under longstanding federal law, he said.

“When somebody who has COVID comes in, and they’ve had like six days in the ICU, that’s going to be way more costly than providing a test in a retail clinic,” Kes said. The effect on margins will likely be minor, but health systems will face more bad debt and have to write off more charity care, he said.

Because safety net hospitals care for the largest number of uninsured patients, they will be the most affected, said Beth Feldpush, senior vice president of policy and advocacy at America’s Essential Hospitals.

These facilities already shoulder a disproportionate amount of uncompensated care relative to their sizes and operating margins. In 2019, safety net hospitals provided $6.9 billion in uncompensated services, 16.5% of all care nationwide, according to the organization’s most recent data.

“They’re not going to cherry-pick certain services, but it is going to be a financial hit,” Feldpush said. “They may need to look at where they can save money. Maybe you have to pull back on weekend hours, or maybe you’re not open as late into the evening for shift workers to come in.”

Hospitals are still trying to figure out what the end of this program will mean for them amid other financial pressures, such as higher wages and supply costs, Feldpush said.

Safety net hospitals also are aware of two looming federal policy changes that could cause the uninsured rate to spike and their uncompensated care costs to grow. Whenever Biden decides not to renew the public health emergency declaration, states will resume the Medicaid redeterminations process, which will shrink the rolls.

And the enhanced subsidies that led to record enrollment in health insurance exchange coverage are due to expire at the end of the year.

“It is going to be a burden,” Feldpush said. “It’s going to be layered on top of other existing pressures the pandemic has put on hospital finances.”

Safety net hospitals, federally qualified health centers, and community clinics, which care for a predominately low-income population, endured financial difficulties early in the pandemic before the federal government started offering support through programs such as the uninsured fund, said Isabel Becerra, CEO of the Coalition of Orange County Community Health Centers in California.

The uninsured fund mitigated that problem, so its expiration will exacerbate existing financial pressures at community clinics since at least 40% of their patients lack insurance, Becerra said. “Nobody will be turned away,” she said. “But it may be a while before you get in.”

Community health centers will have to shorten their hours of operation and reduce staffing if the uninsured fund isn’t reinstated, Becerra said.

Patients turned away by others will turn to safety net providers, leading to long waits for testing and vaccinations, she said. This, in turn, will discourage people from vulnerable populations from seeking tests and vaccines.

In addition to the health risks that would pose, it also would weaken public health data collection because there would be fewer test results to analyze, she said.

“It’s not only a huge fiscal impact across the country for health centers,” Becerra said. “It’s as if we didn’t learn anything from the past two years, and it’s as if we believe that there will be no further variants and it’s as if we now believe that we are all 100% vaccinated.”

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