- Fitch Ratings said for-profit providers are unlikely to experience a "significant burden" on their financial profiles as they begin to repay loans issued through Medicare to help them weather the onset of the pandemic.
- However, that's assuming there is a strong rebound in elective procedures during the second half of the year, which may need to be reconsidered if the disruption lasts longer than anticipated, the ratings agency said Wednesday.
- Fitch, which rates HCA, Tenet and UHS, said based on the trajectory of the current recovery it expects operators "to maintain liquidity profiles consistent with current rating levels."
CMS is soon set to recoup the loans it made to providers to help keep them afloat through the Coronavirus Aid, Relief, and Economic Security Act. The repayments, which begin during the third quarter, will come in the form of providers forgoing Medicare fee-for-service payments until CMS is repaid in full.
However, the hospital lobby is pleading with Congress to change the terms of the loan and extend it out, according to a recent statement from the Federation of American Hospitals.
"The timeline and terms of repayment have essentially just delayed the crisis for hospitals as the COVID case count stays steady or even increases in many areas," FAH said in a June 16 blog post.
The U.S. continues to hit record high case counts of COVID-19 as the pandemic surges in certain regions of the country, particularly in the South and West.
FAH is calling on Congress to extend the repayment timeline from its current 120 days from issuance to 12 months. Instead of taking 100% of each future Medicare FFS claim, FAH is advocating for just 25%.
In its forecast, Fitch is assuming Congress will not budge and acquiesce to the hospital lobby. However, the ratings agency did note the repayment timeline seemed randomly selected.
"We believe the loans' short maturity date was arbitrarily set by regulators, given the uncertain duration of the pandemic, the recent uptick in infections and hospitalizations, and the potential for a second wave of infections nationally versus intermittent hot spots," Fitch said.