Wisconsin Hospitals Will Get Delayed Federal COVID-19 Funds

A woman handles a COVID-19 testing swab Tuesday, July 28, 2020, at Lake Geneva Middle School in Lake Geneva, Wis. Angela Major/WPR

A federal disaster recovery program is reimbursing some Wisconsin hospitals for costs related to COVID-19 response, years after the start of the pandemic.

The Federal Emergency Management Agency recently announced $5.4 billion in funding awarded from its Public Assistance program to states, local governments and health care systems across the country.

The agency reported that $41 million went to facilities in Wisconsin, including $20.8 million to Aurora Health Care in eastern Wisconsin. University of Wisconsin Hospitals and Clinics in Madison received $4.8 million, according to a FEMA press release, and $2.7 million went to Ascension SE Wisconsin Hospital in Milwaukee.

The grants were awarded to cover costs of contracted medical staff, supplies and the expansion of facilities to respond to patients with COVID-19.

Aurora Health Care and UW Health did not provide comment to WPR about the funding.

The press release from FEMA said the agency “conducted thorough reviews” of costs claimed by the health care systems in order to “identify duplication of benefits, specifically with patient care revenue.”

This auditing process could be why it has taken years to pay out the recovery funding, according to Lisa Grabert, research professor at Marquette University College of Nursing.

She said the federal government provided a lot of resources to health care systems during the pandemic, including increased reimbursement for treating Medicare patients in 2020.

“That was for things like (personal protective equipment, or PPE), for new spending in the labor force,” she said. “The federal government really should have taken the time to make sure that all those payments that went out were not duplicated with anything that was being charged to FEMA.”

The response costs incurred by health care systems at the height of the COVID-19 pandemic were different from what typically happens after a natural disaster or other emergency.

Grabert said hospitals ended up relying more on contract labor, which comes at a higher cost than direct employment. She also said the worldwide nature of the pandemic meant health care systems were competing for the same resources, further driving up prices for PPE and other supplies.

Health economist Tony Lo Sasso from the University of Wisconsin-Madison said hospitals were losing revenue at the same time as people canceled routine care or elective procedures.

“That sort of double whammy of costs increasing dramatically at the same time revenues fall dramatically, really put just a humongous burden on health care providers,” he said.

Now six years after the initial response, Lo Sasso said the health care industry has largely returned to a “stable equilibrium.” He said that could make the delayed recovery payments feel more like a windfall, rather than a reimbursement.

But Grabert said health care systems are used to waiting for repayment from the federal government, and often account for delays as part of their regular operations.

“Whenever they receive a lump sum like this, it probably goes toward things that are not necessarily what they initially spent the money on,” she said. “They may be using it for purposes of mergers and acquisitions, or more types of investments.”

Wisconsin hospitals receive delayed reimbursement for COVID-19 response was originally published by Wisconsin Public Radio.