U.S. hospitals and health systems must soon begin repaying Medicare advance payments, but this will not materially affect the ratings of nonprofit healthcare providers, according to Fitch Ratings.
Hospitals received the loans in March under the Medicare Accelerated and Advance Payment Program to help temporarily relieve financial pressure from the COVID-19 pandemic.
While liquidity will gradually decline as these advances are repaid, Fitch said it expects most providers will be able to repay the loans in full and on time.
Fitch said that its rated nonprofit hospitals have ample liquidity to support repayment of the loans and it expects long-term volume recovery in the sector.
"Loan repayments in the form of reductions in Medicare payments would only pressure ratings if volume recovery is markedly slower than expected or if there is a significant rise in infections that results in another round of elective procedure curtailment," Fitch said.
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