Providers who applied for and received advanced payments from CMS will now have 1 year to pay back those loans, instead of the 3 months they initially were given to do so. In late March of this year, and as a result of the COVID-19 pandemic, The Centers for Medicare & Medicaid Services (CMS) revised their already existing Accelerated and Advance Payment Program (AAP). This was one of many programs designed to minimize the financial burden that healthcare providers are currently faced with in the fight against COVID-19. Many providers were experiencing and continue to experience cash flow issues as a direct result of the pandemic. The AAP payments were loans given to providers, and were yet another option for providers to utilize, along with the Paycheck Protection Program, Economic Injury Disaster Loans, and HHS Provider Relief Payments, to help them avoid closing their doors and causing a disruption in service for the patients under their care.
Under this AAP program, providers could apply for an advance payment from CMS that was equal to roughly 3 months’ worth of their Medicare claims. Under the initial terms of the program, CMS would then begin to recoup the money or offset claims for the provider until the money was repaid, and that process would begin after 120 days. If there were not enough claims to offset the original amount of the loan, the rest would need to be repaid with interest (4%). In total, CMS issued roughly $106 billion in advance payments to providers. Approximately $98 billion of that was sent to Part A providers, with another $8.5 billion going to Part B providers, including DME providers.
As a result of the Continuing Appropriations Act, 2021 and Other Extensions Act, providers will now have one year from the issuance date of their payment to repay the loan. After that first 12 months has passed, Medicare will automatically recoup 25% of the Medicare payments owed to that provider for eleven months. Then the recoupment rate will go up to 50 percent for the next six months. If the provider was unable to fully repay the total amount of the initial AAP loan amount during this time-period (a total of 29 months), CMS will request repayment of any outstanding balance, subject to an interest rate of four percent.
The letter sent to providers will also provide instructions on how to request an Extended Repayment Schedule (ERS) if they are still experiencing financial hardship. The ERS is essentially a payment plan that lets providers pay the loan back over the course of three to 5 years in the case of extreme hardship. Providers and suppliers are encouraged to contact their Medicare Administrative Contractor (MAC) for information on how to request an ERS. It is also worth noting that the HHS Provider Relief Fund payments that many providers received can be used towards repayment of these advance payments. CMS will be communicating with each provider and supplier in the coming weeks as to the repayment terms and amounts owed as applicable for any accelerated or advance payment issued.
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