FAH Asks Congress to Delay Recoupment of Advance Medicare Payments

Hospitals need more time to repay Medicare payments advanced to them as a financial safety line at the start of the COVID-19 pandemic, the Federation of American Hospitals (FAH) recently told Congressional leaders.

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In a letter sent to House Speaker Nancy Pelosi (D-CA), Senate Majority Leader Mitch McConnell (R-KY), House Minority Leader Kevin McCarthy (R-CA) and Minority Leader Charles Schumer (D-NY) yesterday, the group representing tax-paying hospitals and health systems urged Congress to formally postpone recoupment of payments providers received under the Medicare Accelerated and Advance Payment Programs earlier this year.

“Although Congress’ expansion of this program in the CARES Act successfully prevented short-term cash flow concerns for many hospitals, the onerous repayment terms were not created with the current pandemic in mind,” the letter stated. “Until Congress has had an opportunity to enact legislation, we urge you to immediately call on CMS and the White House to exercise their administrative authority to formally delay recoupment of MAAPP loans – with public guidance to providers.”

The Medicare Accelerated and Advance Payment Programs advanced nearly $60 billion to over 21,000 Part A providers and $40.4 billion to almost 24,000 Part B providers before CMS shut down half the program in April, when HHS started distributing emergency relief through the Provider Relief Fund.

The advanced Medicare payments were a “lifeline to health care providers at the onset of the pandemic,” according to FAH.

However, per program rules, providers must repay CMS for the Medicare payments advanced to them during the public health emergency. And for providers that leveraged the program in March, before the CARES Act established the Provider Relief Fund, repayment started on or around August 1, 2020.

CMS is recouping the upfront Medicare payments by stopping all fee-for-service reimbursements from going to providers until the advanced payments are repaid.

Under the recoupment strategy, though, hospitals will lose an average of 25 percent of their reimbursements, FAH stated.

“Hospitals across the country, from urban to rural, continue to face significant headwinds, including from government orders to restrict so-called ‘elective’ procedures, which include vital screenings for cancer and other conditions, as well as many non-emergent but nonetheless crucial surgeries,” the group wrote in the letter.

“Rural hospitals are particularly at risk given that they tend to serve older, higher-risk populations and rely heavily on Medicare reimbursement,” the letter continued.

CMS and the White House should exercise their administrative authority to delay total loss of Medicare fee-for-service payments, FAH urged.

Additionally, Congress should include changes to the Medicare Accelerated and Advance Payment Programs in its next COVID-19 legislative package, the group recommended. Specifically, FAH advised policymakers to extend the start of repayment from 120 days to at least 12 months, and no earlier than April 2021.

The group also called for CMS to only recoup 25 percent of Medicare fee-for-service payments during the repayment period and for Congress to waive the 10.25 percent interest rate or at least reduce it to no more than 1 percent.

Other program changes recommended by FAH included a longer period before outstanding balances incur interest, higher limits on how much can be advanced to hospitals, and the restart of the program paused on April 27, 2020.

In extreme cases, the programs should also allow for loan forgiveness, FAH stated.

Policymakers on both sides of the political fence have promised additional COVID-19 legislation to protect individuals and businesses from significant financial losses incurred during the pandemic. But Congress has yet to pass a comprehensive package since May 2020.

Republicans said this week they plan to unveil a “skinny” COVID-19 package, but reports did not detail emergency relief for healthcare providers.

Hospitals are projected to lose $323 billion in 2020 because of COVID-19, the American Hospital Association (AHA) recently reported.

The Association also recently called for more favorable repayment terms for hospitals, especially facilities that receive period interim payments. It also backed loan forgiveness in light of projected financial losses.

“Providers will continue to face historic challenges throughout this extended public health emergency and beyond, as we expect the immense financial strain facing hospitals and health systems due to COVID-19 will continue through at least the end of 2020,” Thomas P. Nickels, AHA’s executive vice president, told CMS Administrator Seema Verma in an Aug. 3rd letter. “Forgiving hospitals’ accelerated payments is necessary for providers to recover and rebuild while delivering the care that patients and communities are depending on.”