CMS Amends Repayment Terms for Accelerated, Advance Payments

UPDATED 10/14/2020 CMS recently announced new repayment terms for payments issued to providers under the Accelerated and Advance Payment Programs at the start of the COVID-19 public health emergency.

In an announcement late last week, the federal agency stated that repayment will now start one year after the issuance date of each provider or supplier’s accelerated or advance payment.

Recoupment under the programs usually starts 120 days after providers receive the first payment. But a continuing resolution signed into law at the start of the month directed CMS to amend the repayment terms to give providers flexibility.

“In the throes of an unprecedented pandemic, providers and suppliers on the frontlines needed a lifeline to help keep them afloat,” CMS Administrator Seema Verma said in the announcement.  “CMS’ advanced payments were loans given to providers and suppliers to avoid having to close their doors and potentially causing a disruption in service for seniors. While we are seeing patients return to hospitals and doctors providing care we are not yet back to normal.”

During the COVID-19 public health emergency, CMS provided more than $98 billion in accelerated payments to over 22,000 Part A providers. In addition, more than $8.5 billion in advance payments were paid to over 28,000 Part B suppliers, including physicians, non-physician practitioners, and durable medical equipment suppliers.

New repayment terms also state that, after the first year, CMS will automatically recoup the payment by holding back 25 percent of Medicare reimbursements otherwise owed to the provider for 11 months. Then, recoupment will increase to 50 percent of Medicare reimbursements for another six months.

Any outstanding balances on the accelerated or advance payments at the end of the period will be subject to an interest rate of 4 percent. CMS will send a letter requiring repayment within 30 days of the date of the letter.

Providers and suppliers who are unable to repay the accelerated or advance payments because of financial hardships will be able to request an Extended Repayment Schedule (ERS).

According to CMS, an ERS is a debt installment payment plan that gives providers up to five years to repay balances owed to CMS. Most providers will be given three years to repay the accelerated and advance payments, CMS noted. Only providers facing extreme hardship are granted five years.

The agency encourages providers and suppliers to contact their Medicare Administrative Contractor (MAC) for more information.

CMS also clarified in the new repayment terms that providers could use payments issued under the Provider Relief Fund to pay back accelerated and advance payments.*

Additionally, the recoupment timeline will be the same for Periodic Interim Payments (PIP) providers who receive lump-sum, biweekly Medicare reimbursements, the federal agency stated.

The American Hospital Association (AHA) urged CMS earlier this year to give PIP providers special repayment terms, including a cost settlement. The hospital group also asked for more flexible repayment options for traditional Medicare providers.

The amended repayment terms, however, are a win for hospitals, which have been urging Congress to take action before repayment starts for most providers.

“These changes are vital to helping the nation’s teaching hospitals and physician faculty continue to provide critical care to patients now and in the future,” David J. Skorton, MD, president and CEO of the Association of American Medical Colleges (AAMC), said in a statement on the signing of the continuing resolution.

Chip Kahn, the president and CEO of the Federation of American Hospitals (FAH), also called the revisions to payment recoupment “fair and appropriate” in an earlier statement on the continuing resolution. FAH launched a campaign over the summer to get Congress to extend recoupment and provide more favorable repayment terms for providers.

But some hospitals are still looking for more relief under the programs. The AHA recently stated that Congress and the White House should “find a permanent solution, including loan forgiveness of these payments.”

Hospitals are slated to lose at least $323 billion by the end of the year because of COVID-19, according to an analysis from the AHA. Financial losses could grow, too, if hospitals face another surge of positive COVID-19 cases, the hospital group warned.

*UPDATE 10/14/2020: An FAQ published by HHS on October 9, 2020, states that providers cannot use Provider Relief Fund payments to repay accelerated and advance payments. The press release from CMS earlier in the week incorrectly stated that providers could use funds from the Provider Relief Fund to repay the loans.