CMS Announces New Payment Terms for Medicare Loans Made to Providers During the COVID-19 PHE
The Centers for Medicare and Medicaid (CMS) announced amended terms for payments issued under the Accelerated and Advance Payment (AAP) Program. This Medicare loan program allowed CMS to make advance payments to providers to help alleviate financial burden due to cash flow issues during the COVID-19 Public Health Emergency (PHE). On March 28, 2020, CMS expanded the existing AAP program to a larger group of Medicare Part A and Part B suppliers, and has issued $106 billion in payments to providers and suppliers.
Initially providers were required to make payments starting in August 2020. However the amended terms for repayments include a delay until one year after the payment was issued and subsequent time periods:
- End of the first year – Medicare will recoup 25% of provider/supplier payments for 11 months.
- End of the 11 month period – recoupment will increase to 50% for 6 months.
- End of the 6 month period – CMS will send letters requiring repayment of any outstanding balance.
- If the balance is not paid in full within 30 days of the date the letter was issued, interest will accrue at 4% and will be re-assessed every 30 days until the loan is paid in full.
There is also an extended repayment schedule (ERS) which is a debt installment payment schedule allowing providers/suppliers experiencing financial hardship to pay debts over 3 years. Depending on the severity of the financial hardship, this schedule can be extended to 5 years. Providers/suppliers can request an ERS after letters are issued, and should contact their Medicare Administrative Contractors (MACs) on the ERS request process.
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