The Centers for Medicare & Medicaid Services (CMS) recently issued an updated fact sheet and a FAQ page detailing the repayment terms for Medicare Part A providers and Part B suppliers who received payments under its Accelerated and Advance Payment Program (AAP).
As discussed in a March 30, 2020, client alert, CMS expanded its AAP program to provide additional liquidity to providers and suppliers experiencing billing disruptions related to the COVID-19 pandemic. Furthermore, as discussed in a Sept. 30, 2020, client alert, the Continuing Appropriations Act, 2021 and Other Extensions Act, enacted Oct. 1, 2020, amended the repayment terms for all providers and suppliers who requested and received accelerated and advanced payments under the AAP. This legislation gave healthcare providers flexibility in repayment timelines for amounts received from CMS as part of the AAP program, which included both delayed start for repayments and longer repayment periods.
The new guidance from CMS provides the following important insights regarding specific repayment terms for providers and suppliers who received AAP payments, including automatically extending the start of recoupment to no earlier than March 2021:
- Timeline for Repayment and Recoupment Without Further Necessary Action. The fact sheet reiterates that, for providers or suppliers with a remaining balance to an accelerated or advance payment, repayment does not begin until one year after the date the accelerated or advance payment was issued. Providers do not have to apply or submit anything to obtain this extension — it is provided automatically, notwithstanding any statutory language that may have allowed CMS to read with discretion. Beginning one year from the date payment was issued and continuing for 11 months thereafter, Medicare payments will be recouped at a rate of 25 percent. After the 11-month period ends, the recoupment rate will be 50 percent for another six months. Finally, any remaining balance will be due at the end of the six-month period (or 29 months from the initial accelerated or advance payment). At such time, CMS or the relevant Medicare administrative contractor (MAC) will issue a letter requiring reimbursement. Providers and suppliers will then have 30 days from the date of the letter to repay the balance in full; otherwise, interest will accrue at the rate of 4 percent from the date of the letter and will be assessed for each full 30-day period the balance remains unpaid. CMS’ fact sheet notes that the timeline for repayments is the same for periodic interim payments (PIP) providers as for non-PIP providers.
- Recoupment Commences Automatically One Year After Issuance of the Accelerated or Advance Payment. In its FAQ sheet, CMS clarifies that recipients of accelerated or advance payments may not extend the recoupment within the AAP rather than receiving an overpayment letter and may not reduce the payment percentage (but see item 4 below on the extended repayment schedule for providers experiencing a hardship). CMS notes that the statute provides that the repayment process ends after the 29th month of the issuance of the accelerated or advance payment. Therefore, providers or suppliers may not extend how long recoupment will continue once they have received the overpayment letter.
- Immediate Repayment May Be Required for Accelerated or Advance Payments Received in Error. Accordingly, CMS reiterates the eligibility criteria for providers and suppliers receiving such payments. To qualify to receive an accelerated or advance payment during the COVID-19 public health emergency, the provider or supplier must have:
- billed Medicare for claims within 180 days immediately prior to the date of signature on the provider’s or supplier’s application;
- not been in bankruptcy (CMS provides further guidance in the FAQ for a provider or supplier that is now going through bankruptcy);
- not been under active medical review or program integrity investigation; and
- not had outstanding delinquent Medicare overpayments.
Further, providers who believe CMS recouped more than the value of their AAP may contact their MAC for a reconciliation. CMS noted that a provider or supplier who would like to return funds received under the AAP prior to the deadline can contact the applicable MAC for instructions. This can be helpful for providers engaged in a transaction allowing the presale owner to address such recoupment.
- Providers Meeting Certain Criteria May Request an Extended Repayment Schedule (ERS). An ERS is a statutorily authorized debt installment schedule, which allows a provider or supplier experiencing “financial hardship” to pay debts over the course of three years (or five years, if extended for “extreme hardship” circumstances). Providers or suppliers may request an ERS once in receipt of a demand letter through their MAC. The criteria for financial hardship are defined in 42 CFR § 401.607 and are evaluated on an individual basis by the MAC.
- CMS Will Not Accept Further COVID-19 Applications Under the AAP. As discussed in an April 28, 2020, client alert, CMS suspended AAP payments to Part B suppliers on April 26, 2020, while announcing more scrutiny on future Part A providers’ AAP applications. This deviated from initially providing payments under the AAP effectively for all those who applied for support (subject to the eligibility criteria). CMS’ fact sheet states that it stopped accepting further applications as of Oct. 8, 2020, although “CMS will continue to monitor the ongoing impacts of COVID-19” on Medicare providers and suppliers, suggesting that, depending on future effects from COVID-19, further support may be provided.
As Medicare providers and suppliers weigh repayment options, they should consider how any payments received may impact existing or anticipated debt financing, particularly any asset-based receivables financing, and what realistic repayment options may exist under the new guidance. Such providers and suppliers will appreciate the guidance from CMS that no further action is necessary to take advantage of the recoupment extension provided by Congress.
McGuireWoods is continuously monitoring information released by Congress and the Trump administration regarding COVID-19 and current legislation. Please contact the authors or any of the McGuireWoods COVID-19 Response Team members for additional information on the accelerated and advance payment programs and additional CARES Act funding and their availability to healthcare providers.