CMS Accelerated and Advance Payment Recoupment Begins

April 6, 2021

Recoupment has started or will soon begin for Medicare Part A and Part B providers and suppliers who received funds in 2020 under the Medicare Accelerated and Advance Payment (AAP) Program. The Centers for Medicare & Medicaid Services (CMS) provided $106 billion in AAP funding to alleviate the financial cash-flow burdens healthcare providers faced in the early stages of the 2019 novel coronavirus (COVID-19) pandemic. CMS began the COVID-19-related AAP funding with an announcement on March 28, 2020, and effectively ended funding by the end of April 2020. AAP recipients will now repay these funds through automatic recoupment from Medicare reimbursement.

As further background, CMS expanded its standard AAP process due to COVID-19 to provide additional liquidity to a larger group of providers and suppliers than typically would utilize the program. CMS announced the expanded AAP program with the expectation that automatic recoupment from reduced Medicare fee-for-service payments would begin 120 days after funding last summer. As the pandemic continued, CMS and its Medicare Administrative Contractors (MACs) generally did not begin to recoup AAP funds as scheduled. Congress then extended the period before recoupment so it would begin a full year after the date the individual provider or supplier received an AAP in the Continuing Appropriations Act, 2021 and Other Extensions Act, signed by President Trump on Oct. 1, 2020, as discussed in a Sept. 30, 2020, client alert. This legislation also extended the repayment timelines for the AAP program from 90 days (for most providers and suppliers) to 17 months, with reduced recoupment payments during this extended schedule, as discussed further below.

As recoupment begins, here are five key points recipients of AAP funds should understand about this process:

  1. Recoupment Starts One Year From the AAP Issuance to the Provider. As discussed in an Oct. 28, 2020, client alert, consistent with CMS’ prior guidance, notwithstanding the ongoing pandemic, recoupment begins one year after the issuance of an AAP from the provider or supplier’s MAC. CMS recently issued a special edition MLN Matters article  to remind providers of the recoupment process under the AAP program. In response to McGuireWoods’ requests, MACs — including First Coast, Noridian, WPS, NGS, Novitas and Palmetto — have all indicated they will implement the prescribed timeline. As a result, providers and suppliers who received an AAP in March or April 2020 will begin to experience (or already have experienced) the first phase of the recoupment process discussed in the next paragraph.
  1. Recoupment Will Occur Automatically by Reduced Medicare Payment for 17 Months. No further action will be necessary for recoupment to begin, as the MAC will automatically offset Medicare payments. Once recoupment begins, until the amount received under the AAP program is repaid in full, Medicare providers and suppliers will receive reduced Medicare fee-for-service payments. The recoupment rate for the first 11 months is a 25 percent reduction to Medicare payments, increasing to 50 percent for the subsequent six months. After the 17-month recoupment period ends, if the provider or supplier has not fully repaid the AAP funding it received, the MAC will issue a demand letter for full repayment of any remaining balance. The issuance of the demand letter triggers an interest rate of 4 percent added to the remaining balance until paid in full, an amount Congress reduced from typical repayment approaches in excess of 10 percent. Interest will be assessed at the end of each 30-day period until the amount is fully repaid, with payments made by the provider or supplier (either by automatic recoupments or a separate payment) repaying interest first, followed by any other outstanding overpayments and finally the AAP balance, until paid in full.

    The included infographic helps illustrate the amended repayment terms for a provider or supplier that was issued an AAP on April 1, 2020, based on a similar graphic provided by First Coast.
AAP Recoupment
  1. No Formal Process for Delay, Reduction or Deferment. Citing the Oct. 8, 2020, CMS FAQ, the MACs recently confirmed there is no formal process to further delay, reduce or defer recoupment. Despite the lack of any formal process, it is possible that some MACs may consider individual requests for an extended repayment schedule (ERS) on a case-by-case basis, as discussed further in the next paragraph. Most MACs have indicated to McGuireWoods that this will not be accepted until the end of the 17-month recoupment period. Notwithstanding the foregoing, providers and suppliers that believe they need or qualify for an ERS should consult their respective MACs to see if they have any ability to slow, extend or delay recoupment (at the contact information below). Providers and suppliers who wish to follow the standard recoupment timeline or who are required to do so, can expect to receive a final demand letter at the end of the 17-month timeline, detailing the remaining balance, if any. Providers and suppliers may apply for an ERS at that time, if they have not repaid in full.
  1. Providers May Request an Extended Repayment Schedule. Medicare rules allow providers and suppliers experiencing “hardship” to request making repayments through an ERS, an installment payment process allowing as much as six years (for “extreme hardships”) to repay amounts owed to Medicare, but generally lasting less than three years. All MACs will consider an ERS request at the end of the 17-month recoupment period. “Hardship” exists when the total amount of all outstanding overpayments (principal and interest) not included in an approved, existing repayment schedule is 10 percent or greater than the total Medicare payments made for: (i) the cost reporting period covered by the most recently submitted cost report; or (ii) the previous calendar year for a non-cost report provider or supplier. Providers or suppliers are ineligible for ERS payments if there is reason to suspect they may file for bankruptcy, cease to do business or discontinue Medicare participation, or if there is an indication of fraud or abuse against the Medicare program.

    In addition to allowing an ERS request at the end of the 17-month repayment period, some MACs, such as NGS, may allow providers or suppliers who are unable to repay their AAP balance based on the standard recoupment timeline to apply to repay in separately negotiated installment payments at any time during the debt collection process. Providers or suppliers would use the same form as if they were requesting an ERS for any overpayment. Further, at least certain representatives of NGS have indicated that the negotiated repayment plan would then govern over the standard 17-month timeline and the provider or supplier may not then receive a demand letter at the end for full repayment. If a provider or supplier believes it needs additional flexibility, some MACs may allow the provider or supplier to submit a request for an ERS now.
  1. Providers and Suppliers Can Contact Their Respective MACs for Outstanding Balance. MACs are sharing with providers and suppliers their outstanding balance of AAP amounts throughout the recoupment process, upon provider or supplier request. In addition, MACs are accepting repayments in one or more lump sum payments at any time during the recoupment process, which can be guided through similar inquiry. MACs generally request the providers’ and suppliers’ NPI and tax identification numbers, and request to speak with the authorized representatives currently listed on the Medicare enrollment, which can be reviewed on the Medicare PECOS website. For more information, each MAC and its contact information is listed below.

    CGS Administrators, LLC (CGS) – Jurisdiction 15
    KY, OH, and home health and hospice claims for the following states: DE, DC, CO, IA, KS, MD, MO, MT, NE, ND, PA, SD, UT, VA, WV and WY
    The toll-free Hotline Telephone Number: 1-855-769-9920
    Hours of Operation: 7 a.m. – 4 p.m. (CT)
    The toll-free Hotline Telephone Number for Home Health and
    Hospice Claims: 1-877-299-4500
    Hours of Operation: 8 a.m. – 4:30 p.m. (CT) for main customer service and 7 a.m. – 4 p.m. (CT) for the Electronic Data Interchange (EDI) Department

    First Coast Service Options Inc. (FCSO) – Jurisdiction N
    FL, PR, US VI
    The toll-free Hotline Telephone Number: 1-855-247-8428
    Hours of Operation: 8:30 a.m. – 4 p.m. (ET)

    National Government Services (NGS) – Jurisdiction 6 & Jurisdiction K
    CT, IL, ME, MA, MN, NY, NH, RI, VT and WI; and home health and hospice claims for the following states: AK, AS, AZ, CA, CT, GU, HI, ID, MA, ME, MI, MN, NH, NV, NJ, NY, MP, OR, PR, RI, US VI, VT, WI and WA
    The toll-free Hotline Telephone Number: 1-888-802-3898
    Hours of Operation: 8 a.m. – 4 p.m. (CT)

    Novitas Solutions, Inc. – Jurisdiction H & Jurisdiction L
    AR, CO, DE, DC, LA, MS, MD, NJ, NM, OK, PA, TX, and Part B for VA counties of Arlington and Fairfax and the VA city of Alexandria
    The toll-free Hotline Telephone Number: 1-855-247-8428
    Hours of Operation: 8:30 a.m. – 4 p.m. (ET)

    Noridian Healthcare Solutions – Jurisdiction E & Jurisdiction F
    AK, AZ, CA, HI, ID, MT, ND, NV, OR, SD, UT, WA, WY, AS, GU, MP
    The toll-free Hotline Telephone Number: 1-866-575-4067
    Hours of Operation: 8 a.m. – 6 p.m. (CT)

    Palmetto GBA – Jurisdiction J & Jurisdiction M
    AL, GA, NC, SC, TN, VA (excludes Part B for the VA counties of Arlington and Fairfax and the VA city of Alexandria) and WV; and home health and hospice claims for the following states: AL, AR, FL, GA, IL, IN, KY, LA, MS, NM, NC, OH, OK, SC, TN and TX
    The toll-free Hotline Telephone Number: 1-833-820-6138
    Hours of Operation: 8:30 a.m. – 5 p.m. (ET)

    Wisconsin Physician Services (WPS) – Jurisdiction 5 & Jurisdiction 8
    IN, MI, IA, KS, MO, NE
    The toll-free Hotline Telephone Number: 1-844-209-2567
    Hours of Operation: 7 a.m. – 4 p.m. (CT)

    Noridian Healthcare Solutions, LLC – DME A & D
    CT, DE, DC, ME, MD, MA, NH, NJ, NY, PA, RI, VT, AK, AZ, CA, HI, ID, IA, KS, MO, MT, NE, NV, ND, OR, SD, UT, WA, WY, AS, GU, MP
    The toll-free Hotline Telephone Numbers: A: 1-866-419-9458; D: 1-877-320-0390
    Hours of Operation: 8 a.m. – 6 p.m. (CT)

    CGS Administrators, LLC – DME B & C
    AL, AR, CO, FL, GA, IL, IN, KY, LA, MI, MN, MS, NM, NC, OH, OK, SC, TN, TX, VA, WI, WV, PR, US VI
    The toll-free Hotline Telephone Numbers: B: 866-590-6727; C: 866-270-4909
    Hours of Operation: 7 a.m. – 4 p.m. (CT)

As the first AAP payments were made in March or April 2020, many providers and suppliers are quickly approaching the one-year anniversary of receiving an AAP. While the recoupment begins automatically with no action required by the provider or supplier, not all MACs are issuing reminder statements or notifications, relying on the CMS-issued MLN Matters article referenced above. Therefore, it is in the provider or supplier’s best interest to review its AAP application and history of accounting so there are no surprises once automatic recoupment begins. Further, providers and suppliers should notify their billing and financial staff that recovery will begin so they are not surprised with smaller payments. Some providers or suppliers’ recordkeeping systems may need to be reviewed to ensure this reduced payment amount does not create automatic system alerts. As mentioned above, a hotline is available for each MAC, if the provider has further questions after such reviews.

McGuireWoods is continuously monitoring information released by Congress and the Biden 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.