On Oct. 8, the Centers for Medicare & Medicaid Services (CMS) announced new repayment terms for Medicare loans made to providers during the COVID-19 public health emergency.
The Medicare Accelerated and Advance Payment (AAP) Program allows CMS to make advanced payments to providers in emergency situations. Providers and health care facilities on the front lines of this pandemic relied on these advanced payments to remain financially solvent during the public health emergency.
Under the Continuing Appropriations Act, 2021 and Other Extensions Act, providers will have one year from the issuance date of their accelerated or advanced payment before they have to begin to repay their loans. Originally, providers were required to start making payments in August 2020, but these new terms will delay repayment for one year to continue supporting the health care field.
After the first year, Medicare will withhold 25 percent of the payments otherwise owed to the provider or supplier for 11 months. Recoupment will then increase to 50 percent for an additional six months. After this period, CMS will issue letters requiring repayment of any outstanding balance, subject to an interest rate of 4 percent if not paid within 30 days of receiving the letter. Providers may apply to their Medicare Administrative Contractor for an extended repayment schedule (ERS) if they are undergoing financial hardship or extreme hardship. Under the ERS, a provider can repay their remaining debt over three to five years.
While CMS originally said health care facilities would be permitted to use Provider Relief Fund (PRF) dollars to pay back the Medicare loans, it since has reversed course to state that PRF payments cannot be used to repay Medicare loans. Please read CMS’ fact sheet and FAQs for more information.
Visit the America’s Essential Hospitals coronavirus resource page for more information about the outbreak.
Contact Senior Director of Policy Erin O’Malley at firstname.lastname@example.org or 202.585.0127 with questions.