Medicare Accelerated and Advance Payment: Top Five Questions Answered
In early 2020 the Centers for Medicare & Medicaid Services opened up the Medicare Accelerated and Advance Payment Program (AAP) to assist various health care professionals and entities with cash flow during the COVID-19 pandemic.
The most recent CMS report (December 9, 2020) shows over $107 billion has been requested and distributed to hospitals, physicians, nursing homes and other Medicare Part A/B providers or suppliers in 2020 under the program.
While you may have forgotten about the AAP during the past year, recoupment of these dollars is now lurking around the corner. We answer the most pressing questions about this program and what you need to know going forward.
What is the AAP?
It is an existing Medicare program that provides an accelerated or advance on payments during times of disruption. Accelerated payments refer to payments made to Part A providers whereas advance payments refer to payments made to Part B suppliers. According to CMS, the payments can be made “in circumstances such as national emergencies, or natural disasters in order to accelerate cash flow to the impacted health care providers and suppliers.”
The AAP was initiated on March 28, 2020. CMS stopped the AAP in the fall of 2020.
Were statutory changes made to AAP during the COVID-19 pandemic?
Yes. Changes to the existing AAP were enacted for the duration of the pandemic under two federal laws and implemented by CMS. Those changes came in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which became law on March 27, 2020, and the Continuing Appropriations Act, 2021 and Other Extensions Act, enacted on October 1, 2020.
- CARES Act. Section 3719 expanded the list of eligible providers who could qualify during the pandemic for AAP to include additional hospitals, such as children’s hospitals, critical access hospitals and cancer hospitals, for example. It also made some changes to the recoupment process.
- Continuing Appropriations Act of 2021. Section 2501 amended the repayment terms for all providers and suppliers who received AAP during the pandemic. CMS recoupment of the dollars does not initiate until one year after receipt of funds. (The CARES Act had previously set that timeframe at 120 days.) Further, specific recoupment percentages during specific timeframes were established. The Act also reduced the interest rate assessed to 4%. Finally, the act requires CMS to report on AAP payments in multiple ways.
What is the timeline for recoupment and repayment?
The new statutorily set timeline for repaying AAP is 29 months, broken down as follows:
- First 12 months – Recipients face no recoupment for one year after date AAP is issued.
- Subsequent 11 months – Respective Part A and/or B Medicare Administrative Contractors (MAC) begin to recoup at 25% of Medicare payments owed to recipients.
- Subsequent 6 months – MACs increase the recoupment to 50% of Medicare payments owed.
- At end of these 29 months – MACs send a demand letter for the remaining balance, if any. Recipients will need to make payment within 30 days otherwise the 4% interest will begin to accrue at the end of that 30 days.
Important: The AAP opened in late March of 2020; therefore, depending on the date of receipt of your AAP, the 12-month timeline for CMS to begin recouping those funds is approaching.
Can I change my recoupment or repayment schedule?
Generally, no. CMS states in their list of Frequently Asked Questions (FAQs) they “will not reduce the repayment percentage or defer recoupment at the request of a provider or supplier, as the terms are specified by Congress in the Continuing Appropriations Act, 2021 and Other Extensions Act.” Therefore, the recoupment process is automatic and will not be altered.
However, there are two things you can consider:
- Make lump sum payments. You are able to make one or more lump sum payments at any time. Keep in mind if you do so once recoupment begins, that process will continue simultaneously. It will be important to keep close track of how much you’ve paid in lump sum payments along with how much is being recouped. You should work through your MAC on this.
- Request financial hardship extension. There is the possibility that once your demand letter is sent (i.e.: at the end of the 29-month process) you may request what is called an “Extended Repayment Schedule” (ERS). However, the ERS is allowed in limited circumstances only and you would need to meet specific criteria of financial “hardship” or extreme hardship.” Again, you would work through you respective MAC on this request.
You may also request your balance or a reconciliation from the MAC. For these or any other AAP questions, you should contact the MAC for your jurisdiction (Parts A/B).
Reminder, you may not use your Provider Relief Funds (PRF) to pay back your AAP. See PRF FAQs.
Is this a forgivable loan?
No. This is a loan program with a statutorily set repayment schedule. There is no forgiveness available. While there has been advocacy around forgiving AAP loans, this may be difficult to achieve for the following reasons.
First, forgiveness is not something CMS is able to do on its own; it will take an Act of Congress and the President. There have now been five COVID-19 relief bills enacted into law with the current Administration and Congress working on the sixth, $1.9 trillion package. To date, forgiveness has not been included in these packages, but rather, COVID relief has come through the PRF, Paycheck Protection Program, FEMA grants among other state and federal sources.
Second, there is $107 billion in play with these loans. Those dollars affect the Medicare Hospital Insurance (Part A) and Supplementary Medical Insurance (Part B) trust funds. Therefore, providing forgiveness would have to be offset by other federal revenues to ensure the trust funds are not in worse off financial positions. (Congress appears to have corrected this in the Continuing Appropriations Act of 2021 by moving funds from Treasury into the Trust Funds for these payments.)
Finally, the AAP is a Medicare program only, which means granting forgiveness would unequally benefit certain provider types (Medicare) and disadvantage others, such as heavily Medicaid dependent providers or those who did not apply for AAP at all.
For example, if we return to the CMS released AAP data, we can see roughly $98.8 billion went to Part A providers with the lion’s share – $83 billion – to hospitals (short stays). The next Part A provider type was Skilled Nursing Facilities at $3.8 billion. Community Mental Health Centers received only $300 million. [CMS notes that many providers offer both Part A and Part B services, and that their Part A data includes total expenditures (Part A and B) for any provider that furnishes Part A services.] For Part B, the total distributed was $8.5 billion. The largest provider type was single or multispecialty group or clinic practices, totaling roughly $6.8 billion. [The Part B data includes total expenditures for providers who received Part B payment only.]
For these reasons, we believe the best approach right now is to plan for the AAP recoupment and repayment process, not on forgiveness.
How CLA can help
Whether you’re wondering how to address all the COVID funding you’ve received, including your AAP loans, or what the future looks like for your organization, we can help.
Jennifer Boese is the Director of Health Care Policy at CLA. She is a highly successful public policy, legislative, advocacy and political affairs leader, including working in both the state and federal government as well as the private sector. She brings over 20 years of government relations and public policy knowledge with her to CLA. Well over half of her career has been spent dedicated to health care policy and the health care industry, affording her a deep understanding of the health care market and environment, health care organizations and health care stakeholders. Her role at CLA is to provide thought leadership, policy analysis and strategic insights to health care providers across the continuum related to the industry's ongoing transformation towards value. A key focus of that work is on market innovations and emerging payment models. Her goal is to help CLA clients navigate and thrive in an increasingly dynamic health care environment.
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