The Centers for Medicare & Medicaid Services (CMS) announced updated terms for loans issued to Medicare providers and suppliers under the Accelerated and Advance Payment (AAP) Program—a program that allows the agency to make such payments in emergency situations—during the COVID-19 Public Health Emergency (PHE). Loan repayment will now begin one year from the issuance date of each provider or supplier’s payment. Providers were previously required to make payments starting in August of 2020.
After that first year, CMS will automatically recoup 25% of Medicare payments otherwise owed to the provider or supplier for 11 months. At the end of the 11-month period, recoupment will increase to 50% for another 6 months. If the provider or supplier is unable to repay the total amount of the AAP during this time-period (a total of 29 months), CMS will require repayment of any outstanding balance, subject to a 4% interest rate.
The update also provides guidance on how providers and suppliers that are experiencing financial hardship can request an Extended Repayment Schedule (ERS). In the coming weeks, CMS also plans to communicate with each provider and supplier that received an accelerated or advance payment regarding repayment and amounts owed.
These regulatory flexibilities from CMS are possible in part due to the COVID-19 PHE the Department of Health and Human Services (HHS) declared on January 27, 2020 and extended for a third time on October 2 for an additional 90 days effective October 23. The PHE is now set to expire at the end of January 2021, unless otherwise rescinded.