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Analysis

CMS Extends AAP Repayment Timeline

By John Commins  
   October 08, 2020

Providers will begin repaying the $106 billion in advanced Medicare payments next spring.

Medicare providers will be given more time to pay back the Accelerated and Advance Payment Program funds they received during the coronavirus Public Health Emergency, the Centers for Medicare & Medicaid Services announced Thursday.

Under the original terms of the loans, providers were required to make payments starting in August. Now, the repayment will be delayed until one year after the AAP was received, CMS said.

Under the new repayment terms, after the first year, Medicare will automatically recoup 25% of Medicare payments otherwise owed to the provider or supplier for eleven months. At the end of the 11 months, recoupment will increase to 50% for six months.

If a provider of medical supplier is unable to repay the total amount of the loan during the 29-month timeframe, CMS will slap a 4% interest penalty on outstanding balances.

The new repayment terms were authorized by the Continuing Appropriations Act, 2021 and Other Extensions Act, which was passed last week by Congress and funds the federal government through December 11.

CMS is also offering guidance on how to request an Extended Repayment Schedule (ERS) that allows providers or suppliers to pay debts over to five years in the case of extreme hardship.

CMS Administrator Seema Verma called the $106 billion in advance payments the federal government made to providers during the pandemic "a lifeline to help keep them afloat" as patient volumes, and non-urgent and elective procedures tanked and revenues dried up.

"CMS' advanced payments were loans given to providers and suppliers to avoid having to close their doors and potentially causing a disruption in service for seniors," Verma said. "While we are seeing patients return to hospitals and doctors providing care we are not yet back to normal."

CMS expanded the AAP on March 28 and paid more than 22,000 Part A providers, totaling more than $98 billion in accelerated payments. This included payments to Part A providers for Part B items and services they furnished.

In addition, more than 28,000 Part B suppliers, including doctors, non-physician practitioners, and Durable Medical Equipment suppliers, received advance payments totaling more than $8.5 billion.

CMS is allowing providers to use the $175 billion in Provider Relief funds to pay back the AAP loans.  

CMS said it will contact providers and suppliers in the coming weeks to finalize the repayment terms and amounts owed under the AAP. 

“CMS' advanced payments were loans given to providers and suppliers to avoid having to close their doors and potentially causing a disruption in service for seniors. While we are seeing patients return to hospitals and doctors providing care we are not yet back to normal.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

Under the original terms of the loans, providers were required to make payments starting in August. Now, the repayment will be delayed until one year after the AAP was received.

Under the new prepayment terms, after the first year, Medicare will automatically recoup 25% of Medicare payments otherwise owed to the provider or supplier for eleven months. At the end of the 11 months, recoupment will increase to 50% for six months.

If a provider of medical supplier is unable to repay the total amount of the loan during the 29-month timeframe, CMS will slap a 4% interest penalty on outstanding balances.


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