Accelerated and Advance Payment Program Repayment Begins April 2021
Legislation | March 25, 2021 | by Mollie Gurian
In the September 2020 Continuing Resolution (CR), the Congress made positive changes to the terms of Medicare Accelerated and Advanced payment (AAP) program. This article services as a reminder of the terms of the Accelerated and Advanced Payment program for those who took loans during the COVID-19 emergency.
The Medicare Accelerated and Advanced payment program is a tool that CMS can use to offer to increased cash flow to providers whether due to a disruption in claims processing or due to public health or other emergencies. CMS began offering this option to providers related to the COVID-19 emergency and the terms of the program were expanded by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) related to the COVID-19 public health emergency. The CARES Act expanded the providers who were eligible for the loans.
Without the September 2020 continuing resolution, the AAP payments provided by CMS would need to be repaid by offsetting Medicare claims beginning 120 days after the payment was made to the provider or supplier, with interest beginning to accrue as soon as 210 days after the payment date. CMS held off on recoupment as Congress discussed different terms for the program over the summer and into the early fall. The CR made the following key changes to the AAP program:
- Time before repayment begins: the repayment period will now not start until 1 year after the first payment was made to the provider or supplier. This means that recoupment will begin for most members who took the loans in April 2021.
- Recoupment rate: For the first 11 months of the repayment period, the recoupment rate will be 25% of the claims due to the provider or supplier. During the last six months, the offset will be 50% of the claims due to the provider.
- Repayment period: Given the longer time before repayment begins in combination with the staggered recoupment rate, the repayment timeline before interest starts to accrue on the loan is effectively 29 months.
- Interest rate: if a loan is not fully paid off during the 29 month repayment period, CMS starts to charge interest on the loan. That interest rate was changed to 4% by the CR; it had been 10% if the loan was made between the passage of the CARES Act and the end of the COVID-19 public health emergency. This PHE is still ongoing; Secretary Azar renewed it for another 90 days on January 21st, 2021. The Biden Administration announced in January that they anticipated that the PHE would run through the end of 2021.
The CR also explicitly included all Part A providers in the language regarding the new program terms which, along with the new program flexibilities, which is something for which LeadingAge advocated.