October 30, 2020

New Terms for the Repayment of Accelerated and Advance Payment Program (AAP) Loans Announced by CMS

The Centers for Medicare and Medicaid Services (CMS) recently announced new terms for loans issued under the Accelerated and Advance Program (AAP) that were paid to providers and suppliers during the Covid-19 pandemic as a means of providing relief. Under the AAP, CMS paid $106 billion to providers and suppliers. The new repayment terms are required under the recent Continuing Appropriations Act, 2020 and Other Extensions Act approved by President Trump and Congress.

Under the new terms, repayment by providers and suppliers will be delayed for one year from the date in which they were issued the accelerated or advance payment. Prior to these new terms, providers and suppliers were required to start repaying such payments in August of this year. After the first year, 25 percent of Medicare payments owed will automatically be recouped over a period of eleven months. After eleven months, CMS will start recouping 50 percent of payments owed over a period of six months. At the end of this 29 month time period, CMS will issue letters to providers and suppliers requiring them to repay their outstanding balance with a four percent interest rate.

For providers and suppliers who are going through a financial hardship, an Extended Repayment Schedule (ERS) can be requested after they receive a repayment letter from CMS. An ERS is a debt payment schedule that will allow providers or suppliers to repay their debts over the course of three years, which can be extended to five years if extreme financial hardship criteria are met. Under Section 401.607 of the Code of Federal Regulations, a “hardship exists when the total amount of all outstanding overpayments . . . not included in an approved, existing repayment schedule is 10 percent or greater than the total Medicare payments made for the cost reporting period covered by the most recently submitted cost report for a provider filing a cost report, or for the previous calendar year for a supplier or non cost-report provider.”

CMS recommends that providers and suppliers contact their Medicare Administrative Contractor (MAC) for information on requesting an ERS. In the next few weeks, CMS will be in communication with each provider and supplier about AAP Program repayment terms and amounts. Further, CMS has a Fact Sheet and a FAQs page for more information.

If you have any questions about this article, please contact David R. Ross, Esq., Senior Shareholder, via e-mail at dross@oalaw.com.  Law Clerk Colleen R. Pierson contributed to this article.