CMS Abruptly Ends Part B Advance Payments, Announces Intent to Reevaluate Part A Accelerated Payment Program

Alerts / April 28, 2020

The Centers for Medicare & Medicaid Services (CMS) announced on Sunday that it immediately is suspending its Advance Payment Program to Part B suppliers and reevaluating all pending and new applications under the Part A Accelerated Payment Program. After expanding these temporary loan programs on March 28, 2020, to increase cash flow to Medicare suppliers and providers impacted by the 2019 novel coronavirus (COVID-19) pandemic, CMS approved over 21,000 applications totaling $59.6 billion in payments to Part A providers, including hospitals, and approved almost 24,000 applications totaling $40.4 billion in payments to Part B suppliers, including physicians. In making this policy change, CMS explained that expansion of the loan programs was intended to ensure providers and suppliers had the resources needed to combat the beginning stages of COVID-19. Loan recipients will be obligated to repay the advanced/accelerated payments, with repayment obligations commencing 120 days from the loan distribution, with limited exceptions.

CMS emphasized that significant additional funding is being made available to the healthcare industry by the Department of Health and Human Services (HHS) from its Provider Relief Fund, consisting of $100 billion appropriated by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and $75 billion added by the Paycheck Protection Program and the Health Care Enhancement Act. HHS divided the original CARES Act appropriations equally between targeted allocations and general allocations. Of the general funds, HHS distributed $30 billion to Medicare providers between April 10 and April 17, 2020, and announced it would begin distributing an additional $20 billion on April 24, 2020. The agency has been forced to act quickly in developing allocations and payment formulas to make these funds available on an expedited basis. It is therefore unlikely that this relief will be made equitably or in proportion to actual need. The initial $30 billion was quickly directed to hospitals based on historic Medicare revenues to ensure the availability of resources to treat an influx of COVID-19 patients. Recipients of these payments may now request additional funding through the Provider Relief Fund Application Portal and should review the terms and conditions of acceptance of Provider Relief Fund distributions. In remarks earlier this month, CMS Administrator Seema Verma indicated that relief to other providers and suppliers would be forthcoming.

As the agency evaluates its provision of further relief to providers and suppliers, it could make additional changes to the Advance Payment and Accelerated Payment programs. Industry advocates have urged HHS and CMS to exercise regulatory and statutory authority to revise the programs, including requests in an April 23, 2020, letter to make the following changes to address the financial struggles of the healthcare system following the initial COVID-19 response period:

  • Increase the amount that can be advanced to hospitals from three or six months of Medicare payments to 12 months of Medicare payments.
  • Extend the period before repayment begins from four months to at least 12 months.
  • Reduce the amount of Medicare claim reduction during repayment from 100 percent to no more than 25 percent.
  • Extend the repayment period before interest begins to accrue from 12 months to a maximum of 36 months.
  • Waive the interest rate (or collection of interest) to no more than 2 percent. (The programs apply the prevailing interest rate set by the Treasury Department, which is currently 9.625 percent.)

Authorship Credit: Kristen McDermott Woodrum

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