Providers win year’s reprieve on accelerated payments

Ingrid Stiver Senior Manager, Health Research Institute, PwC US October 15, 2020

Under new repayment terms, CMS will not begin recouping payments received by providers under the Accelerated and Advance Payment Program, expanded by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, until one year after the accelerated payment was issued (see CMS’ announcement here). The new repayment terms were authorized by Congress in the Continuing Appropriations Act, 2021 and Other Extensions Act, which was signed into law on Oct. 1.

Starting a year after the accelerated payment was issued and continuing for 11 months, CMS will automatically begin recouping the payment by holding back 25% of Medicare payments to the provider. After 11 months (23 months after the original accelerated payment was issued) and continuing for six months, CMS will hold back 50% of Medicare payments to the provider. After those six months (29 months after the original payment), CMS will issue a letter to the provider for the balance, which will be due 30 days after the date of the letter.

If payment is not received within the allotted time, interest will begin accruing at 4% on the balance. Providers also can opt for an extended repayment schedule when CMS sends its letter seeking the balance. Providers experiencing financial hardship will be allowed to stretch repayment of the balance for an additional three to five years. Under the statute, financial hardship exists when the total amount of outstanding payments is 10% or more of the total Medicare payments reported in the most recent Medicare cost report.

CMS also announced that as of Oct. 8, it will no longer accept applications for accelerated or advance payments related to the COVID-19 public health emergency.

HRI impact analysis

The guidance from CMS comes two months after the agency was scheduled to begin recouping accelerated payments from providers under the previous repayment terms outlined in the CARES Act. CMS had held off on recouping payments in the hope that Congress would extend the repayment terms, which it did.

As of May 2, CMS had advanced over $100 billion to providers and suppliers under the expanded accelerated payment program authorized by the CARES Act. In total, providers will have roughly 30 months from the date the accelerated payment was originally issued to repay it in full without interest.

The option for an extended repayment schedule could give a lifeline to providers experiencing financial hardship by extending the repayment time frame to five to seven years, in total. This could be especially helpful for providers facing a liquidity crisis due to the pandemic, buying them time to improve their liquidity position and repay the loan from CMS.

In June, the Federation of American Hospitals called on Congress to adjust the repayment terms of the accelerated payment program, encouraging Congress to authorize loan forgiveness in cases of hardship. In July, the American Hospital Association urged Congress to fully forgive accelerated payments received by all hospitals. The new repayment terms set by Congress do not include an option for CMS to forgive the loans.

Providers faring better financially have the option of repaying the accelerated payments before the recouping process begins, one year after the payment was originally issued. One health system recently announced plans to repay some of the accelerated payments early.

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Trine K. Tsouderos

HRI Regulatory Center Leader, PwC US

Tel: +1 (312) 241 3824

Ingrid Stiver

Senior Manager, Health Research Institute, PwC US

Erin McCallister

Senior Manager, Health Research Institute, PwC US

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