Providers may see door closing on COVID-19 Medicare accelerated/advance payments

Crystal Yednak Senior Manager, Health Research Institute, PwC US April 30, 2020

Days after a COVID-19 relief bill was signed that includes a new $75 billion infusion for healthcare providers, CMS said that it is not accepting new applications for the Medicare advance payment program and that it is reevaluating pending and new applications submitted for accelerated payments. These actions may cut off streams of money for hospitals still financially struggling during the pandemic and Part B suppliers reeling from the disappearance of other revenues during COVID-19.

Since March 28, when it expanded access to the advance and accelerated payments, CMS has doled out $59.6 billion in payments to Part A providers and $40.4 billion to Part B suppliers, including doctors and durable medical equipment companies, according to CMS.

But that money has to be paid back; the $175 billion in grant money for healthcare providers that was included in the Coronavirus Aid, Relief and Economic Security (CARES) Act and the Paycheck Protection Program and Health Care Enhancement Act does not.

The repayment clock on the advance and accelerated payments starts 120 days after the payment is issued. Inpatient acute care hospitals, children’s hospitals, certain cancer hospitals and critical access hospitals (CAH) need to repay the money within one year of the payment date; other Part A providers and Part B suppliers have 210 days to repay, according to a CMS fact sheet.

HRI impact analysis

Emergency relief money is flowing to providers, although how much of the money is going to whom remains murky. HHS announced last week that the remaining $20 billion of CARES money would be distributed proportional to the providers’ share of 2018 net patient revenue, but hospitals and physicians groups still have questions on what they can expect in these next rounds, as providers across the country worry about their cash flow during the pandemic.

And in the rush to send out payments, Modern Healthcare reported that some grants were sent to closed hospitals. Axios reported this week that HHS is establishing a database that would include how much healthcare organizations received, as the information was not otherwise publicly available beyond healthcare companies’ financial filings.

Some providers are turning to road maps to see how they may add back some nonemergent services to help with their finances, but testing and supplies remain a challenge that could prolong the period when providers are restrained from fully operating.

Further down the road, industry groups are worried about providers that continue to be hit hard because of COVID-19 waves and then find they do not have the money to repay their advance or accelerated payments. In that case, they could face interest rates of almost 10% on the balance, according to the American Hospital Association, which is pressing CMS and HHS to waive or reduce the interest. 

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Trine K. Tsouderos

HRI Regulatory Center Leader, PwC US

Tel: +1 (312) 241 3824

Crystal Yednak

Senior Manager, Health Research Institute, PwC US

Erin McCallister

Senior Manager, Health Research Institute, PwC US

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