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The promotion applies to the Medicare Accelerated and Advanced Payment Loan program.
In March, the Centers for Medicare & Medicaid Services (CMS) expanded the Accelerated and Advanced Payment Program (AAP) due to the COVID-19 Public Health Emergency (PHE) to increase cash flow for providers. Under current conditions, redemption for these funds should commence on August 10th or 120 days after issue.
Members who have used or applied for Bridgepayday online have been advised that if APP funds are received, repayments will be made, as these are “loans” and not “grants” in the sense of Coronavirus Aid, Recovery and Economic Security ( CARES) Act. You will be brought back in. These are also not PPP loans that have some forgiveness under certain circumstances.
As part of the repayment process, each submitted claim will be offset against the new claims to repay the expedited payments. The outstanding expedited payment balance is reduced by the amount of the entitlement payment, and this process is automatic. Most Part A and B providers must repay funds within 210 days, with the exception of inpatient acute, pediatric, cancer and critical access hospitals, which are available one year after they are issued. After 210 days, Medicare Administrative Contractors (MACs) submit a request for repayment of the remaining balance, which will be collected through direct payment. In addition, after 210 days there is an interest rate of 10.25 percent on the repayment of these loans. As we expected, many hospitals and providers who participated in this application and received these loans are now requesting delays in the repayment process or the granting of the loans. This is an impossible request as CMS has spent more than $ 34 billion on these loans, with the mindset that that money will be repaid for future services. However, due to the unforeseen length of the PHE and the burden of the pandemic on hospitals and providers trying to reopen after nearly six months of minimal elections, panic is emerging as to what this reparation could mean for practices trying to get it back to solvency.
Payments were made available to Part A suppliers, including hospitals, and Part B suppliers, including doctors, non-doctors, and permanent medical device (DME) suppliers. While most of these providers and suppliers could have received three months of their Medicare reimbursements, certain providers may receive up to six months.
The CMS Accelerated and Advance Payment program is funded from the health insurance trust funds (part A) and supplementary health insurance (part B). These are the same funds used to pay Medicare claims on a daily basis. Because of this, the payments are a loan that the providers have to repay.
It’s important to note that this funding is separate from the $ 100 billion provided for in the Coronavirus Aid, Aid, and Economic Security (CARES) Act. The means of the CARES Act are a payment that does not have to be repaid. Because of this, many health advisors and accountants have strongly discouraged providers from applying for these loans.
Due to the turmoil, with reparations already beginning in August, this stalemate is temporary. An administrative delay in repayment does not invalidate the legal liability of the provider. In terms of accounting, this becomes a nightmare for hospitals whose fiscal years end in September or October. Remember that funds that have not been repaid or repaid are subject to an interest rate of 9.6 percent or more.
I would agree with the American Hospital Association (AHA) that setting an initial 120-day repayment schedule was a mistake and six months could have been more reasonable due to the unknowns of the pandemic. But when I advised my clients against applying for these loans, I reminded them that if they don’t make a mistake, these funds will be recovered. The question now is when? And what will the interest rate be?
Stay tuned because this is a developing story.
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