CMS Amends Medicare Loan Terms Allowing Providers More Time to Make Payments

King & Spalding

During the COVID-19 pandemic, CMS has issued approximately $106 billion in loans to providers who were struggling with cash flows and financing in the early stages of the pandemic. This month, the Continuing Appropriations Act, 2021 and Other Extensions Act were enacted, and CMS released new payment terms for the Accelerated and Advance Payment (AAP) Program loans issued during the pandemic. Under the original loan terms, providers and suppliers were required to start making payments in August. Now, providers and suppliers have one year after their accelerated or advanced payment loan issuance dates to start making repayments.

At the end of the year period, Medicare will automatically recover 25% of the Medicare payments for 11 months. Then, providers will be required to pay 50% for the next 6 months. After this 17-month repayment period, if providers are unable to repay the total amount of the loans then CMS will require repayment of any outstanding balance subject to a 4% interest rate.

Since March 28, 2020, CMS has paid approximately $98 billion in accelerated payments to more than 22,000 Part A providers and approximately $8.5 billion in advance payments to over 28,000 Part B suppliers. As of October 8, CMS will no longer accept applications for AAP Program loans.

Providers and suppliers that are experiencing extreme hardship can also request a debt installment payment plan called an Extended Repayment Schedule (ERS). The ERS permits suppliers and providers to repay their loans over a 3 to 5-year period. Providers and suppliers can contact their MAC for more ERS information. In addition, providers can use their Provider Relief funds to repay their Medicare loans. For more information about the repayment terms, see the CMS Fact Sheet and FAQs.

Written by:

King & Spalding

King & Spalding on:

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