Our Health Care Group details how changes by the Centers for Medicare & Medicaid Services to the AAP loan program delays repayment obligations for all health care providers and suppliers that received AAP loans during the COVID-19 pandemic.
On October 8, the Centers for Medicare & Medicaid Services (CMS) announced amended terms for Accelerated and Advance Payment (AAP) Program loans that provide much-needed relief for AAP recipients. Initially, providers and suppliers were required to begin repayments on these loans 120 days after payment was issued, as early as August, and repay the balance in full within seven months (one year for certain hospitals). Further, AAP recipients faced recoupment of up to 100 percent of Medicare payments during the repayment phase and an interest rate of around 10 percent. See our March 30 advisory for details on the initial expansion of the AAP Program under the CARES Act.
Key AAP Program Changes
These changes to the AAP Program are required in the Continuing Appropriations Act, 2021 and Other Extensions Act (P.L. 116-159) (“Continuing Resolution”). This law delays repayment obligations for all providers and suppliers that received AAP loans during the COVID-19 public health emergency (PHE). While CMS will be communicating with each provider and supplier in the coming weeks about the repayment terms and amounts owed, there are several important details to note:
The Continuing Resolution also provides CMS additional discretion to limit AAP loans after April 26, 2020, and CMS announced through its fact sheet that as of October 8 it will no longer accept applications for AAP loans “as they relate to the COVID-19 PHE.” If CMS changes its position, it would be able to resume advance payments to providers and suppliers. However, payments to Part B suppliers would be capped at $10 million in total advance payments for 2020 and $10 million for each year during the COVID-19 PHE.
The Continuing Resolution also requires CMS to publish certain AAP Program data on its website by October 15, including payment amounts broken down by provider and supplier type and by provider and supplier Medicare certification number.
Additional Flexibilities for “Hardship” Situations
Providers and suppliers experiencing financial hardships can request an Extended Repayment Schedule (ERS) after receiving a repayment letter. An ERS allows eligible providers to repay outstanding debt through an installment payment plan over three years (potentially up to five years), but this option is not available during the initial 29-month repayment period. To qualify for an ERS, a provider or supplier must meet the criteria for financial “hardship” or “extreme hardship” set forth under 42 C.F.R. 401.607(c)(2).
See CMS’s fact sheet and FAQ document for additional details regarding these changes.
Download PDF of Advisory