CMS begins recovering Medicare advance and accelerated payments

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By Jacqueline LaPointe

– CMS has started recovering Medicare payments it made to healthcare providers last year during the COVID-19 pandemic.

In a recent MLN Questions newsletter, the agency said it began collecting payments through COVID-19 Expedited and Advance Payments (CAAP) on March 30, 2021 and would continue to recover based on the first anniversary of receiving their first payment by suppliers.

“Please make sure your billing staff are aware that recovery has started, or will begin soon, but no earlier than one year from the date we issued the CAAP to you,” CMS said in the newsletter.

Lawmakers expanded Medicare’s accelerated and advance payments program through the Aid, Relief and Economic Security (CARES) law against the coronavirus last March. The program distributed a total of $ 100 billion to hospitals and other types of providers affected by the COVID-19 pandemic by May 2020.

CMS has the authority to provide up-front Medicare payments to providers in the event of a national emergency or natural disaster “to speed up cash flow to affected health care providers and providers.” Payments are intended to support providers when submitting the complaint or discontinuing processing.

READ MORE: CMS amends repayment terms for accelerated prepayments

However, providers who accept payments must reimburse the CMS, and the agency may withhold future Medicare reimbursements from the provider until the initial payments are recovered.

These providers were initially scheduled to begin reimbursing Medicare payments made in advance during the COVID-19 pandemic in August 2020.

But CMS and lawmakers, through the 2021 Standing Appropriations Act and the Other Extensions Act (PL 116-159), have extended the original repayment deadlines in light of ongoing struggles arising of the pandemic.

During the payback period, CMS will withhold a portion of new Medicare claims from providers – 25% during the first 11 months of payback and 50% during the six months – until payments advanced last year are clawed back.

Suppliers are required to have repaid advance payments in full 20 months after receiving the first payment. If they don’t, CMS will charge four percent interest on the remaining balance.

READ MORE: FAH wants more time and lower rates on Medicare advance payments

Clawback conditions are more favorable for suppliers thanks to the 2021 Standing Appropriations Act and the Other Extensions Act and other laws. Usually, providers have a shorter time frame until the repayment is made and CMS would withhold future full Medicare repayments until the loan is repaid.

The interest rate is also generally around 10 percent for any balances remaining after the payback period.

But healthcare providers are still concerned about reimbursing CMS for up-front Medicare reimbursements as their organizations continue to face significant challenges with COVID-19.

According to the last hospital financial performance report from Kaufman Hall, hospitals and healthcare systems are still seeing small margins as inpatient and outpatient volumes remain down from before the pandemic.

Specifically, the median hospital operating margin index was -0.5% in February, not counting federal aid intended to offset lost revenue and expenses related to COVID-19. The margin had fallen 30.8% year over year.

READ MORE: CMS pays $ 34 billion in Medicare prepayment to providers

As healthcare providers continue to face depressed margins and volumes, many industry groups are renewing their calls for total loan cancellations.

“As vendors strive to continue breaking out of ties created by responding to COVID-19, we call on Congress to avoid adding to existing financial pressures and consider allowing cancellation of loans made. through accelerated and prepayment programs ”, Donald H.. Crane, president and CEO of the American Physician Groups (APG), wrote in a March 25 letter to the leaders of the Senate.

“This would play a critical role in providing physicians with financial assistance in the midst of the current pandemic, given the scale of the changes that have been made to infrastructure and the disruption of service that has occurred during this pandemic. Crane added.

The American Hospital Association (AHA) also recently mentionned that he plans to work with Congress and the Biden administration to get more “relief for hospitals and health systems through fast-track Medicare payments.”

The Kaiser Family Foundation (KFF) has advised that while policymakers are considering further adjustments to loan repayment terms, they are considering the different sources of funding that have already been distributed during the pandemic and the fact that some providers have recovered faster than others.

In addition, they should consider how the changes to reimbursement could increase the tax burden on the Medicare hospital insurance trust fund, which is now slated for. exhaust sooner than the 2026 estimate.

KFF researchers also found that the vast majority ($ 92 billion) of expedited and advance payments during the COVID-19 pandemic went to Part A providers, who were filing claims for hospital stays, stays in skilled nursing homes, some home health visits and palliative care. .

Of these providers, short-stay hospitals received 78% of the payments.

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