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Healthcare Update: Are You Ready for Recoupment on Medicare Accelerated Payments?

3/16/21 – Dave Macke

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In October 2020, the Centers for Medicare and Medicaid Services (CMS) announced revised repayment terms for those providers and suppliers that received Accelerated and Advance Payments (AAP).  This was in response to the Coronavirus, Aid, Relief and Economic Security (CARES) Act to address cash flow problems for providers that might be caused by the coronavirus pandemic.  Accelerated payments have existed for a long time but the qualifications were significantly reduced during COVID.  CMS halted the expedited program on April 26 due to the availability of Provider Relief Funds (PRF) that were being distributed.  Accelerated and Advance Payments are strictly loans and must be paid back to CMS, which is significantly different than the Provider Relief Funds. 

Originally, Accelerated and Advance Payments were to be paid back to CMS beginning 120 days from the day that the provider initially received the funds.  This would be early to late August.  However, August came and there were no recoupments.  Instead, CMS announced revised recoupment terms on October 8, 2020.

The recoupment process was initially applied to withhold 100% of payments to claims processed after 120 days until the full balance was recouped.  As part of the Continuing Appropriations Act, 2021 and Other Extensions Act, repayment will now begin one year from the issuance date of each provider’s or supplier’s accelerated or advance payment.  The repayment terms have also been amended as follows for recoupment of Medicare claims payments:

Month 1 to 12                                   no recoupment

Month 13 to 23 (11 months)              25% of remittance advice

Months 24 to 29 (6 months)              50% of remittance advice

Month 29+                                        Demand Letter – subject to 4% interest

If a provider cannot repay the balance after 29 months, they can request an Extended Repayment Plan (ERP) or borrow the money to pay back CMS.  Providers also have the option to repay the advance balance early by sending a check to the Medicare Administrative Contractor.  Providers should contact their Medicare Administrative Contractor to get the proper paperwork to make repayment.

The balance of the Accelerated and Advance Payments should be reported on the Balance Sheet as a liability.  The balance is not considered income and should never be treated as such..  As the withholdings begin, the full amount of the remittance advice should be applied against open Accounts Receivable on patient balances and the withhold amount used to reduce the loan balance. 

For example, remit advice is $100,000.  CMS recoups $25,000.  Net Cash is $75,000.

Cash – debit                                      $75,000

Loan balance – debit                          $25,000

AR – credit                                         $100,000

It is important for providers that have an Accelerated and Advance Payment loan balance to plan now for this reduced cash flow beginning in April 2021.  To allow even more flexibility in paying back the loans, providers can use Provider Relief Funds towards repayment of the Medicare loans.  However, this does not count as an eligible expense for purposes of the Provider Relief Funds.

For any questions related to the CARES Act Provider Relief Fund, or healthcare reimbursement in general, contact Dave Macke, VonLehman’s Director of Reimbursement Services, at dmacke@vlcpa.com or 800.887.0437.