Early in August 2020, the Medicare Accelerated & Advance Payment Programs will start to recover the $100 billion in Medicare reimbursements advanced to hospitals and physicians to ease cash flow issues they experienced in March when a handful of COVID-19 cases turned into a national public health emergency.
Major hospital groups are asking Congress to forgive $100 billion in Medicare accelerated and advance payment loans, according to CNBC.
CMS had expanded temporary loan programs to ensure providers and suppliers had enough resources needed to fight the beginning stages of the 2019 Novel Coronavirus (COVID-19).
Funding was available to hospitals and other healthcare providers on the front lines of the coronavirus response primarily from the Provider Relief Fund.
The Accelerated and Advance Payment (AAP) Programs are typically developed and used to give providers emergency funding. Using this program CMS addresses cash flow issues for providers and suppliers when there is a disruption in claims submission or claims processing, including during a public health emergency or Presidentially-declared disaster.
American Hospital Association CEO Rick Pollack also said the association is asking for forgiveness of the Medicare payments.
“It’s a mechanically easy way to provide instant relief to people on the ground,” Mr. Pollack told CNBC.
In addition, the Senate GOP proposal released July 27 calls for pushing the start date of the repayment to Jan. 1, 2021, and extending the overall time to pay back the loans.
Before $175 billion was allocated by Congress to the Provider Relief Fund, the first option available to healthcare providers starting to see revenues dip as a result of COVID-19 was the Medicare Accelerated & Advance Payment Programs.
Healthcare providers started facing revenue dip as a result of coronavirus before the $175 billion was allocated by Congress to the Provider Relief Fund. Providers jumped and availed this opportunity to receive immediate financial support through the programs, which were established decades ago to move funding to providers experiencing economic hardship during natural disasters and other national emergencies.
Providers can also opt to repay the funds, or a portion of the funds, directly instead of having payments earned via claims submission. If the loans are not repaid within one year, they will face a 10 percent interest charge, according to the report. To avoid the high-interest rate, a $100 million hospital, for example, would have to take a close to $3 million hits if it borrowed its maximum of $20 million.
“A healthy, well-performing $100 million hospitals may an annual margin of about $2.5 million dollars, and that’s a good performer,” said Jordan Shields, MBA, managing director at Juniper Advisory.
Groups like AHA, FAH, and the AMGA (American Medical Group Association) have been pushing for changes to the loan programs.
The loan may not be forgiven according to industry experts. Though Congress has indicated via draft legislation that it intends to include changes to the program in upcoming coronavirus relief package. For providers up against the August 1st deadline, though, Congressional relief will come too late.