On March 28, 2020, the Centers for Medicare and Medicaid Services (CMS) expanded the Accelerated and Advance Payment Program (AAP) to ensure providers and suppliers had the resources needed to combat the 2019 Novel Coronavirus (COVID-19). The streamlined process reduced processing times for a request of an accelerated or advance payment to between four to six days, down from three to four weeks. The agency paid out over $100 billion to nearly 45,000 providers and suppliers. Prior to COVID-19, CMS had approved just over 100 total requests in the past five years, with most being tied to natural disasters such as hurricanes. CMS stopped accepting new AAP applications on April 26, 2020. Since AAP payments are a loan, recipients need to prepare for repayment.
How Much was an AAP Payment?
AAP payments were available to Part A providers, including hospitals, and Part B suppliers, including doctors, non-physician practitioners, and durable medical equipment (DME) suppliers. While most of these providers and suppliers received an amount equal to three months of their Medicare reimbursements, certain providers (general hospitals) received up to six months.
What Are the Terms of repayment?
AAP payments are loans that providers must payback. CMS will begin to apply claims payments to offset the accelerated/advance payments 120 days after disbursement. Most hospitals including inpatient acute care hospitals, children’s hospitals, certain cancer hospitals, and critical access hospitals will have up to one year from the date the accelerated payment was made to repay the balance. All other Part A providers and Part B suppliers will have up to 210 days to complete the repayment of AAP payments.
Recoupment and Reconciliation.
A provider/supplier should continue to submit claims as usual after the issuance of an APP payment. Providers/suppliers will receive full payments for their claims during the 120-day delay period. At the end of the 120-day period, the recoupment process will begin, and every claim submitted by the provider/supplier will be offset from newly submitted claims to repay the AAP payment. Thus, instead of receiving payment for newly submitted claims, the provider’s/supplier’s outstanding AAP payment balance is reduced by the claim payment amount. This process is automatic.
Most hospitals will have up to one year from the date the accelerated payment was made to repay the balance. That means after one year from the accelerated payment, the MACs will perform a manual check to determine if there is a balance remaining, and if so, the MACs will send a request for repayment of the remaining balance, which is collected by direct payment. All other Part A providers and Part B suppliers will have up to 210 days for the reconciliation process to begin.
What Should a Facility do to Prepare for Recoupment?
Assuming an AAP payment was received in April 2020, sometime in July 2020, the recoupment process will begin. Between now and the end of June the following needs to be considered:
- Cash Flow Preparation – Plan for the reduction in regular Medicare payments. Ensure there will be adequate cash on hand for 210 days or 1 year, depending on provider type, to offset payment reductions.
- Develop a Payment Posting Plan – After the 120-day delay period, remittances will show claim adjudication and payments, but no money will be received. Adjudicated amounts will still need to be posted against the claims in the billing system. A new general ledger account should be set up (perhaps, AAP Recoupment) for posting purposes.
- Develop a Reconciliation Plan – Providers should always reconcile payments received against payments posted in the billing system. AAP recoupments will cause an imbalance. Staff involved in reconciliation duties should be aware of the impending recoupments and develop a communication plan to ensure the recoupments are accurately identified and reconciled.
Don’t hesitate to reach out to our experts to discuss how to prepare for the impending APP recoupments.
The information and advice we are providing for this matter relates to COVID-19 legislative relief measures. Because legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that could modify some of the advice and information provided to you, after the conclusion of our engagement. We, therefore, make no warranties, expressed or implied, on the services provided hereunder.
