CMS’s Advance Payment Program Could Provide Short-Term Relief for Providers with Cash Flow Concerns During the COVID-19 Crisis

By Allison Davis

Centers for Medicare and Medicaid Services (CMS) has expanded its advance payment program in light of COVID-19. As noted in the CMS press release, the program provides for a short term loan of advance Medicare payments designed to relieve providers of the financial hardships they may be facing due to the impact of COVID-19 including moratoria on elective procedures, increased childcare demands, and disruptions to billing. To qualify for this program, a Medicare Part A or B provider/supplier must:

1. Have billed Medicare for claims within 180 days immediately prior to the date of signature on the provider’s/supplier’s request form,
2. Not be in bankruptcy,
3. Not be under active medical review or program integrity investigation, and
4. Not have any outstanding delinquent Medicare overpayments.

Providers who meet these criteria can request an advance of up to 100 percent of the Medicare payment amount they received from October to December, 2019. Certain hospitals may request a longer advance payment period or a higher percentage of payment if the hospital falls into certain categories set forth by CMS.  In a clarifying discussion with senior CMS officials, the American Medical Association (AMA) learned that providers will not be expected to calculate the exact amount themselves, however CMS will limit the amount providers can request to the amount that provider received in Medicare claims from October through December 2019.  Further, as noted in the AMA’s summary, providers may choose to request less than 100 percent of the payment from that three-month period if they wish. A provider who requests a 50 percent of the maximum can approach Medicare later for the other 50 percent if they find they initially requested less than is needed. Given that this is effectively a short-term loan with the potential for interest accrual after a certain period of time, providers may wish to limit their request to the amount they absolutely need to maintain cash flow through the 120-day advance payment period as the advance funds will need to be repaid through future claim offsets.

The process for recoupment of advance payments is set forth in the CMS’s program fact sheet as follows:

The provider can continue to submit claims as usual after the issuance of the accelerated or advance payment; however, recoupment will not begin for 120 days. Providers 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 will be offset from the new claims to repay the accelerated payment.

Thus, instead of receiving payment for newly submitted claims, the provider’s outstanding accelerated/advance payment balance is reduced by the claim payment amount. This process is automatic. Although the CMS guidance on this COVID-19 related advance payment program does not provide many details on the repayment timeline or when interest may be charged, the AMA’s interview with CMS staff indicates that no interest will be charged on advance payments that are repaid within 210 days of disbursement. If repayment within this timeframe is a hardship for the practice, physicians can request that the Medicare Administrative Contractor (MAC) provide an extended repayment plan; however, interest is charged on extended repayment plan payments at 10.25 percent.

The AMA has reached out to CMS to ask for additional information on the repayment process as providers who request a 100 percent claims advance could easily be in a position where the Medicare advance covers cash flow during the 120-day advance period, but right after that period 100 percent of the provider’s Medicare claims will be offset for repayment. The presumption is that a provider could request delayed repayment on a portion of the advance, but that would mean that portion of the advance would begin bearing interest. Once again, providers may wish to be cautious about how much they request through this program if they wish to keep the advance interest free and not simply postpone current cash flow problems.

It is not clear from CMS’s guidance on the program how long interest might accrue before CMS takes additional actions to recoup payment. Given that CMS will offset the payments from additional Medicare claims, as long as a provider continues billing CMS after the 120-day advance payment period, it is likely that CMS will eventually recoup all of the advance payment. However, if a provider does not continue to bill CMS after the advance payment period, the Medicare Financial Management Manual indicates that failure to repay an accelerated payment could be considered a CMS overpayment which will be referred to Department of Treasury for debt collection, which could result in wage garnishment or other traditional debt collection remedies.  

Advance payments must be requested at the individual NPI level so MACs can confirm calculations for the amount to be advanced. Groups of providers will need to fill out multiple forms for the providers in their practice to receive funds for each provider. Once applications are submitted and approved by CMS, payments will be made in the same fashion as traditional Medicare payments, meaning if Medicare payments are currently received by the group entity, that is how advance payments will be received as well.  

Providers can apply for advance payments through their MAC. The MACs are working to process these payments within seven days of request. Note that each MAC has different application systems for these funds, so providers who are interested in applying may want to review their MAC’s guidance in addition to CMS materials relating to the program. In the AMA’s interview with CMS officials, CMS explained that to roll out the program more quickly it planned to rely on current MAC advance payment applications. As most MACs have not had the opportunity to modify their applications for this specific purpose, CMS indicates that providers should be sure to specify in the application that “they are experiencing cash flow problems due to the COVID-19 crisis.”