CMS alerts providers to changes to Medicare advance loan repayments, giving hospitals more time

The Trump administration laid out more information Thursday about how providers facing financial hardship can get help with repaying loans they received through the Medicare Accelerated and Advance Payments Program.

The Centers for Medicare & Medicaid Services (CMS) released new details on repayment terms for the loan program, which sent aid to Medicare Part A providers and certain Part B suppliers to help them recover from the financial blow caused by COVID-19.

The details primarily focus on repayment terms that Congress passed last week as part of a short-term government funding bill.

But CMS also announced new flexibility for providers to help them repay the loans. CMS gave out more than $100 billion in loans before suspending the program in April.

Providers were initially required to make payments in August with the plan that CMS would start to garnish Medicare payments. But major pushback from hospital groups, which argued that hospitals are still suffering from the financial COVID-19 downturn, caused Congress to step in.

Now, providers have until one year after the first payment was issued to start repaying. Once that first year ends, Medicare will automatically recoup 25% of the Medicare payments otherwise given to a provider or supplier for 11 months.

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At the end of that 11-month period, the recoupment will increase to 50% for another six months.

If a provider or supplier can’t repay the total amount during this 29-month period, CMS will issue letters calling for the repayment of any outstanding balance with an interest rate of 4%.

The letter will also give guidance on how a provider can request an Extended Repayment Schedule, which would set up a debt installment plan for providers experiencing major financial hardships.

The installment plans could vary from three to five years.

The lifeline could be vital for some independent or smaller hospital systems faring worse than larger systems with more financial liquidity.

CMS also said a provider can use relief funds it received from a $175 billion pot passed as part of the Coronavirus Aid, Relief, and Economic Security Act. So far, the Department of Health and Human Services has doled out more than $100 billion of the relief fund, and Congress could pass more funds to help out hospitals.