MAAPP Payments for Healthcare Providers Coming Due Soon

Last year, the Centers for Medicare & Medicaid Services (CMS) issued $106 billion in accelerated and advance Medicare payments to healthcare providers and suppliers. Those providers and suppliers will need to begin repaying those accelerated and advance payments soon and should consider the legal and financial ramifications of repayment during a time when many providers and suppliers are still heavily reliant on government funding to survive the financial challenges resulting from the COVID-19 pandemic.

CMS issued these payments under the Medicare Accelerated and Advance Payment Program (MAAPP). This was an existing program that was amended in March 2020 by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. On October 1, 2020, Congress enacted the Continuing Appropriations Act, 2021 and Other Extensions Act, which amended the repayment terms for all healthcare providers and suppliers that received payments as part of the program. On October 8, 2020, CMS announced that it was suspending COVID-19-related applications under MAAPP.

The amended repayment terms are as follows:

• Recipients may request a payment/recoupment holiday of up to one year.
• One year after the accelerated and advance payment was issued, CMS will recoup 25% of payments for eleven months.
• After the eleven-month period, CMS will recoup 50% of payments for six months.
• After the six-month period (a total of 29 months after the payment was issued), CMS will require repayment of the outstanding balance at a 4% interest rate.

Because these payments began to be issued in April 2020, the payment/recoupment holiday for many providers and suppliers will soon expire, and such providers and suppliers face the beginning of CMS recouping 25% of the advanced and accelerated payments.

Many of the nation’s largest public health systems received payments under MAAPP. For instance, Community Health Systems has disclosed that it received $1.158 billion in COVID-19-related MAAPP payments. It is anticipated that CMS will recoup anywhere from $150 million to $350 million per quarter such that all MAAPP recoupments shall be completed by the quarter ending June 30, 2022.

In addition, many rural and safety net providers must be particularly cognizant of the effect that the MAAPP repayments/recoupments will have on their bottom line, as such providers are likely to rely heavily on Medicare reimbursements to fund ongoing operations and may still be relying on government stimulus funds to remain operational. While rural and safety net providers may be uniquely impacted by the MAAPP repayments/recoupments coming due, all healthcare providers and suppliers that accepted COVID-19-related MAAPP funds should be aware and prepare for the legal and financial consequences of such repayment or recoupment.

Finally, one option for healthcare providers and suppliers to consider is an Extended Repayment Schedule (ERS). An ERS gives providers and suppliers the option to pay debts over three years, or as many as five years (if certain extreme hardship criteria are met). Providers and suppliers may request an ERS after their Medicare Administrative Contractor (MAC) issues letters requiring reimbursement. To receive an ERS, providers and suppliers must meet established criteria for financial “hardship” or “extreme hardship.” “Hardship” exists when the total amount of all outstanding overpayments (principal and interest) not included in an approved, existing repayment schedule is 10% or greater than the total Medicare payments made for the cost reporting period covered by the most recently submitted cost report, or for the previous calendar year for a supplier or non cost-report provider. “Extreme hardship” exists when a provider or supplier qualifies as being in “hardship” and their request for an ERS is approved by CMS. Additional factors to consider include total amount of the claim (overpayment), provider or supplier’s ability to pay, and cost to CMS of administering an installment agreement.