Congress Gives Nursing Homes Two-Year Extension on Advance Medicare Repayments

A bill to fund the federal government and avert another shutdown also gave nursing home operators and other health care providers a significant extension on repaying advance Medicare payments offered through a COVID-19 stimulus program.

The Senate passed and President Trump last week signed a continuing resolution that included a provision to delay recoupments from the Medicare Accelerated and Advance Payment (AAP) Program, an initiative that floated future Medicare reimbursements to a wide spectrum of health care providers.

The program laid out $100 billion before the Centers for Medicare & Medicaid Services (CMS) shut it down in April, citing the direct aid distributed from the Provider Relief Fund and the Paycheck Protection Program (PPP) as reasons the advance payments had run their course.

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The terms of the advance program allowed operators to access up to 100% of their predicted Medicare payments over the coming three months, with CMS then taking its repayment out of future reimbursements within 120 days of receipt.

“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 the new claims to repay the accelerated/advanced payment,” CMS indicated at the time. “Thus, instead of receiving payment for newly submitted claims, the provider’s/supplier’s outstanding accelerated/advance payment balance is reduced by the claim payment amount.”

The continuing resolution extended the repayment period for an entire year, according to an analysis from law firm McGuireWoods. In addition, the recoupment offsets will be capped at 25% of the full payment for the first 11 months thereafter, followed by six months with a 50% cap.

“This change effectively provides a full 29 months to repay the AAP amount in full,” McGuireWoods observed.

The bill also cuts the interest rate on any payments still due after that period from about 10% to 4%, the firm noted.

The move codifies a payment delay that had been expected within the skilled nursing industry; American Health Care Association (AHCA) CEO Mark Parkinson last month indicated that Medicare Administrative Contractors (MACs) have generally been ignoring the repayment requirements and providing full reimbursements to providers that have taken advantage of the program.

“All the policymakers understand we’re not in a position to pay the money back yet,” Parkinson said.

While the advance payment program brought quick liquidity to some operators in the space — Genesis HealthCare (NYSE: GEN) received $157 million through the program — not every skilled nursing operator elected to participate. Many lenders expected operators to use the funds to pay down their lines of credit, Sabra Health Care REIT (Nasdaq: SBRA) CEO Rick Matros observed in May, prompting providers to stay away.

“Most of our operators haven’t availed themselves of that piece,” Matros said about the advanced payment program.

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