The federal government last week began recovering the extra Medicare payments sent to nursing homes and other health care providers during the initial height of the coronavirus crisis last year.
The Centers for Medicare & Medicaid Services (CMS) in 2020 doled out more than $100 billion in cash to Medicare-certified providers under the Accelerated and Advance Payments (AAP) program, one of several federal initiatives designed to help tide operators over amid spiking costs and other operational issues caused by COVID-19.
Unlike the straight relief funds distributed through the CARES Act, the Medicare dollars were always intended to be loans, with repayment starting a year from the date of first receipt.
That day came for the first wave of providers on March 30, CMS announced last week. Operators will gradually begin to see lighter Medicare payments over the coming weeks as the government uses current reimbursements to pay off the outstanding debts.
Under the terms of the AAP, CMS will keep 25% of a given facility’s Medicare payments for the first 11 months of the recoupment period, increasing to 50% for six more months thereafter. Any outstanding debt will then become due within 30 days, with a 4% interest rate applied thereafter.
“CMS will show the recoupment on the remittance advices issued for Medicare Part A and B claims we process after the 1 year anniversary of issuing the first payment,” the agency advised. “The recoupment will appear as an adjustment in the Provider-Level Balance (PLB) section of the remittance advice.”
CMS instructed operators to ensure that their billing teams are aware of the pending lower payments.
The AAP deadline marks another milestone as the federal government shifts its COVID-19 strategy away from crisis management and slowly begins to perform an accounting of where hundreds of billions in emergency aid ended up.
Originally introduced at the end of March 2020, the AAP lasted about a month, with the Department of Health and Human Services (HHS) suspending the program by the end of April as CARES Act cash and Paycheck Protection Program (PPP) loans began to flow to operators.
Congress gave operators a reprieve from the initial 120-day repayment period in October, extending the deadline to the current multi-tiered structure and also reducing the eventual interest rate from the original 10% figure.
Major operator Genesis HealthCare notably received $157 million in AAP funds, but Sabra Health Care REIT (Nasdaq: SBRA) CEO Rick Matros observed last May that many nursing home companies may not have actually used the program, as lenders expected providers to use the cash to pay down their credit lines.
“Most of our operators haven’t availed themselves of that piece,” Matros said at the time. “It’s just for a decent-sized operator, getting three months of Medicare in advance is a huge number, so that $150 million looks larger than it is in terms of the number of operators it’s really impacting.”