The Centers for Medicare & Medicaid Services (CMS) announced new repayment terms for Accelerated and Advance Payments (AAP) issued to providers and suppliers during the COVID-19 pandemic (press release). These changes are pursuant to the Continuing Appropriations Act, 2021 and Other Extensions Act (P.L. 116-159).
Beginning on March 27, 2020, CMS expanded the AAP program to provide additional financial supports to providers and suppliers during the initial phase of the COVID-19 pandemic (details). By the suspension of this program on April 26, 2020, CMS had dispersed approximately $106 billion in AAP loans.
Policymakers and stakeholders have urged CMS to waive or modify interest rate requirements for these loans (e.g., here), though CMS had responded that to do so would require an act of Congress. Congress therefore authorized CMS to modify the AAP loan repayment terms through the Continuing Appropriations Act, 2021 and Other Extensions Act. The new terms are as follows:
- Repayment will now not begin until one year starting from the date the loan was issued;
- After one year from the issue date elapses, payments will be recouped at a rate of 25 percent for an 11-month period;
- After the 11-month period ends, payment will then be recouped at a rate of 50 percent for another six months;
- After this final six-month period, CMS will issue a letter for any remaining balance of the AAP loan. CMS further states that providers and suppliers will have 30 days to repay the balance in full after the letter is issued. After this 30-day period, interest will then accrue at a rate of 4 percent from the date the letter was issued, and will be assessed for each full 30-day period that the balance remains unpaid.
CMS also provides information on an extended repayment schedule (ERS) – a debt installment plan – which allows providers and suppliers experiencing financial hardship to pay debts over the course of three years, or up to five years in extreme circumstances. Providers and suppliers may request ERSs once they receive the letter from CMS requesting repayment of the remaining AAP loan balance. The agency directs providers and suppliers to their Medicare Administrative Contractor (MAC) for instructions on requesting an ERS.