- CMS will begin recouping accelerated Medicare loans it sent as COVID-19 relief as early as Monday, a spokesperson confirmed to Healthcare Dive, despite fears that could exacerbate the financial stress on hospitals and doctor's offices as the pandemic worsens.
- Providers that received loans won't receive Medicare reimbursement from their claims until the amount of the loan they received is reduced to zero. Hospital groups have pleaded with the Trump administration and Congress to forgive the loans, or relax repayment terms, with no relief so far.
- CMS doled out more than $100 billion in the loans to providers, beginning late March, then suspended the program after about a month, citing the $175 billion tranche of congressionally appropriated grants for providers.
The Medicare Accelerated and Advance Payment Programs speeds Medicare payments to providers in times of emergency, based on historical payments. It's been a godsend in lessening the immediate financial pressure on providers, but the tight repayment window sparked calls from providers for further relief from the administration.
But CMS stresses the loans are intended to keep providers and suppliers afloat when an emergency disrupts claims submission or processing, and are not grants like some other COVID-19 funding. Most providers can request up to 100% of their Medicare payment amount for a three-month period, and begin paying it back 120 days after CMS issues the payment.
One day after that deadline, CMS will automatically zero out Medicare fee-for-service payments from any new submitted claims until the borrowed funds are repaid.
The majority of hospitals will have to repay the full balance of their loan a year after it was issued. Other Medicare Part A providers have a total of 210 days to repay the entire balance of the loan.
Medicare fee-for-service payments make up roughly a fourth of a U.S. hospital's revenue, on average, and losing that source of income could be really damaging for providers, hospital lobbies say — especially as COVID-19 cases surge once again, surpassing the 4 million mark earlier this month.
The American Hospital Association estimates U.S. hospitals could lose a sum of $323 billion this year because of the pandemic.
The lobby, along with its sister groups, is pushing for Congress to forgive the loans in its next round of COVID-19 relief legislation currently being negotiated on Capitol Hill, or enact looser repayment strictures like postponing the deadline, reducing the loans' interest rates or reducing the per-claim recoupment amount from the entire claim to a fourth of it.
The final form of that legislation is unclear, but the Democrat-backed Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act passed by the House in May would enact some of those measures, including more favorable loan terms, a longer repayment period and a lower per-claim recoupment rate.
However, CMS says it is balancing statutory requirements to collect the debt to funnel cash back into the beleaguered Medicare trust fund with providers' financial needs. Due to rising stress on the program, the hospital fund could run dry as early as 2026, a looming financial crisis likely to be exacerbated by COVID-19.
Much like its disbursement of the $175 billion in congressional grants to providers, the Trump administration has faced persistent criticisms for how it has allocated the Medicare loans, with the majority going to hospitals better positioned to stick the crisis out.
Acute care and critical access hospitals received more than 80% of the loans, while single or multispecialty group practices got $3.5 billion and family practices received $15 million.