Balances remaining on Medicare COVID-19 Accelerated Advance Payments (CAAP) loans taken by providers in April 2020 to soften the economic impact of the COVID-19 pandemic, are coming due in September 2022.
There was a 12-month delay in recoupment from the date of payment receipt, followed by the 17-month payback period.
Key considerations and recommendations to address due payments follow.
Payback Timeline
The payback period for payments taken in April 2020 ends August 31, 2022. Medicare Administrative Contractors (MACs) will send 30-day repayment demand letters in September, requesting the balance of the unpaid advances plus 4% interest accruing from the date of the demand letter.
Recoupment will occur at 100% after 30 days, meaning all Medicare payments will be withheld on remittances until the entire unpaid balance plus interest is paid in full.
CAAP After April 2020
Providers who received CAAP advances after April 2020 should also monitor for their respective payback periods as follows:
- One year from date of disbursement, no recoupment applied
- Next 11 months, recoupment at 25%
- Next six months, recoupment at 50%
- After 29 months from disbursement date, demand letter is issued, and recoupment begins at 100% plus 4% interest
Extended Repayment Schedule
If facilities are unable to pay and meet certain hardship criteria, they may qualify for an Extended Repayment Schedule (ERS).
Hardship as defined in the Code of Federal Regulations exists when the total amount of all outstanding overpayments—principal and interest including overpayments reported in accordance with Section 401.301 through Section 401.305—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 for a provider filing a cost report.
Providers can request an ERS only after their demand letter is issued. Contact your regional MAC for specific instructions on how to apply if you believe you may meet the criteria.
Validate Demand Debt Amount Upon Receipt
Reconcile the amount of the original loan, dates, and recoupment amounts on remits from your MAC to the amount requested from the MAC to ensure the demand amount is accurate. For example, some recoupment payments may not have been credited appropriately resulting in a higher demand amount.
If the debt amount is incorrect, providers have 15 days to file a CAAP Debt Dispute Form with their MAC. Forms and instructions are available on your regional MAC’s website. Documentation must be attached to substantiate the dispute.
If not disputed within 15 days, the MAC will assume the amount is correct. Disputes will be researched and responded to within 30 days from receipt. Filing a dispute does not stop the recoupment process or interest assessment.
What Providers Can Do
To help mitigate the financial effects of unpaid CAAP balances:
- Contact your MAC to request the amount of unpaid advance balances.
- Review your last cost report for Medicare payments to estimate if you qualify for ERS.
- If you believe you may qualify, prepare to contact your MAC as soon as possible after you receive your demand letter.
- If you don’t qualify, prepare now to mitigate the effects of the recoupment.
- Validate your amount due from the demand letter and dispute an incorrect amount in a letter to your MAC within 15 days.
- Ensure a credit line is established for emergency cash flow needs.
- Estimate your impact to cash collections.
- Estimate time frame for repayment, specifically how long you may be on 100% recoupment.
- Shift resources as needed to improve your collections rate from other payers.
- Review denials and underpayments to target collections of additional dollars due.
We’re Here to Help
For more information or assistance as CAAP repayments come due, or to learn more about the Provider Relief Fund, contact your Moss Adams professional.
You can also visit our Health Care Practice for additional resources.