Providers struggling during the pandemic were given a critical lifeline from CMS in the form of Medicare advanced/accelerated payments last year. With so many things on your plate during these difficult times, you may have forgotten that these funds are not a gift, and all providers will have to return any funds not used to render services for their patients. This means that on top of all the other challenges you are facing during the COVID-19 pandemic, you need to plan for a significant reduction in cash flow until your balance is paid.
In October last year, CMS announced amended repayment terms. Recoupment of advance and accelerated payments would begin one year after the payments were issued. For many providers, that date has arrived. When the extended repayment terms were announced, your MAC should have sent a letter containing the amount of funds received and the repayment start date. If you did not receive such a letter, contact your MAC immediately.
11 months after your repayment start date, 25% of your Medicare payments will be automatically withheld or offset. The withheld amount will be applied towards your organization’s loan repayment. After the first 11 months, 50% of your Medicare payments will be withheld or offset. This will apply for months 12-17 after your repayment start date (six months total). For organizations who wish to avoid recoupment, a lump sum can be paid in advance.
In total, your agency has 29 months from the day your funds were received to repay the balance in full. No interest will be assessed during this 29 month period. After the 29 month period, your MAC will issue a “demand letter” for any remaining balance. You will then have 30 days to repay the balance before a 4% interest rate is applied. Most importantly – Medicare will recoup 100% of your payments until the balance is fully repaid. It goes without saying that you should do everything possible to avoid having an outstanding balance after 29 months.
You need a plan that covers Medicare recoupment and beyond. We still don’t know what the future holds for Medicare sequestration cuts, or what kooky payment model will come out of the woodwork next. Contact us today to protect your cash flow and get ready for the challenges around the corner!