Hospitals that received COVID-19 relief loans from Medicare expected that CMS would cut off their fee-for-service reimbursement after four months, but as deadlines have passed the agency apparently hasn’t started garnishing payments.
State and national hospital associations, providers and consultants that work with providers said their reimbursements remain the same although CMS said it would begin recouping Medicare Accelerated and Advance Payment Program funds. In March and April, hospitals received more than 80% of the $100.3 billion in relief loans from CMS.
CMS declined to comment on the agency’s recoupment policy.
The CARES Act, which outlined requirements for the expanded loan program, stated that the HHS secretary should provide “up to 120 days before claims are offset to recoup the accelerated payment.”
Hospitals have implored Congress to forgive the loans, or at least change their repayment timelines, recoupment percentage and interest rate. Both House Democrats’ and Senate Republicans’ comprehensive proposals for another COVID-19 relief package would relax the loan terms, but negotiations have stalled with no agreement in sight.
Executives at Atlantic General Hospital and Health System based in Berlin, Md., said their 120-day deadline was Aug. 8, but they have not noticed any garnishment yet.
“But if they forgot, we’re not going to remind them,” Atlantic General CEO Michael Franklin said.
He said the unexpected delay could potentially be due to unclear language. If CMS started recoupment based on new claims submitted after the 120-day deadline, the withholdings may not show up yet due to a 30-day turnaround time.
A CMS guidance document on the program states that “at the end of the 120-day period, the recoupment process will begin and every claim submitted by the provider/supplier will be offset from the new claims to repay the accelerated/advanced payment.”
However, a frequently asked questions webpage maintained by Medicare Administrative Contractor Palmetto GBA indicated the recoupment would begin immediately after the 120-day deadline.
“Offset of the AAP will begin on the 121st day. Providers should make note of the date their refund is due based on the date their AAP was issued and plan accordingly,” the webpage states.
Spokespeople for the Federation of American Hospitals, Premier, the Washington State Hospital Association, and the National Rural Health Association said they are not aware of any withholdings yet by CMS.
“We are hearing from some that are extremely grateful recoupment has not occurred yet,” National Rural Health Association federal lobbyist Maggie Elehwany said.
Some providers and industry observers speculated that if changes to the program could come soon, CMS may want to avoid a situation where they might have to refund withheld payments if the repayment timeline is changed.
“My sense is, the fact that this has been included in the bill that passed the House and the Republican bill in the Senate, that CMS has acted responsibly to give it a shot at waiting. But it’s critical that Congress act on this,” Federation of American Hospitals CEO Chip Kahn said.
Harrison Memorial Hospital CEO Sheila Currans said that uncertainty about when recoupment would begin is making planning difficult for the hospital’s next fiscal year. The hospital’s 120-day deadline expires in mid-September, and its fiscal year ends Sept. 30.
“Our payment deadline is upcoming next month, and we have not fully recovered. If we have to start paying, it is going to be very difficult,” Currans said.
Cynthiana, Ky.-based Harrison Memorial’s Medicare accelerated payment makes up roughly one-third of the hospital’s overall cash on hand, Currans said.
Loan repayments could be especially difficult for some financially strapped hospitals, and hospital finance experts estimate that up to 20% of hospitals that received the loans may be forced to restructure, consolidate or close when CMS begins to recoup the funds.
Franklin said the recoupment could also be an issue for physician practices, which may have less liquidity available. Several physician practices in Atlantic General’s market have approached the hospital about potential acquisitions— groups that had not previously expressed interest, Franklin said.
“They operate more from a small-business perspective, and are more sensitive to swings and fluctuations, so it will be more challenging for them to pay these loans back,” Franklin said.