CMS on Thursday detailed new repayment timelines for providers that received COVID-19 Medicare loans from the Accelerated and Advance Payment Program after Congress loosened the loan terms.
Congress initially required providers to start making payments in August, but relaxed requirements in the latest government funding bill. Medicare will automatically recover 25% of Medicare payments during the first year of repayment. That number will climb to 50% for the six months following the first repayment year.
"In the throes of an unprecedented pandemic, providers and suppliers on the frontlines needed a lifeline to help keep them afloat," CMS Administrator Seema Verma said in a statement. "CMS' advanced payments were loans given to providers and suppliers to avoid having to close their doors and potentially causing a disruption in service for seniors. While we are seeing patients return to hospitals and doctors providing care, we are not yet back to normal."
Providers that received COVID-19 relief loans from Medicare expected that CMS would cut off their fee-for-service reimbursement after four months, but CMS never garnished payments, even as the program's deadlines passed, as congressional negotiations were ongoing.
Loan repayments could be incredibly 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.