The Federal Accelerated Payment Program— Is It All It Is Chalked Up to Be?

• April 17, 2020

• Jenny G. Givens , Gray Reed & McGraw LLP

Like other establishments, health care providers have been devastated by the impact the coronavirus has had on their businesses. Hospitals, which serve as safety nets to their surrounding communities, have been hit particularly hard. This is evident as we watch masses of people, many of whom are now unemployed and uninsured, flood hospitals’ emergency departments. Unlike other businesses, however, hospitals cannot turn away those who are unable to pay for their services (depending upon the individual’s condition). Further complicating hospitals’ ability to operate during this pandemic, the government ordered hospitals and surgery centers to cease all elective procedures—it is these lucrative procedures that allow hospitals to cross-subsidize the care rendered to uninsured individuals. All the while, hospitals’ operating costs are surging due to their need to prepare for additional patients and to obtain the additional supplies required to treat patients and to protect their most valuable asset—their front-line staff.
 
Hospitals are by no means the only health care providers impacted by the coronavirus epidemic. Private medical practices focused mostly on treating patients in their offices struggle to see the volume of patients they saw in the past in order to protect themselves, their staff, and their patients. Physicians whose practices are primarily facility-based are impacted too. Surgeons are limited on what surgeries they can perform, there is less demand for anesthesiologists’ services due to the cancellation of elective procedures, and physicians staffing emergency departments are equally impacted by the increased volume of patients who do not have insurance.
 
It goes without saying that these obstacles lead to cash flow issues. While the aid called for under the Coronavirus Aid, Relief and Economic Security (CARES) Act is slowly making its way into the hands of struggling businesses, many health care providers were able to obtain more immediate relief through the Accelerated Payment Program (APP).
 
The APP was established well before the coronavirus made its way to the U.S. to provide cash flow relief during disasters, the last being Hurricanes Harvey and Irma in 2017.^[1] The program is simply a means for providers to receive an expedited payment of future Medicare claims. Qualified providers may receive up to 100% of their Medicare payment amount for a three-month period whereas hospitals (acute care and children’s hospitals and some cancer facilities) can request up to 100% of their Medicare payments over a six-month period (critical access hospitals may request up to 125% over six months). Unlike the funds made available through the $100 billion Public Health and Social Services Fund (Relief Fund), any amounts received under the APP must repaid. The APP is offered in addition to other funds made available under the CARES Act and accepting funds under the APP does not limit providers’ ability to pursue other amounts available under Relief Fund.[2]
 
The obligation to repay the amount advanced to providers begins on the 121st day after the date payment is issued to providers. The APP differentiates between hospitals and all other providers with respect to the period of time in which they must repay the advance—hospitals must repay the advance over the 12 months following day 120 whereas other providers must repay the advance within 210 days following day 120. The applicable Medicare Administrative Contractor (MAC) will recoup the funds by offsetting the advance against future Medicare claims.
 
In an April 9, 2020 press release, the Centers for Medicare & Medicaid Services (CMS) reported that it processed approximately 21,000 of 30,000 requests and advanced almost $51 billion to providers, which is $17 billion more than what CMS originally planned to advance. CMS also noted the time to process a request was down to four to six days.^[3] CMS’ ability to process the advances so quickly is somewhat impressive given that CMS processed only 115 accelerated/advance payment requests over the past five years.
 

Who is Eligible to Participate in the APP?

 
Any provider who meets all of the following criteria:
 

• Billed Medicare within the 180 days prior to submitting the request,
• Is not in bankruptcy,
• Is not under medical review or a program integrity investigation, and
• Does not have any outstanding delinquent Medicare overpayments.

Here’s How It Works

1. The provider will submit a simple, one-page request for the advance to the provider’s MAC.
   1. It appears that most MACs recommend that providers submit the request through PECOS/the Provider Enrollment Gateway on the MAC’s website. There are other ways to submit the request but processing may take longer.
   2. Use the NPI and PTAN that typically receives payment from the provider’s applicable MAC and if the provider has multiple NPI/PTAN combinations it may submit a separate application for each.
   3. Each form requires a “wet” signature. The provider will need to print the form, sign it, and then upload it to the portal.^[4]
   4. The provider can submit up to 15 requests per submission.
2. The provider will receive an email telling it whether the request was accepted or denied. According to the Fact Sheet published by CMS, providers do not have administrative appeal rights if their requests are denied.^[5]
3. If accepted, the provider can expect payment to be issued shortly thereafter by EFT to the account the MAC has on file. The provider will receive remittance advice showing the payment issued.
4. The provider will continue to submit claims as usual and will receive full payment of claims over the 120 days following date the payment was issued.
5. On day 121, the applicable MAC will automatically commence recouping the advance by offsetting the amount against the provider’s Medicare claims. At the end of the repayment period, the MAC will determine whether there is a remaining balance. If so, it will send a request for repayment to the provider (a demand letter) that is collected by direct payment. Providers do have appeal rights if they disagree with CMS’ issuance of a determination notice for an unpaid balance.^[6]

What the Fact Sheet Did Not Tell Providers

 
Unfortunately for some providers who received an advance, the CMS Fact Sheet left out an important detail—upon the 31^st day after the date of the demand letter, if the provider has not repaid the full amount due, the outstanding balance will commence accruing interest at the prevailing interest rate for overpayments set by the U.S. Department of the Treasury. That rate is currently 10.25%.^[7] Thus, if providers believe they may not be able to repay the full amount of the advance when due, for example if their practices will remain closed or if they otherwise anticipate their volume will be low throughout the PHE, providers may be better served by pursuing a loan on the open market.
 
In an April 8 2020 letter to CMS Administrator Seema Verma and Department of Health and Human Services (HHS) Secretary Alex Azar, a group of over 30 Senators urged Verma and Azar to modify or waive the interest rate and/or extend the repayment period for non-hospital providers to 12 months.^[8] In an April 6, 2020 letter to Verma and Azar, the American Hospital Association provided two additional options—(1) CMS exercise its authority under 42 CFR § 405.378 to refrain from issuing a demand letter, or (2) simply instruct CMS to refrain from sending providers a demand letter for repayment under the APP.^[9] As of the date of this article, no indication has been given that the interest rate will be adjusted or that HHS will modify its collection process.
 
In addition to advocating that HHS address the exorbitant interest rate, the American Hospital Association appealed to private payers asking that they make similar advances to hospitals for cash flow purposes.^[10] On April 7, 2020, UnitedHealth Group (UHG) announced that it will accelerate up to $2 billion in payments to providers in the U.S.^[11] It is not yet clear how providers may access these funds or the parameters surrounding repayment.
 
While the process for obtaining an advance under the APP is incredibly simple and is a method for obtaining funds quickly, the interest rate on unpaid balances is high and providers should carefully consider whether they will be able to repay the advance by the due date. If not, providers would likely be better served pursuing other sources of funding whether through other relief programs made available under the CARES Act or traditional funding sources.
 

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