Expansion of the Accelerated & Advance Payments Program for Providers & Suppliers During COVID-19 Emergency
CMS recently announced an expansion of accelerated and advance payment programs for Medicare Part A and B providers and suppliers.
This expansion was made available through the passage of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which was signed on March 27, 2020, and represents the country’s largest economic stimulus package in history.
Can your organization participate?
The expansion is open to a wide range of Medicare Part A and B providers and suppliers. To see if your organization is eligible to participate, view the eligibility criteria in the CMS’ fact sheet or contact your BKD Trusted Advisor™. Providers can request the accelerated payments through a short application form obtained from their Medicare Administrative Contractor’s (MAC) website.
What are the accelerated payment periods?
Most providers and suppliers will be able to request up to 100 percent of the Medicare payment amount for a three-month period. Most hospitals will be able to request payment amounts for a six-month period. Critical access hospitals will be able to request 125 percent of the Medicare payment amount for a six-month period.
How does it work?
In general, advanced amounts will be recouped from remittances starting 120 days after the advance is made, with a request for repayment of any remaining unrecovered amounts (if any) made after 210 days or a year (depending on organization type).
The repayment window begins when the organization receives the advanced payment, and the repayments will be recouped over 90 to 245 days. During that 90- to 245-day period, the organization won’t receive any Medicare payments until the advances are recouped.
It’s critical your organization has a plan on how cash flow will be managed during this recoupment period.
What are your organization’s operational considerations?
Properly tracking advanced payments and their recoupment will be vital. To account for this activity, organizations should consider establishing separate payment codes within the patient accounting system for recouped payments and isolating them from payments actually received.
In addition, a newly established advanced payment balance sheet clearing account could be created. This account would record the advanced payment amounts received by the organization as a credit. The new recouped payment codes can then be interfaced as debits. The net balance in this advanced payment account would represent the outstanding liability associated with the payment advances at any given time.
Since organizations frequently have control processes to reconcile posted payments to bank deposits (typically using cash clearing accounts), separating the recouped payments from the cash clearing account will ease the process of reconciling posted payments from the patient accounting system to deposits in the bank account.
What are the accounting implications?
From a financial reporting perspective, the balance of the advanced payment balance sheet clearing account would represent a current liability to the Medicare program. Each organization should consider the nature of its specific debt covenants and the effect the advanced payments might have on covenant compliance.
What should you do now?
- Determine if participation is right for your organization based on your current cash position and the anticipated impact of lost revenue in the coming months.
- Apply now, if you choose to participate, using the application on your MAC’s website.
- Project your future cash flows based on the best, most likely and worst-case scenarios, and plan how your organization will manage cash during the recoupment period.
View CMS’ fact sheet for more information. If you have additional questions regarding the accelerated and advance payment program or need assistance with completing the application, please contact your BKD Trusted Advisor or submit the Contact Us form below.