Stopgap Funding Provides Welcome Relief on Medicare Loans

Health care providers who obtained Medicare Accelerated and Advance Payment Program (“MAAPP”) loans received welcome relief from the Continuing Appropriations Act, 2021 and Other Extensions Act (the “Continuing Resolution”), which President Trump signed into law on Thursday October 1, 2020, keeping the federal government open until December 11, 2020.

In late March, the Centers for Medicare & Medicaid Services (“CMS”) expanded the MAAPP to increase cash flow to providers in response to the adverse financial impact of the COVID-19 pandemic. CMS suspended the MAAPP on April 26, 2020, citing the availability of direct payments through the Department of Health and Human Services’ Provider Relief Fund. During late March and April, CMS issued an estimated $100 billion to providers through the MAAPP.

The Continuing Resolution relaxes the recoupment terms on the issued MAAPP loans, including delaying the start of recoupment until one year after the issuance of the loan. Recoupment was originally set to begin 120 days after issuance, though CMS notably began unilaterally delaying recoupment in late July as lawmakers negotiated new terms.

The MAAPP loans will still be recouped through the withholding of Medicare reimbursements due to a provider, but the Continuing Resolution also relaxes the rate of recoupment by implementing a phased-in approach. The recoupment rate is now 25% for the first 11 months of recoupment and 50% for the next six months, down from the original, flat 100% recoupment rate. MAAPP loans are aimed to be recouped within 29 months at which point interest would begin to accrue at a 4% rate, down from the original 9.6% rate.

The Continuing Resolution also extends funding for a number of other health care policies, and again delays scheduled reductions of Medicaid disproportionate-share hospital payments until December 11, 2020.

While the Continuing Resolution provided welcome, albeit temporary, relief to health care providers, industry groups have signaled that they will continue to push for full MAAPP loan forgiveness and further delay of disproportionate-share hospital payment reductions through the end of the 2021 fiscal year. The Continuing Resolution, however, was likely the only direct relief health care providers can expect before the impending November presidential election, as stop-and-go negotiations continue on the next COVID-19 relief bill.