Accelerated or advance Medicare payments can provide some cash flow as providers and suppliers combat the effects of the Coronavirus (COVID-19) pandemic. This program requires a one-page application, and funds may be available as soon as seven days after the provider or supplier applies. These payments are subject to automatic recoupment through claims offsets beginning 120 days after payment issuance. In spite of confusion around program eligibility criteria, providers and suppliers should evaluate this opportunity and ensure that their applications are accurate and transparent.
This On the Subject was updated on April 7, 2020.
On March 28, 2020, the Centers for Medicare & Medicaid Services (CMS) issued guidance regarding how providers may access accelerated or advance Medicare payments. CMS has offered this type of relief in the past for providers affected by hurricanes and other natural disasters. CMS announced that the program is now available nationwide during the COVID-19 public health emergency and expanded the scope of providers and suppliers that can take advantage of it.
This CMS action combines steps mandated by Congress in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which President Donald Trump signed into law on March 27, 2020, with additional program expansions initiated by CMS. The CARES Act directed CMS to expand the Medicare Part A payment acceleration program for hospitals and critical access hospitals (CAHs), while CMS itself took action to expand payment acceleration for Medicare Part B providers and suppliers.
According to the CMS guidance, to be eligible for accelerated or advance payments for Part A or Part B, the hospital, other provider or supplier must:
Have billed Medicare for claims within 180 days immediately prior to the date of signature on the provider’s/supplier’s request form,
Not be in bankruptcy,
Not be under active medical review or program integrity investigation, and
Not have any outstanding delinquent Medicare overpayments.
As part of a broader regulatory package responding to COVID-19, on March 31, 2020, CMS issued an interim final rule with comment period (comments are due June 1, 2020). The applicability date of the regulations is stated to be March 1, 2020. Among a range of other changes, CMS seeks to modify 42 CFR § 421.214 (the existing advance payment authority for suppliers). Among other technical updates (e.g., changing carrier to contractor), most notably, CMS has provided that:
Advance payments may be made in “exceptional circumstances,” including when CMS approves the Medicare Administrative Contractors (MACs) making advance payments during the period of Public Health Emergency or Presidential Disaster Declaration under the following “exceptional conditions”:
The contractor being unable to process the claim timely or is “at risk of being timely in processing the claim”, or
When the supplier has experienced a temporary delay in preparing and submitting bills to the contractor beyond its normal billing cycle.
For suppliers qualifying for advance payments pursuant to a Public Health Disaster or Presidential Disaster Declaration, a contractor may disburse an advance payment for a particular claim up to 100% of the anticipated payment for that claim based upon the historical assigned claims payment data. (Existing regulations do not explicitly define “historical assigned claims” but define “historical data” as “a representative 90-day assigned claims payment trend within the most recent 180-day experience before the system malfunction.”)
Only suppliers that are “in” bankruptcy are ineligible for advanced payments.
The melding of congressionally mandated acceleration for Part A hospitals with CMS’s expansion of pre-existing Part B advance payment programs into a single effort, combined with the admirable speed at which CMS and MACs have been trying to get the acceleration option up and running, has led to inconsistency and confusion about these eligibility criteria and the information that providers and suppliers are required to submit to MACs as part of the payment request. To date, CMS has not clarified beyond what is described above. And there even remains a question about the enforceability of these criteria—at least with respect to Part A hospitals for which the payment acceleration expansion was directed by Congress without these conditions.
In this fast-moving and unclear environment, providers and suppliers should consider applying for accelerated or advance payment regardless of whether they are sure they meet all of the stated eligibility criteria. Applicants should take care, however, that their applications accurately and transparently address any items that reasonably could touch on any of the eligibility criteria stated so far by CMS or the applicable MAC. For specific examples see the discussion below, Eligibility Criteria and Application Contents. Hospitals, other providers and suppliers would be wise, however, to seek advice of counsel on their specific situations, to avoid unanticipated recoupment risk, adverse financial consequences or future enforcement risk based on their acceleration applications.
Program Financial Details
The accelerated payment amount a provider or supplier can request varies. The CARES Act expanded the program for hospitals and CAHs in two notable ways. First, inpatient acute care hospitals, children’s hospitals and certain cancer hospitals are able to request up to 100% of their Medicare payment amount, and CAHs are able to request up to 125% of their Medicare payment amount for a six-month period. Other providers and suppliers not affected by the CARES Act can request these funds for 100% of their Medicare payment amount for a three-month period. Providers and suppliers should keep in mind that they may be asked to submit documentation to support their request, either in connection with the application or at some later date.
Second, while repayment of the advance begins for all participants after 120 days, providers covered by CARES have additional time to repay the balance. Approved participants will receive their prepayment amount and payment for claims submitted. After 120 days, CMS will begin to offset claims for the amount of the accelerated payment. After that, any remaining balance becomes due:
Inpatient acute care hospitals, children’s hospitals, certain cancer hospitals and CAHs will have up to one year from the date the accelerated payment was made to repay the balance.
A small subset of Part A providers that receive Period Interim Payment will have their accelerated payment included in the reconciliation and settlement of their final cost report.
All other Part A providers and Part B suppliers will have 210 days from the date the accelerated or advance payment was made to repay the balance.
CMS’s written guidance does not detail how the MACs are to calculate the payments or the application of interest. CMS’s current position is to have the MACs use data CMS provides on the net reimbursement/claim payments, including pass-through payments, made to the relevant provider/supplier over a three-month or six-month period: October 1 to December 31, 2019, or July 1 to December 31, 2019, respectively.
With respect to the application of interest, CMS confirmed that interest will only apply if a provider or supplier fails to repay the advance or accelerated payment within the 210-day or one-year repayment period, respectively. While the rate is subject to change, based upon the existing regulatory framework it appears that CMS will apply the standard overpayment rate, currently 10.25%. Providers and suppliers should immediately engage with CMS (e.g., through their trade associations and societies) to address the various implementation issues as well as the potentially unintended consequences of the recoupment/offset and application of a significant interest rate at a time when suppliers and providers are, at best, likely to be in the early stages of attempting to recover from the pandemic.
To request accelerated or advance payment, a provider or supplier must submit an Accelerated/Advance Payment Request Form specific to the provider or supplier’s MAC. The form is a single page and can be found on the applicable MAC’s website, and must be submitted via mail, fax or email to the MAC. There is still inconsistency between the information requested by the various MACs, but the request form generally includes:
Provider or supplier’s identification information, including legal business name, correspondence address, National Provider Identifier and any other information required by the MAC
Amount requested based on the provider or supplier’s need
Reason for the request (i.e., “Delay in provider/supplier billing process of an isolated temporary nature beyond the provider’s/supplier’s normal billing cycle and not attributable to other third party payers or private patients”) and statement that the request is for an accelerated/advance payment due to the COVID-19 pandemic
Signature of an authorized representative of the provider or supplier.
The MACs are accepting and processing the Accelerated/Advance Payment Request Form effective immediately, and payment for approved requests is anticipated to be issued within seven calendar days of form receipt. Providers should contact their MAC’s COVID-19 hotline if they have questions about accelerated or advance payment requests.
Eligibility Criteria and Application Contents
As noted, to be eligible for payment acceleration under the CMS-stated criteria, a provider or supplier must have billed Medicare within the last 180 days, must “not be in bankruptcy,” must not be under “active medical review” or “program integrity investigation,” and must “not have any outstanding delinquent Medicare overpayments.” To date, CMS has not elucidated the outer boundaries of “active medical review,” “program integrity investigation” or “outstanding delinquent Medicare overpayment.” MACs generally have not yet expounded upon what these mean.
The application forms that MACs are asking providers and suppliers to submit to receive payment acceleration add further complication by, in some cases, stating additional or different criteria than CMS has done. This variance appears, at least in part, to exist because some MACs have so far simply repurposed pre-existing forms from prior payment acceleration programs whose specifics differed from the new COVID-19 program. For example, while CMS states that an eligible provider cannot “be in bankruptcy,” at least two MACs’ forms ask each provider applicant to certify, under penalty of perjury, that it “has no plans to file for bankruptcy nor has the provider retained bankruptcy counsel” and also that it “has no plans to cease doing business.” Another MAC’s (no doubt repurposed) form adds eligibility criteria of which CMS made no mention in relation to the COVID-19 acceleration program: “The provider does not have any outstanding/accelerated advanced payments pending for more than 90 days,” and “The providers [sic] impaired cash position must be such that it would not be alleviated by receipts anticipated within 30 days of the request.” These form discrepancies may lessen over time as more MACs introduce new forms geared specifically to the current payment acceleration situation directed by the CARES Act and stop repurposing pre-existing forms created for prior, non-identical payment acceleration contexts. But, for providers seeking to apply now, the current crop of forms remains very relevant.
In order to minimize future enforcement risk, providers and suppliers should ensure that their applications and associated certifications are accurate and materially complete with respect to all matters covered in both the MAC-specific application form and the more generalized CMS-set criteria. With respect to CMS criterion #3 above, providers should consider some means of disclosing or otherwise addressing all manner of program review and investigation activities (e.g., Targeted Probe and Educate, Comprehensive Error Rate Testing, Quality Improvement Organization activities, Recovery Audit Contractor activities, any open CMS/SDRP or OIG self-disclosures, any pending qui tam litigation under the False Claims Act, regardless of whether or not the US Department of Justice has intervened), even if the form used currently by the provider’s MAC does not include any reference to pending medical reviews or investigations. Such matters can generally be addressed by inclusion of appropriate disclosures and/or disclaimers in providers’ applications, which experienced healthcare regulatory counsel can help draft.
Similarly, applicants should carefully evaluate any contemplated bankruptcy, other insolvency proceedings or cessation of operations in making their certifications. Care also should be taken to define specifically and transparently what the certifying provider or supplier means by a lack of delinquent overpayments, and any categories of routine overpayments that the certifying provider or supplier is excluding from that definition for purposes of the certification (because, read broadly, CMS eligibility criterion #4 could exclude most providers and suppliers from accessing the program at all).
These steps need not consume much time, effort or other resources to complete, but they will prove very worthwhile to help insulate providers against future enforcement risk after the immediate COVID-19 crisis has passed.
Any provider or supplier whose application for accelerated or advance payments is denied by its MAC should then consult with experienced healthcare regulatory and litigation counsel on its options for recourse. Under CMS guidance, providers and suppliers will not have administrative appeal rights related to these accelerated or advance payments. Administrative appeal rights would apply to the extent CMS issued overpayment determinations to recover any unpaid balances on accelerated or advance payments. However, nothing in the available guidance prohibits providers or suppliers from resubmitting a request if the initial request is denied.
With respect to Part A hospitals and CAHs, specifically, Congress directed the acceleration program expansion through the CARES Act and did not provide for eligibility exclusions except “appropriate safeguards against fraud, waste, and abuse.” Therefore, such entities are likely to have more options to challenge any application denials on administrative law grounds than Part B providers and suppliers may have.
Comparing Accelerated/Advance Payments to the CARES Provider Relief Funding
As physicians and hospitals pursue relief from the COVID-19 pandemic, they should consider other options also available to them and the interplay between these models. The CARES Act created a $100 billion Public Health and Social Services Emergency Fund to prevent, prepare for and respond to the COVID-19 pandemic. The fund is intended to assist physicians, hospitals and other entities that provide diagnosis, testing or care for individuals with possible or actual cases of COVID-19. The CARES Act states that these funds may not be used to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse.
There are several key distinctions between the Public Health Fund and the Accelerated Payment Program. First, the Public Health Fund is intended to pay providers for costs incurred outside of Medicare or Medicaid reimbursable amounts. Examples include building or construction, medical supplies and equipment, testing supplies, and increased workforce and training. In contrast, the Accelerated Payment Program essentially pre-pays providers for their Medicare services. The Public Health Fund offers new money, whereas the Accelerated Payment Program is essentially a cash advance.
The specific criteria for the Public Health Fund are not yet available, but additional details are expected this week.
Key Takeaways: All Medicare providers and suppliers may now participate in CMS’s Accelerated and Advance Payment Program. These accelerated or advance payments would act as immediate resources to assist providers and suppliers in combatting the spread of COVID-19 in the coming months. To view a sample timeline for these payments, click here. These payments are subject to automatic repayment through claim offsets beginning 120 days after payment issuance. All providers and suppliers should consider applying, regardless of the stated eligibility criteria, but should consult with counsel about how to do so in a compliant manner, in order to avoid creating future enforcement risk.
The McDermott Difference
If your organization is unsure whether a provider entity qualifies for advanced or accelerated payments, or has questions about how to compliantly frame an application and certification, please do not hesitate to contact us for responsive, efficient advice.