Medicare Advance Payment Reductions to Begin Soon
Providers who applied for and received funds from the Medicare Accelerated and Advance Payment Program (APP) will begin to see reductions in their Medicare payments one year after they received the advance. This could be as early as the end of March.
The revised recoupment terms outline how these advances will be repaid. For the first 11 months, providers will see a 25 percent reduction in each Medicare payment. This reduction reduces the providers’ APP debt. If the debt is not fully recouped in the first 11 months, the recoupment percentage will increase to 50 percent of each Medicare payment
HHS has made it clear that Provider Relief Funds (PRFs) cannot be used to repay the AAP debt. Click here to review the CMS Fact Sheet and FAQ.
We still anticipate that PRF reporting will first be due for 2020 expenses and lost revenues due to coronavirus. A second report will be due for providers if the 2020 increased expenses and lost revenues do not exceed the PRF receipts AND for providers who receive a Phase 3 payment in 2021. For these providers, it is important to account for the APP recoupment correctly.
Other questions we have heard from clients:
- Is the Provider Relief Fund reporting based on the recipient’s fiscal year? At this point, HHS guidance is that providers will report increased expenses and lost revenues based on calendar year 2020. If all PRF funds received were not used in 2020, a second report will be required. Neither reporting date has yet been published by HHS.
- Is the $750,000 single audit requirement based on calendar year receipts or total PRF amounts received? Currently, the reporting requirement is based on the total amount of PRF receipts. It is not clear how this single audit requirement will be handled if the funds are received over two recipient fiscal years. We expect further guidance on this question when the final reporting requirements are issued.
- We received our Phase 3 distribution in 2021. How should this be reported in our financial statements? The IRS guidance has not changed. For for-profit entities, PRF receipts are taxable to the recipient in the fiscal year received.
Are You Ready?
Let us help you prepare so you can be ready to submit your required reports. We can help with the registration process; use additional guided processes to help you identify, correctly allocate, and report on appropriate expenses and lost revenues; and assess your internal control's compliance in preparation for the new deadline.
Additionally, our fees can be part of an allocated expense for the use of Provider Relief Funds.