With the passage of H.R. 8337 in October, Congress generously modified repayment terms for loans made to suppliers earlier this year through the Advance and Accelerated Payments program. The law establishes a grace period deferring repayment for one year from the original loan date and provides for a longer offset repayment period thereafter.
During the early days of the pandemic, amidst a backdrop of uncertainty, CMS advanced DME suppliers up to three months’ worth of routine Medicare payments. The MACs originally planned to recover advances after 90 days through an offset of 100% of the borrowing supplier’s Medicare payments. The new law offers suppliers significantly more time to repay the debt.
Revised Repayment Schedule
During the initial 12-month grace period, suppliers make no payments toward their loan balance and accrue no interest. When the grace period ends, Medicare will offset 25% of Medicare payments and divert the recovered funds toward loan repayment. The 25% continues for 11 months or until the loan balance reaches zero, whichever is first.
If the 25% offsets do not satisfy the loan balance, Medicare will increase the offset amount to 50% for up to six more months.
Demand Letters
For loans not fully repaid within 29 months of the loan date, Medicare will send demand letters requesting payment-in-full of any remaining balance. Suppliers have 30 days from the date of the letter to comply. If the supplier fails to pay the loan in full, CMS will assess a 4% penalty on the residual balance every 30 days while the loan carries a balance.
Extended Repayment Schedules
CMS does not have the authority to stop automatic offset activity or reduce the offset percentage because the repayment terms are established by law. However, suppliers who cannot pay the remaining loan balance in full within 30 days of the demand letter date due to a documentable financial hardship can apply for an Extended Repayment Schedule (ERS). Suppliers in Jurisdictions B and C should visit the CGS ERS Resource page at https://cgsmedicare.com/ers/index.html. Suppliers in Jurisdiction A and D can find Noridian resources here and here, respectively.
Pre-Payments
Suppliers can submit one or more lump sum payments to avoid or lessen the impact of offsets. Those interested should contact the applicable DME MAC’s customer service department for specific instructions.
Given the extended nature of the revised repayment schedule, suppliers who accepted these loans can worry less about the immediate effects of offset payments. Nonetheless, these funds are temporary loans, and suppliers must plan for their eventual repayment.
SOURCE LINKS
https://www.congress.gov/116/bills/hr8337/BILLS-116hr8337enr.pdf
https://www.cgsmedicare.com/articles/cope19171.html
https://www.cms.gov/files/document/covid-advance-accelerated-payment-faqs.pdf
During the early days of the pandemic, amidst a backdrop of uncertainty, CMS advanced DME suppliers up to three months’ worth of routine Medicare payments. The MACs originally planned to recover advances after 90 days through an offset of 100% of the borrowing supplier’s Medicare payments. The new law offers suppliers significantly more time to repay the debt.
Revised Repayment Schedule
During the initial 12-month grace period, suppliers make no payments toward their loan balance and accrue no interest. When the grace period ends, Medicare will offset 25% of Medicare payments and divert the recovered funds toward loan repayment. The 25% continues for 11 months or until the loan balance reaches zero, whichever is first.
If the 25% offsets do not satisfy the loan balance, Medicare will increase the offset amount to 50% for up to six more months.
Demand Letters
For loans not fully repaid within 29 months of the loan date, Medicare will send demand letters requesting payment-in-full of any remaining balance. Suppliers have 30 days from the date of the letter to comply. If the supplier fails to pay the loan in full, CMS will assess a 4% penalty on the residual balance every 30 days while the loan carries a balance.
Extended Repayment Schedules
CMS does not have the authority to stop automatic offset activity or reduce the offset percentage because the repayment terms are established by law. However, suppliers who cannot pay the remaining loan balance in full within 30 days of the demand letter date due to a documentable financial hardship can apply for an Extended Repayment Schedule (ERS). Suppliers in Jurisdictions B and C should visit the CGS ERS Resource page at https://cgsmedicare.com/ers/index.html. Suppliers in Jurisdiction A and D can find Noridian resources here and here, respectively.
Pre-Payments
Suppliers can submit one or more lump sum payments to avoid or lessen the impact of offsets. Those interested should contact the applicable DME MAC’s customer service department for specific instructions.
Given the extended nature of the revised repayment schedule, suppliers who accepted these loans can worry less about the immediate effects of offset payments. Nonetheless, these funds are temporary loans, and suppliers must plan for their eventual repayment.
SOURCE LINKS
https://www.congress.gov/116/bills/hr8337/BILLS-116hr8337enr.pdf
https://www.cgsmedicare.com/articles/cope19171.html
https://www.cms.gov/files/document/covid-advance-accelerated-payment-faqs.pdf
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