Congress grants Medicare Advance borrowers more time to repay, lower interest rates

October 5, 2020

Now that the federal Continuing Resolution (CR) to fund the government through Dec. 11 has been officially signed, the Medicare Advance and Accelerated Payment Program is being modified to give borrowers a bit more flexibility in repaying their loans.

As part of the CARES Act earlier this year, Medicare expanded access to its advance and accelerated payment program to provide a lifeline to providers struggling with COVID or other shutdown-related expenses. Funds distributed under the program are loans that are eventually paid back to CMS.

While MACs should have started recouping funds at end of August in the form of automatic 100% reductions in new Medicare payments, it quickly became clear Congress was seeking a less punitive option after the recoupment process did not begin as expected.

Now, the CR has modified the program in the following ways:

–Borrowers now have 365 days (12 months) from the date of disbursement of the loan before recoupment begins. For most groups, that means it will start on/or about April 2021.

–MACs will recoup 25% of new claims for the first 11 months, then 50% of new claims for up to the following six months until completely recouped.

–This means borrowers have a total of 29 months from the original distribution date to repay the balance before interest is incurred. This extends the recoupment period to as far as September 2022.

–The interest rate applied to outstanding balances after 29 months was lowered to 4%, down from 10.25%.

If you have any questions about how to best approach repayment, don’t hesitate to contact our office directly.

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