CARES Act Offers Short-term Financial Relief for Medicare Providers/Suppliers

March 31, 2020

The Centers for Medicare & Medicaid Services has expanded its payment program to provide emergency funding and increased cash flow to providers and suppliers that participate in Medicare based on historical Medicare payments in response to the coronavirus (COVID-19) pandemic.

The Trump Administration has moved quickly to begin implementing the Coronavirus Aid, Relief, and Economic Security (CARES) Act in ways that will offer immediate relief to America’s embattled healthcare providers and suppliers. The Centers for Medicare & Medicaid Services (CMS) announced over the weekend that it has expanded the Accelerated and Advance Payment Program pursuant to the authority granted under Section 3719 of the CARES Act.

The Accelerated and Advance Payment Program provides emergency funding and increased cash flow to providers/suppliers based on historical Medicare payments when there is disruption in claims submission and/or claims processing. It typically has been used to provide assistance for a limited period in a discrete geographic area in response to a natural disaster, but the CMS’s March 28, 2020, announcement expands the program to include all eligible participating Medicare providers/suppliers throughout the United States for the duration of the COVID-19 public health emergency.

Providers/suppliers should be aware, however, that accelerated/advance payments distributed through the program are nothing more than a short-term (very short, for some), interest-free loan. CMS will begin collecting on that loan in 120 days, with the timeline for reconciliation and complete repayment varying from 210 days up to one year based on provider/supplier type.

The program’s terms are the most generous for many hospitals, but no matter the provider/supplier type, CMS will begin recouping the accelerated/advance payment after the 120-day period from 100 percent of an entity’s claims for reimbursement to Medicare. It is also unclear how much value the program will be to children’s hospitals that generally do not participate in billing Medicare.

Although the CMS states that the expanded program is intended to ensure that providers/suppliers have enough funds and resources to help fight the COVID-19 pandemic, it may do nothing more than reintroduce a potential cash-flow problem after a four-month period during which the pandemic is unlikely to be resolved. The program, however, affords struggling providers/suppliers an otherwise unavailable period of flexibility during which to try to get their businesses on more solid financial footing during a time of unprecedented disruption to, and significant financial burdens imposed on, the healthcare industry.

Program Overview

In short, the Accelerated and Advance Payment Program:

  • Applies to all participating Medicare Part A providers and Part B suppliers nationwide that meet a limited set of eligibility criteria;
  • Requires eligible providers/suppliers to submit an Accelerated/Advance Payment Request Form to the servicing Medicare Administrative Contractor (MAC);
  • Within seven days of the MAC receiving a qualifying request form, distributes to eligible applicants accelerated/advance payments of between 100 percent of their Medicare payment amount for a three-month period and 125 percent of their payment amount for a six-month period, depending on provider/supplier type; and,
  • As noted above, requires repayment in full of the accelerated/advance payment within either 210 days or one year through automatic recoupment from Medicare reimbursement payments. The recoupment begins after 120 days.

Program Details

The CARES Act authorizes the CMS to provide accelerated or advance payments to any qualified Medicare provider/supplier, including hospitals, physicians, nursing facilities, hospice providers, durable medical equipment suppliers, and other Medicare Part A and Part B providers and suppliers, that submits a request form to its respective MAC.

The amount that can be requested varies by provider/supplier type, with inpatient acute care hospitals, children’s hospitals, and certain cancer hospitals able to request up to 100 percent of their Medicare payment amount for a six-month period; critical access hospitals able to request up to 125 percent of their payment amount for a six-month period; and other types of providers/suppliers able to request up to 100 percent of their Medicare payment amount for a three-month period. The CMS does not state, however, how the six-month or three-month periods will be determined.

To meet the eligibility requirements, a provider/supplier must:

  • Have billed Medicare for claims within 180 days immediately prior to the date of signature on the request form;
  • Not be in bankruptcy;
  • Not be under active medical review or program integrity investigation; and,
  • Not have any outstanding delinquent Medicare overpayments. It’s not clear whether this criterion would exclude a provider/supplier who is current with respect to an Extended Repayment Schedule agreed to with the CMS.

Request Forms

The request form will be made available on each MAC’s website and will vary by MAC. The forms can be submitted by mail, or to expedite processing, by email or facsimile. In addition, the CMS has established a COVID-19 hotline at each MAC to assist providers/suppliers with submitting requests. The CMS will begin accepting and processing request forms immediately and anticipates that payments will be issued within seven days of receipt of the request by the relevant MAC.

Although request forms will vary by MAC, the CMS announcement indicates that, at a minimum, the information needed to complete the form will be basic provider/supplier identification information, including NPI; the amount of the accelerated/advance payment requested, based on need; and the reason for the request, which includes checking the box indicating “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 stating that the request is due to the COVID-19 pandemic.

The request form, which must be signed by the provider/supplier’s authorized Medicare representative, will be reviewed by the servicing MAC to ensure that the entity submitting the request meets the eligibility criteria. The MAC will notify the provider/supplier by mail or email as to whether the request has been approved. Although providers/suppliers do not have administrative appeal rights with respect to whether a request is approved and accelerated/advance payments are issued by CMS, administrative appeal rights do apply to the extent CMS later issues overpayment determinations to recover unpaid balances on accelerated/advance payments.

Payment Timeline Extension

In addition to broadening the reach of the Accelerated and Advance Payment Program, the CMS has extended the timeline for repayment of accelerated/advance payments, which also varies by provider/supplier type.

Repayments will begin 120 days after Medicare issues the accelerated/advance payment through automatic complete recoupment from a provider/supplier’s routine ongoing submission of claims for reimbursement (a provider/supplier will receive full reimbursement for claims submitted during the 120-day period). Every new claim submitted by the provider/supplier after the 120-day period will be offset in its entirety to repay the accelerated/advance payment; i.e., instead of receiving payment for newly submitted claims, the outstanding accelerated/advance payment balance will be reduced by the claim payment amount.

Pursuant to the new legislation, inpatient acute care hospitals, children’s hospitals, certain cancer hospitals, and critical access hospitals have one year from the date the accelerated/advance payment was made to repay the balance, and all other Part A providers and Part B suppliers will have 210 days. The servicing MAC will perform a manual reconciliation at the end of the repayment period and will request payment for any remaining balance, which will be collected by direct payment. For the small subset of Part A providers who receive Period Interim Payment (PIP), the payment reconciliation process will occur as part of the final cost report process 180 days after the close of the fiscal year.

In announcing the expanded Accelerated and Advance Payment Program, CMS Administrator Seema Verma acknowledged the extraordinary disruption to the healthcare industry caused by the COVID-19 pandemic and the significant financial burden being experienced by providers/suppliers as the result of delayed non-essential surgeries and procedures; healthcare staff being unable to work due to childcare demands or illness; and disruptions in billing. A well-intentioned effort to support providers/suppliers and ensure they have the resources needed to combat COVID-19 and focus on patient care may, however, do little to address long-term financial hardships that will be necessary to keep them in the fight.

A Fact Sheet issued by the CMS provides additional details.

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