Healthcare providers will have another year to pay back advance payments issued by the Centers for Medicare and Medicaid Services (CMS) at the beginning of the pandemic. On Thursday, CMS said it would bump back the start date for repayments to begin one year after the loans were issued.

The agency had issued a total of $106 billion to healthcare providers and suppliers through its Accelerated and Advance Payment Program. Unlike relief funds distributed to providers as a result of the CARES Act, the Medicare advance payments must be repaid, with Medicare recouping a portion of them through claims.

Under the original deadline, hospitals and physician practices were required to start making payments in August of this year. At the time, the American Medical Association pushed for more flexibility, given that many practices are still struggling financially from the pandemic. They asked CMS to bump back recoupment for a year and reduce the per-claim amount from 100% to 25%.

“We have significant concerns that recouping the advance payments by offsetting 100% of Medicare claims until the balance is extinguished will result in a sudden seizure of Medicare revenues, halting cash flow and putting physician practices in financial jeopardy,” AMA CEO Dr. James Madara wrote in a letter to CMS Administrator Seema Verma at the time. “Now more than ever, we need physician practices on strong financial footing and open to combat COVID-19.”

CMS granted those requests after Congress passed a short-term funding bill that extended the deadline for repayments. After the first year, Medicare will automatically recoup 25% of payments in claims. After 11 months of that, the recoupment amount will increase to 50%.

After 29 months, providers will be responsible to pay the full total, subject to a 4% interest rate.

Photo credit: Getty Images

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