Benjamin Fee: Hello and welcome to Hall Render’s Practical Solutions in Healthcare podcast featuring analysis and insight on legal issues facing the healthcare industry. My name is Benjamin Fee. I’m an attorney in the Hall Render Denver, Colorado office. Today I’m joined by my colleague Joe Krause in our Milwaukee, Wisconsin office. Both Joe and I are part of a Hall Render work group focused on COVID-19 relief funding for healthcare hospitals and other providers and suppliers.

Benjamin Fee: One aspect of relief funding that organizations are looking at right now is the expanded CMS accelerated payment program. That’s the focus of this podcast and the reason we’ve got Joe here with us. He’s been answering these questions for a number of clients. Thought we would talk through some of the questions that we have been asked to help you listening to this work through that program or in deciding whether you want to seek funds through that program. So Joe, just to start things off, I guess, could you tell us a little bit more about what is the Medicare accelerated or advanced payment program?

Joe Krause: Sure. Ben, the CMS accelerated or advance payment program is actually an existing program that’s been around for years that allows the Medicare program to accelerate or advance Medicare payments in order to provide emergency funding and address cashflow issues if there’s a disruption in claims submission or claims processing issues. It’s historically been used in response to natural disasters to accelerate cash flow to those impacted providers and suppliers in those areas. But last week, as part of the Cares Act that was signed into law by the President, it was significantly expanded, the accelerated payment program as part of the COVID-19 public health emergency to apply to a broader category of providers and suppliers, to increase the amount of payments available and to lengthen the repayment timeframes. CMS also released a fax sheet late on Saturday night with some updated guidance for the accelerated payment program based on those changes.

Benjamin Fee: So I guess first question is, you mentioned that this is part of the Cares Act, huge piece of legislation, a lot of information in there. When we think about the Cares Act, a lot of times we’re thinking about, there’s a $100 billion fund set up to help healthcare providers offset some of their costs, possibly recover some losses. Is this part of that fund or is this a separate thing?

Joe Krause: No, this is a completely separate fund or program. Not at all related or linked to that $100 billion relief that will be going out separately. So this is a completely separate application and processing within the Medicare program.

Benjamin Fee: And you mentioned it’s expansion of an existing program. What types of entities are able to request? I know we’ve gotten this question a lot, some think that maybe it’s limited to hospitals, but what other organizations or healthcare industries could maybe or healthcare entities could maybe take advantage of this?

Joe Krause: Yeah, no. Yeah, that’s, that’s one of the misnomers floating around out there. It’s not just limited to hospitals. It’s hospitals, critical access hospitals, skilled nursing facilities, any type of healthcare entity enrolled in the Medicare programs. That would even include physician groups and the like. Anything that’s enrolled with Medicare can request these funds if they qualify.

Benjamin Fee: What are the criteria for qualifying?

Joe Krause: Yeah, so there’s some criteria related to that you’ve billed Medicare within the past 180 days prior to submitting the request form, the entity submitting it can’t be in bankruptcy or under active medical review or program integrity investigation. And they can’t have any outstanding delinquent overpayments. Essentially the Medicare program wants to make sure that it’s still a going concern. But importantly there’s not a need base threshold for requesting these funds for COVID-19 related expenses as there has been in the past, outside of the pandemic hospitals or other entities would need to show that there’s a need for these funds.

Joe Krause: But that has been done away as part of the Cares Act and CMS guidance that was released last weekend. So entities requesting these funds basically need to check a box on a form saying that there’s a delay in billing and fill on a short description that the funds are being requested due to the COVID-19 pandemic, and that will make it easy for the Mac to understand that this is why those funds are being requested and accelerates the processing of those forms.

Benjamin Fee: So open to a number of different providers and suppliers. The criteria are pretty straight forward, pretty simple. Most providers and suppliers likely will meet those criteria that you’ve just described. You mentioned in the form, I think probably talk a little bit more about that when we talk about the process. Next question I think we get a lot is, how much can organizations request? What’s the amount of payment that someone could get through this accelerated payment program?

Joe Krause: Yeah, so there’s basically three categories of entities in how they calculate how much they can request, so the maximum amount they can request. First hospitals can request up to a hundred percent of Medicare payment based on a six month lookback period. Critical access hospitals, those being small rural hospitals that are paid by Medicare based on their costs, they can actually request up to 125% of their Medicare payment amount. That’s also for a six month lookback period. And then everything else, any other type of provider, supplier and go with Medicare, they they can request up to 100% of their Medicare payments but only for a three month lookback period. So they have a smaller lookback period, which will mean that it’s going to be a smaller amount based on their revenue.

Benjamin Fee: And one thing that came up tied to that is how, I know we get asked quite a bit, how organizations need to calculate that. I think when they hear that it’s based on a lookback period based on the historical Medicare payments under part A and part B is how do they calculate those amounts and include those in their application process? What does that look like? And I know things have been changing because again, this program wasn’t designed for this type of use. It’s been expanded as part of the Cares Act. So can you talk a little bit about, I guess, how organizations calculate those lookback periods or lookback amounts or even if they have to at this point?

Joe Krause: Yeah, so there’s not real detailed guidance on, you know like what the source documentation is for calculating this, whether it’s the cost report or, for hospitals, the PSNR or some other source. So entities are really just using kind of good faith estimates based on some period for them. And one of the key things is that it is just Medicare part A and part B payments that are used to calculate those amounts. It doesn’t include Medicare advantage or part C payments. Those shouldn’t be included.

Joe Krause: We’ve actually learned that CMS has provided Macs with a listing of the maximum amount each provider supplier is able to get through this process based on their own calculations. And some of the Macs have even updated their forms to allow entities to to just check a box saying I want the maximum amount allowed and calculated by CMS to make the process a lot easier for those entities.

Joe Krause: Some of the Macs have not done that so they still ask you to fill in an amount, but you can always include in your cover letter that that you’d like the maximum amount calculated by CMS and that might be one way to get that maximum amount. And Macs are continuing to update their forms, so entities should continue to check those websites to make sure they’re using the most recent and updated form to make the process go more smoothly.

Benjamin Fee: And I think on that point, if an organization has already requested and they used an old form, my understanding is the Macs have said they will process requests using the old forms. If an organization happened to have tried to submit something right away before the Macs actually created COVID-19 specific forms. That’s correct?

Joe Krause: Yep. Yeah, you’re exactly right. Because this has been moving so fast and rolling out at different speeds at different Macs. Some of the Macs had their forms updated right away and some did not. And we understand that they’re not going to hold that against providers just because they were submitted right away though. They’ll still accept those old forms and that shouldn’t hold up anything.

Benjamin Fee: And this is in the name, it’s accelerated payment program. Everything’s moving pretty quickly here. This is actually probably some of the first guidance that we received from HHS related to relief funding coming out very quickly after the Cares Act was signed into law. Along those lines, what’s the timeframe from submission of a request to a Mac to actually receiving funds? What should organizations be expecting?

Joe Krause: Yeah, yeah. You’re exactly right. This was very fast. I mean the Cares Act was signed into law on a Friday afternoon, Friday, early evening. And this guidance came out essentially 24 hours later. So it has been a scramble to understand what’s going on and it’s been a scramble to submit. We understand that these are being processed on a first in, first out basis. CMS initially stated that they wanted Macs to work to review and issue payments within seven calendar days of receiving the request. And that’s probably ambitious, given the number of entities that we know that have submitted. So that might’ve been the initial guideline or timetable. But once more entities are getting these in the pipeline, it probably will slow down. So the sooner your request is submitted, the more likely the Mac will issue payment and get that out to entities that need it for their COVID-19 response.

Benjamin Fee: Yeah. And we’re recording this a few days after that guidance came out, so it actually hasn’t been seven days since the guidance came out, so, we don’t actually know if the Macs have started distributing funds yet or if they’ll be able to meet that seven day timeframe. But certainly your point to, it’s a fairly simple form available to a lot of different providers and suppliers. Get it in and the sooner you get it in, the more likely you’ll get paid in a timeframe more consistent with that seven day, maybe a little bit longer, consistent with the intent of the program of getting some money to organizations right away as health and human services works through how they’re going to distribute other funds available through the Cares Act or other relief funds that may be available through other avenues.

Benjamin Fee: One, we talk about this as I think there’s two things I want to ask you about. It’s an accelerated payment program, so can you talk about the repayment obligations? This is not a grant or a forgivable loan. This is accelerated payments, advanced payments, and there are repayment obligations tied to that. Can you tell us a little bit more about when those repayment obligations begin and how those repayments occur?

Joe Krause: Sure. Yeah, so first I’ll start for hospitals and critical access hospitals because they have slightly different rules than all other entities. They get a little bit longer period to pay it back. But essentially what happens is, once an entity gets the funds, the accelerated repayment funds, they get those on day one and nothing happens for 120 days. During that timeframe, they can use the funds as part of their COVID-19 response and go on with business as usual. Starting on day 121 CMS starts to withhold from payments that the hospital would otherwise be receiving amounts towards that APP balance.

Joe Krause: Once the timeframe gets to one year for hospitals and critical access hospitals, the Mac will basically do a manual check to see if there’s anything still outstanding. At that point, if there is still anything outstanding, they’ll send a demand letter and it’ll say the remaining funds need to be repaid within 30 days. If they’re not being repaid within 30 days, you’re going to start accruing interest at X rate. And we understand the rate right now is 10.25% or it was on March 31st. I’m not sure if they’ve released the new rates for April yet.

Joe Krause: So at that point hospitals either need to repay it, the remaining balance, or they can request what’s called an extended repayment schedule that would allow them to repay the remaining amount over and up to a 60 month period if they meet certain hardship requirements. So that’s hospitals and critical access hospitals. For everybody else, they have the same 120 day period where they don’t owe anything back. And on day 121 CMS or the Mac starts to withhold payments, dollar for dollar against that APP balance. And then once we get to 210 days, that’s when the Mac will do a manual check for those entities to see if there’s anything still outstanding and they would issue the demand letter at that point, triggering a 30 day repayment requirement or interest starts. Or they can request an extended repayment schedule at that point as well.

Benjamin Fee: Can you just confirm when the timeframes that you mentioned there, the 120 days, the one year for hospitals in terms of a full repayment being due, those begin at the date of receipt of the initial requested funds? Correct?

Joe Krause: Yep. Yeah, so that’s an important point. So the hospital would be submitting their form at some point. The clock doesn’t start until those funds actually make their way to the entity, to the healthcare entity. So we’re not counting from when you submit the application, it’s when the funds are transferred and made available to you.

Benjamin Fee: And you mentioned things are changing rapidly. I think everyone is aware of that, as we work through all of this, and you mentioned the over 10% interest in the event that there is an outstanding balance after the other repayment time period runs out. I guess that probably would strike me or does strike me as a pretty high percentage, given the market right now. Do we have any sense of whether that could change or there would be flexibilities in that or is that just something that we should keep an eye on and hope for?

Joe Krause: It’s something that we should keep an eye on, but we have been told by some Macs that those are, the what I outlined before with the timing and the interest, that’s kind of the process for that as it’s been set up previously and how they would normally take an entity through this APP program from when they get the money to when they have to start repaying it. But we have been told by some Macs that further guidance is expected and it’s definitely possible that we’ll get some guidance that’s different from past repayment obligations that allow hospitals maybe longer time to repay or different interest rates or something or ability to offset the hundred billion dollar fund against these amounts. That’s also something that’s been floated around out there in the industry.

Benjamin Fee: I think that’s an important point too, to think about this in the context of the other relief funding that is out there that will be made available, but that we just don’t know yet how, which is this is a way to get funding as organizations, as the government decides, other avenues, other opportunities, how they’re going to distribute funds through the Cares Act, whether there’s going to be FEMA funding, small business association loan funding for some organizations.

Benjamin Fee: This is cash you can get fairly quickly. There are repayment obligations, but potentially you could take funds that you ultimately receive through other sources and use those to repay amounts that have come through this accelerated payment program. Joe, I assume if an organization wanted to, they could repay earlier than the time frames we laid out and there wouldn’t be any sort of repayment penalty given how this program is structured?

Joe Krause: Yeah, yeah. There’s nothing that would prohibit or restrict an entity from repaying this quicker if they got to the 120 days or the year mark, whatever it is and they have other funds available through those programs and they want to pay off their APP balance, there’s nothing that would restrict them from doing that at that point.

Benjamin Fee: Well, thank you. I guess last point on that is just we worked with a number of organizations. Joe, I know you have, I have as well, and there’s not a lot of downside to requesting funds through the CMS accelerated payment program. If an organization thinks they’re potentially eligible, certainly we recommend considering it. And if there’s any questions, certainly feel free to contact one of us or your regular Hall Render attorney. We thank you for joining us today.

Benjamin Fee: Wanted to mention, we do have an information briefing webinar coming up on April 8th at 1:00 PM Eastern that’s going to discuss not only this program but also other relief funding availability. Probably have an update if you happen to be listening to this podcast before that date. If you are listening to this podcast after that date, that listening session is available on our website at HallRender.com. So please, if you’re looking for additional information on relief funding and what is out there, check that out as a resource.

Benjamin Fee: Final reminder, the views expressed in this podcast are for those of the participants only and do not constitute legal advice.