CAAP Payments

The Covid-19 Accelerated and Advanced Payment (CAAP) program was created to help providers weather the financial difficulties created by the pandemic. However, the legislation authorizing the program dictates that Medicare begin recouping its money one year after payment. Medicare started this process several months ago as the first CAAP payments went out in March 2020.

Once the recoupment process begins, Medicare will take 25% of each subsequent provider payment to offset the balance. This rate will continue for up to eleven months. If a balance remains, Medicare will begin taking 50% of subsequent provider payments for up to six months. If a balance still remains after the 50% cycle, Medicare will issue a demand letter to have the balance repaid in full. Providers who do not pay will see 100% of their subsequent Medicare payments reduced to settle the balance. Also, if it takes more than 30 days from the date of the demand letter to settle the balance, Medicare will charge a monthly interest rate of 4%.

The CAAP legislation allows very little flexibility in regards to these repayment terms. However, if providers still have a balance after 17 months of recoupments, they can request an extension to avoid having to pay the remaining balance in full. The Extended Repayment Schedule (ERS), which is only granted for certain hardships, gives providers up to a total of five years to repay the balance. Requests for an ERS must be made through providers’ local Medicare Administrative Contractors (MAC), but cannot be done so until after receiving a demand letter for repayment in full.

Providers who took CAAP payments can check with their local MAC to see their current outstanding balance. Knowing your balance will help you estimate whether you will be able to repay the money prior to the 50% threshold kicking in, helping you plan accordingly. Check this link for additional details on the repayment process.

https://www.cms.gov/files/document/covid-advance-accelerated-payment-faqs-06-24-21.pdf