CARES Act Includes Relief for Medicare Providers and Suppliers

Date April 3, 2020
Authors Michael DeLuca

The CARES Act, the phase 3 federal legislation addressing the COVID-19 crisis that was signed into law March 27, includes two key provisions for Medicare Part A and Part B providers and suppliers:

  • The Act provides sequestration relief for the period of May 1, 2020 to December 31, 2020, a pause in reimbursement reductions that should result in an average 2 percent increase in Medicare reimbursement throughout the eight-month period.
  • The Centers for Medicare & Medicaid Services (CMS) has expanded its Accelerated and Advance Payment Program (AAPP), which is designed to advance funds when there is a disruption in claims submission or claims processing, to a broader group of providers and suppliers for the duration of the public health emergency.

About the AAPP expansion
The AAPP expansion, as distinguished from the SBA loan programs addressed by the legislation, allows eligible providers and suppliers to request up to 100 percent of their Medicare payments in advance for a three-month period. Certain types of hospitals are eligible for additional relief. Given what is known today, each state-specific Medicare Administrative Contractor (MAC) to which a provider or supplier must apply will work to review and issue payments within seven calendar days of receiving the request.

Most non-hospital providers and suppliers will not be required to start repayments of accelerated funds until 120 days after the date of issuance. In the interim, all Medicare claims within that 120-day window will be paid in full. At the end of the 120-day period, claims submitted by a provider or supplier will go to offset its advanced balance until the balance is paid in full or 210 days after funding, whichever comes first. The repayment will be applied automatically.

Submission forms can be found on each individual MAC website, and will vary by contractor. The required Information should be easy to access, and the only calculation are the Medicare payment amounts for the three-month period. Electronic submissions are available, and will reduce processing time, but requests can also be submitted by fax, email, or mail.

While a Paycheck Protection Program (PPP) loan might be more attractive to some organizations, given that the anticipated loan forgiveness would typically cover the majority of private practice overhead, the AAPP program may offer:

  • More immediate near-term financing to carry a practice before PPP loans are funded
  • Additional funding should the PPP funds be insufficient to carry the provider
  • The advantage of no stated limitations on how loan proceeds may be used
  • A virtually interest-free loan for 120 days

Given that these funds must be repaid in a relatively short time frame, it is essential that each practice considers such factors as practice size; specialty; the revenue mix among Medicare, private-pay, and third-party reimbursements; current and future 2020 cash flow planning; seasonality; and physician compensation allocations and formulas.

Click for a fact sheet featuring highlights of the program and a MAC sheet by state.

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