The Deadline for MAAP Repayments is Approaching – Is Your Practice Prepared?
August 27, 2020
From supply shortages to revenue shortfalls, hospitals and healthcare providers have continued to face unprecedented challenges throughout the COVID-19 pandemic. Congress and the Department of Health and Human Services have offered some assistance in funding, primarily through creating the Provider Relief Fund and through expanding other existing funding programs, like the Medicare Accelerated and Advanced Payment Program (MAAP). However, providers and practices now face repayment deadlines for funding sources like the MAAP, and, with the pandemic still continuing, the ramifications of repayment could have a detrimental impact on cash flow for many practices.
What is the MAAP?
The MAAP is an existing program that was expanded during the pandemic to provide immediate cash flow assistance for medical practices. Unlike the Provider Relief Fund, the MAAP is essentially a loan that must be paid back from future reimbursements. It is also an elective program by application, unlike some of the distributions from the Provider Relief Fund which have been automatic.
COVID-19, the repayment timeline for the program was extended to begin 120 days after issuance, but the timeline to complete the repayment varies. Some providers who applied under Part A, including inpatient acute care hospitals, children’s hospitals, certain cancer hospitals, and Critical Access Hospitals, have a year to repay the balance.
All other Part A and Part B providers will be required to repay the balance within 210 days before interest begins to accrue. If a provider doesn’t repay the reimbursement within the specified timeline, the funding will convert to a loan with an interest rate between 9 and 10%.
Applications for providers who applied under Part B were suspended as of April 26, 2020, so the end of that 120-day period is rapidly approaching for many practices (if it hasn’t arrived ).
How Can MAAP Repayments Impact Liquidity and Cashflow?
The MAAP loan provided cashflow assistance when healthcare providers needed it most, but now participants face mandatory repayment while still struggling through a long-term revenue battle caused by the lingering pandemic. The repayment deadline is imminent, so providers need to begin evaluating how MAAP repayment will impact their practice.
If you are a provider staring down the barrel of a MAAP repayment deadline, it is critical to get a strategy in place now to prevent insurmountable revenue challenges. Evaluating variables like staffing and expenses can help identify ways to reduce costs while increasing services like telemedicine can create additional revenue. Likewise, other funding options may be available to your practice. For instance, applications for Phase 2 General Distributions from the Provider Relief Fund have been extended to September 13, 2020.
The Bottom Line
Whether you’re looking for assistance with creating a comprehensive cashflow strategy or seeking help on Provider Relief Fund applications, an Aprio advisor can help. Contact Angela Dotson, Mary Khodaparast, or Ella Corry for more information.