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BY&S Update on Medicare AAPP – Changes and Current Findings

Written By:

Danielle Andre
Senior Healthcare Consultant

Most healthcare lenders have become very familiar with the Medicare Accelerated/Advanced Payment Program (“AAPP”) over the past few years.  AAPP was created as a response to help cover costs as the COVID public health emergency disrupted healthcare services beginning early 2020. CMS, through the CARES Act and AAPP, provided increased cash flow to providers by allowing them to request advances of up to 3 months of historical Medicare payments.  Repayment was to begin one year from the date the advance payment was issued.  Providers were able to apply for these advanced A/R funds from April 2020 until October 2020.


Repayment of the AAPP is accomplished by recoupments from Medicare remittances.  After the initial year has passed, recoupments are 25% of Medicare collections for 11 months, 50% for months 12 through 17, and after 17 months any remaining balance will be due in full.  Using April 2020 as the typical date most AAPP funds were received, recoupments  began in April 2021 at 25% of Medicare collections and continued at 25% through February 2022. Afterwards recoupments increased to 50% and will continue through August 2022, with the remaining balance due in September 2022.


BY&S has been closely monitoring the repayment of AAPP advances by providers and has noted the following:

  • As of February 2022, most providers reviewed had approximately 50% to 100% of their AAPP liabilities recouped with most providers having greater than 67% recouped.
  • Most providers will not have any remaining recoupments by the end of the 50% recoupment period with most providers reviewed projected to have all liabilities recouped within 4 months of application of the 50% recoupment rate.
  • There could be some providers finding themselves with insufficient Medicare collections to offset AAPP liabilities in time to avoid a balloon payment due after 17 months.


One possible scenario that could extend the repayment of the AAPP advances is the possible expiration of the waiver for the 3-day stay rule, which was implemented in response to the public health emergency caused by COVID-19. This waiver is currently set to expire on 04/16/22.  The 3-day stay rule requires a patient to be hospitalized for 3 days before they are eligible for Medicare A benefits in a skilled nursing facility.  If the waiver is not extended, a reduction of Medicare census would occur at some SNFs, resulting in lower Medicare collections and less funds available for recoupment before the deadline. 


If a provider anticipates having a material remaining balance after 17 months, some additional repayment options may be available.  In October 2020, CMS announced they would send letters to providers with remaining balances after August 2022, which would accrue interest at a rate of 4% assessed each month the balance remains open. Upon receipt of such letter, providers were encouraged to contact their Medicare Administrative Contractor (“MAC”) for information on how to request an Extended Repayment Schedule (“ERS”), which could potentially allow any unpaid balances as of August 2022 to be repaid over the course of three to five years. Additionally, providers are allowed to utilize Provider Relief Funds to repay these Medicare loans.


Lenders have taken varying approaches to protecting themselves against the impact of AAPP recoupments with most creating some form of reserve on the borrowing base for ABL borrowers.   BY&S has typically recommended at least a 25% Reserve of Net Eligible Medicare A/R during the first 11 months. As we are seeing more instances of remaining AAPP liabilities past 11 months, BY&S has begun recommending increased reserves as follows:

  • At 11 months increasing to a 50% Reserve of Net Eligible Medicare A/R.
  • Before the 17th month increasing the reserve to 100% of AAPP liabilities up to Medicare Availability.

The increases to the reserve are recommended to accommodate the expected increased impairment to the Medicare collateral for those providers whose recoupments are projected to extend past the initial 11-month repayment period.


In the event you have providers in your portfolio with larger AAPP liability balances and would like to know the impact to availability, BY&S has a few options for you to consider.  We can review your clients’ AAPP balances and calculate reserves with a field exam, or we can have our monitoring services division monitor the AAPP liabilities, recoupments, and Net Eligible Medicare A/R to determine appropriate Borrowing Base reserves.  For additional information please feel free to reach out to Luke Dempsey, Scheduling Manager, at:

This entry was posted on Monday, April 11th, 2022 at 2:58 pm. Both comments and pings are currently closed.