Considerations for COVID-19 Accelerated and Advance Payment (CAAP) Recoupments

The Medicare Accelerated and Advance Payments (AAP) program assists certain types of providers with advances on future claims to help with funding due to a disruption in claims submission or processing.

With the passage of the Coronavirus Aid, Relief and Economic Security (CARES) Act, the Centers for Medicare and Medicaid Services (CMS) expanded the existing AAP program on March 28, 2020, to include a broader group of Medicare Part A providers and Part B suppliers. Changes also included added benefits as well as extended repayment terms.

Now known as COVID-19 Accelerated and Advance Payments (CAAP), the revised program aims to increase cash flow to health care providers, physicians, and suppliers during the COVID-19 public health emergency (PHE). These advances are recouped on remittances by Medicare Administrative Contractors (MACs)

Depending on when providers received the payments, they already experienced or will experience recoupments on their remittances. The following is an overview of key program details and items providers should consider with regards to the recoupments.

AAP Background

The Omnibus Budget Reconciliation Act of 1986 on October 21, 1986 first authorized the AAP program to provide so-called accelerated payments to Medicare Part A, or hospital, providers.

The program intended to expeditiously replace lost provider revenue in times of national emergencies or disasters and enable providers to remain solvent. The program extended in 1996 to include an advance payment program to Part B providers, such as doctors and other outpatient care.

The coalescence of both accelerated and advance payments sought to quickly sustain the health care ecosystem through recovery. These payments may be forgiven in part or repaid over time as health care utilization resumes.

Who Is Eligible for COVID-19 Accelerated and Advance Payments?

Per CMS, to qualify for CAAP, the provider or supplier must:

  • Have billed Medicare for claims within 180 days immediately prior to the date of signature on the provider’s or supplier’s request form
  • Not be in bankruptcy
  • Not be under active medical review or program integrity investigation
  • Not have any outstanding delinquent Medicare overpayments

Distribution of Payments

As of December 9, 2020, CMS reported approximately $98.8 billion dollars in accelerated payments were distributed to Part A providers and another $8.5 billion dollars advance payments to Part B suppliers.

Payments were distributed to providers as requests were processed. Applications were accepted by CMS until October 8, 2020.

Recoupment Process for Payments

Unlike Provider Relief Funds, these loans are repayable to the Medicare Trust fund.

Providers can repay the loan by contacting their MAC directly. If repaid in full, the following repayment terms don’t apply.

Recoupment Schedule

Any outstanding loans will be recouped by the MACs over 29 months. They will appear as takebacks at the provider level balance in remittances from the date of the disbursement.

The recoupment schedule is as follows:

  • One year from date of disbursement, no recoupment applied
  • Next 11 months, recoupment at 25%
  • Next 6 months, recoupment at 50%
  • After 29 months from disbursement, recoupment at 100% plus interest

Interest Rate

After six months recoupment at 50%, a demand letter will be issued for any remaining unpaid balances to be repaid within 30 days—with 4% interest levied from the date of the demand letter.

Recoupment will occur at 100% if a provider doesn’t repay within 30 days. This means that all Medicare payments will be withheld until the entire balance plus interest is paid in full.

Mergers, Acquisitions, and Change in Ownership

For many providers, recoupments already started.

Providers should be cognizant that mergers, acquisitions, or change in ownership during and after the PHE may increase their recoupment liability if the acquired provider also received CAAP funds.

Key Thoughts and Considerations for Providers

As of May 31, 2021, CMS reported approximately $81 billion from Part A providers and $5.9 billion from Part B providers or suppliers remain unpaid.

Providers should consider the following questions when thinking through CAAP recoupment impact:

  • Will I be able to repay the entire amount of the loan before recoupment begins?
  • What effect will this have on my cash flow and for how long?
  • How can I prepare now for Medicare cash shortfalls over the recoupment period?
  • Our organization didn’t take any accelerated or advanced payments, but acquired organizations, groups, or providers who received distributions. How will this affect my organization?
  • How do I properly record the transactions for recoupment?
  • How do I track various recoupments for my organization and predict the effects on cash flow?
  • Will my Medicare fee-for-service (FFS) patient volume remaining constant to support timely repayment?
  • What if I still owe a balance at the end of the 50% recoupment period? What are my options if I receive a demand letter and can’t repay the balance?
  • What is the impact if I already owe Medicare and am on an installment plan for non-CAAP monies?
  • What if I am understaffed or have finance or revenue cycle staff laid off as a result of the COVID-19 PHE?

Tips to Help Providers Mitigate the Effects of CAAP Recoupments

The following tips can help prepare for the impact of CAAP recoupments:

  • Estimate Medicare cash shortfalls in the upcoming months and trend the length of time to repay advance payments
  • Develop solutions to address cash flow shortages by targeted cash acceleration from other payors
  • Develop and implement an action plan to handle recoupment offsets and reconciliation
  • Redeploy resources and repurpose and train staff to facilitate improved revenue cycle operations
  • Review and develop options for repayment at the end of the recoupment period


Mandy Mori has worked in the health care industry since 2003. She specializes in assisting clients with strategic analysis and development of internally integrated and externally oriented strategic plans that assess market demand, identify service gaps, and build clarity on the long-range strategic direction. She can be reached at (415) 812-5375 or



Denise Stark has helped health care providers improve cash flow and boost productivity for more than 20 years. She has expertise in health care revenue cycle operations including patient access; revenue cycle management; patient accounting; denial management; process improvement; and financial operational protocols. She can be reached at (949) 623-4185 or