Some home healthcare providers soon may be in for a rude awakening. Bills for Medicare Accelerated and Advanced Payments to the federal government come due in a few weeks.
The National Association of Home Care and Hospice (NAHC) hoped the Centers for Medicare and Medicaid Services (CMS) might forgive the loans, but a NAHC spokesman told McKnight’s Home Care Daily in a statement that “there does not seem to be congressional focus on it.”
The Centers for Medicare & Medicaid Services announced the expansion of the program on March 28 of last year. The program was intended as a financial lifeline to providers — including Medicare-certified home healthcare firms — struggling with cash flow disruptions during the COVID-19 pandemic. It expedites payments during emergencies and natural disasters to help providers stay afloat.
Recipients were originally supposed to start paying back the money last August, but CMS extended the repayment period until one year after the funds were loaned. CMS advanced about $100 billion, and only about 2% went to home health providers, according to an analysis by the Kaiser Family Foundation.
Under repayment, CMS will withhold 25% of Medicare payments for 11 months or until the amount has been paid back. If the advanced payments have not been received by that point, CMS will withhold 50% of Medicare payments for up to six months and then issue a demand letter for the balance.
Better repayment odds
The home healthcare industry may fare better than its post-acute care counterparts in terms of repayments. While the home healthcare industry saw a significant drop in referrals at the beginning of the pandemic, referrals have rebounded beyond pre-pandemic levels, according to Sherill Mason, principal at Mason Advisors LLC, which provides strategic planning and operations analysis to healthcare providers.
“The sector is significantly healthier financially than their colleagues in the skilled nursing industry, where census has not rebounded,” Mason told McKnight’s Home Care Daily.
Jacquelyn Kung, CEO of senior consulting firm Activated Insights, agrees profitability has improved for the home healthcare industry, but she told McKnight’s Home Care Daily most providers continue to face higher operating costs from the pandemic.
“They have higher expenses from PPE [personal protective equipment] and additional training. Working capital is difficult to manage when you’re on the smaller side as a (Medicare) certified home health company, so this is definitely going to put pressure on working capital,” Kung said.
Home healthcare firms that struggle to repay the Medicare loans could become acquisition targets of larger companies. At a recent healthcare conference hosted by investment bank Barclay’s plc, Amedisys (AMED) Chairman and CEO Paul Kusserow said his firm is on the hunt to acquire companies.
“We’ve been able to predict who is going to be in trouble, who is not and where we want to be. We are going to be very aggressive about anybody within our licensing area and probably won’t pay much,” said Kusserow.
Mason said those companies that planned ahead and ensured good cash flow will likely be able to repay the loans in a timely fashion. But she said those that didn’t or thought the timeline for repayment might be extended, could have problems.