Published April 14, 2020

Accounting for Medicare Advance Payments and Relief Fund Payments

Healthcare providers across the country have begun receiving the much-needed relief promised in the CARES Act. This relief is arriving from two programs: Medicare Advance Payments and disbursements from the Public Health and Social Services Emergency Fund (the Relief Fund). While the goal of payments under both programs is similar, the accounting for the payments received under each differs.

Medicare Advance Payments should be available to most providers and hospitals who have billed Medicare in the past 180 days. More information on Medicare Advance Payments and a complete list of the criteria may be found in this PYA insight.

Medicare Advance Payments Accounting Treatment

Medicare Advance Payments must be repaid to the Centers for Medicare & Medicaid Services (CMS) beginning 120 days after receipt of the advance. The repayment will be made by withholding payment on future claims submitted by the healthcare provider. These payments should be reported on the balance sheet as a current asset (cash) and a current liability (deferred revenue or due-to-third-party). As the payment on future claims is withheld, the healthcare provider will debit the deferred revenue or the recorded due-to-third-party account, while crediting the related patient accounts receivable amount.

Relief Funds Accounting Treatment

Relief Fund payments are approximately 6.2% of a provider’s 2019 Medicare fee-for-service payments (not including Medicare Advantage). More information on Relief Fund payments can be found in this PYA insight.

Relief Fund payments are not considered loans and do not have to be repaid or forgiven unless the healthcare provider does not meet certain terms and conditions. If the healthcare provider believes it can meet the list of program criteria and attest to such within 30 days of receipt of payment, these funds should be recognized as revenue when received. If the healthcare provider is unsure of whether it can meet the program criteria, the funds should be recorded as deferred revenue until such time that the healthcare provider determines fulfillment of the criteria is likely to occur (and the probability of having to pay back the funds is unlikely).

PYA recommends recording the revenue related to the Relief Fund payments in a separate general ledger account and reporting on the financial statements as a line item in operating revenues, separate from patient service revenue. We also recommend ensuring that footnote disclosures adequately explain the portion of revenue related to Relief Fund payments.

Healthcare providers should also consider consulting their external auditors to discuss the accounting for these payments.

PYA will keep you updated as more details become available. If you have any questions about this information, or would like additional guidance related to COVID-19, visit our COVID-19 hub, email us at, or contact one of our PYA executives below at (800) 270-9629. A PYA


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