To expedite communication with states, Centers for Medicare & Medicaid Services (CMS) emailed State Medicaid agencies indicating they should treat Employee Retention Credits (ERC) like Provider Relief and Paycheck Protection Dollars, and not as a tax credit that should be offset. This clarification impacts both Medicaid Cost Reports and Medicaid rate setting and was distributed a few weeks ago.

Please let Nicole Fallon know if your state issues any rate reduction notices due to the impacts of the ERC. We will promptly communicate this to our contacts at CMS and they will follow up directly with the states in question. We’ve heard that about a dozen states had issued rate reduction letters about three weeks ago so this practice should have stopped.