Providers are anxiously waiting on formal confirmation from the Centers for Medicare & Medicaid Services that any payments made to nursing homes through the COVID-related Employee Retention Credit program should not be treated as a credit for cost-reporting purposes.
Nursing home leaders in several states had initially been told that they would have to include such one-time payments as a credit on their cost reports, a factor that could have reduced future years’ Medicaid payments. That was different from the way in which other COVID relief funds have been treated.
The confusion led the American Health Care Association and LeadingAge, the nation’s two largest nursing home advocacy groups, to write to CMS and meet with an agency official on the topic in mid-February.
After those discussions, LeadingAge said that CMS was expected to notify states the week of March 13 that the ERC funds “should be treated like other COVID relief funds such [including the Paycheck Protection Program and Provider Relief Funds] and not like a tax credit on Medicaid cost reports.”
Since that time, however, several sources have said they are still awaiting official word on how to treatment Employee Retention Credits.
Last Wednesday, McKnight’s Long-Term Care News asked CMS for an update on the issue or a copy of any related correspondence with state officials. By late Monday, however, CMS had not provided any of this information. It remained unclear if state Medicaid agencies had received any communication about the policy.
In the meantime, the uncertainty around the issue is weighing on providers who have not received details, most of whom must file their cost reports by May 31. Cost reports are used broadly in state rebasing efforts.
“Depending on the state Medicaid stance regarding the treatment of the ERC funds and how the Medicaid rates are calculated, this is a huge concern for facilities,” Deb Emerson, CPA and principal at CliftonLarsonAllen, told McKnight’s last week. “If the credits have to be offset against incurred costs, future rates will be artificially reduced, thereby negatively impacting Medicaid revenue for facilities.”
In their letter from February, AHCA and LeadingAge noted the one-time funds given only to select providers who qualified, applied and were awarded funds “would lower base rates for all providers, whether they received ERC or not, and would take years for rates to be normalized.”
