Originally, CMS had informally instructed State Medicaid Agencies to offset Employee Retention Tax Credit (ERC) against cost. This position would have resulted in reductions in Medicaid rates. Several states already had begun issuing Medicaid rate letters. This guidance was completely different from CMS’ PPP and PRF guidance – those funds were to be disregarded for Medicaid rate setting.

Earlier this week, CMS reversed its position and is now treating ERC as it does PPP and PRF. ERC should be disregarded for purposes of rate setting. CMS is releasing emails to states this week sharing the updated guidance. WHCA/WiCAL will be monitoring the situation to ensure Wisconsin is handling this in conjunction with the updated guidance.

Please reach out to Kate Dickson with any questions.