CMS has clarified that hospitals will not be penalized for receiving COVID-19 relief grants or forgiven small-business loans in future Medicare payments.
Some rural hospitals were concerned that forgiven Paycheck Protection Program loans would be counted against them in future Medicare payment calculations, but CMS on Aug. 26 updated Medicare cost report guidance stating that providers will only have to report the sums for informational purposes.
"Do not offset SBA Loan Forgiveness amounts against expenses unless those amounts are attributable to specific claims such as payments for the uninsured," the updated guidance states on filing Medicare cost reports.
The National Rural Health Association viewed the clarification as a win.
"NRHA is thrilled with the clarification that PPP funds do not have to be offset on a cost report of a critical-access hospital or rural health clinic," said Maggie Elehwany, NRHA vice president of government affairs and policy. "We believe that this is the absolutely correct interpretation of the intent of these funds."
Several lawmakers of both parties had written to CMS asking for the policy to be clarified after a Medicare Administrative Contractor sent out an inaccurate communication to providers. The notice stated that critical-access hospitals would have to subtract their forgiven PPP loans from their expense totals to "prevent the duplication of benefits from the federal government."
The guidance also clarifies that Provider Relief Fund grants intended to help providers pay for coronavirus-related costs or lost revenue also should not offset expenses in cost reports.
RSM US partner Rick Kes said the grant policy will give more certainty to critical-access hospitals that may not have been eligible for PPP loans because of their affiliation with larger health systems.
