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CMS Clarifies that PPP Loan Forgiveness will not Offset Expenses

One of the questions surrounding loans under the Paycheck Protection Program (“PPP”) was whether forgiveness of these loans would be offset against expenses and used to decrease future Medicare reimbursement. PPP loans were created under the CARES Act and are administered by the Small Business Administration (“SBA”). They were intended to help employers keep employees on the payroll during the economic crisis caused by the COVID-19 pandemic. These loans are eligible for forgiveness if the recipient uses them for their intended purpose and complies with the specified terms and conditions.

It was not initially clear what, if any, effect PPP loan forgiveness would have on Medicare reimbursement. However, a Medicare Administrative Contractor (“MAC”) caused concern when it informed some providers, primarily rural hospitals, that any PPP loans that were forgiven would be offset against their expenses. This measure, therefore, would decrease Medicare reimbursement in order to prevent duplicative payments from the federal government. CMS indicated shortly thereafter that this communication from the MAC was inaccurate and that further guidance would be forthcoming.

CMS recently issued guidance and clarified that PPP loan forgiveness would not be offset against expenses. The only circumstance under which CMS has indicated a PPP loan would be offset is if the loan amounts are attributable to specific claims, such as payments for the uninsured. The guidance goes on to remind providers that PPP and other SBA loans must be used for eligible expenses. Therefore, it is likely that any recipient of a PPP loan who uses it for eligible expenses and this is eligible for loan forgiveness would not be subject to offset.

For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in understanding new developments in CMS regulations. If you or your healthcare entity has any questions pertaining to healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or

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