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Skilled Nursing Facilities' Medicare Payments to Related Parties

Understanding skilled nursing facilities' (SNFs') costs is crucial to understanding the factors that contribute to nursing home performance and how nursing homes deliver care to beneficiaries. The cost of services, facilities, and supplies furnished to a provider by an organization related to the provider by common ownership or control may be included in the allowable cost of the provider in an amount equal to the related organization's cost. However, such cost must not exceed the price of comparable services, facilities, and supplies that could be purchased elsewhere. Medicare requires that a reported amount be the lower of either the actual cost to the related organization or the market price for comparable services, facilities, or supplies, thereby removing any incentive to realize profits through these transactions. We will determine whether SNFs are reporting related-party costs in accordance with Federal regulations. We will also determine whether a SNF's allocation of Medicare funds could impact beneficiary care, such as whether overhead costs might have increased while allocations for patient care decreased, potentially reducing care.

Announced or Revised Agency Title Component Report Number(s) Expected Issue Date (FY)
Revised Centers for Medicare and Medicaid Services Skilled Nursing Facilities' Medicare Payments to Related Parties Office of Audit Services WA-22-0004 (W-00-22-35887) 2024