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Series: Skilled Nursing Facilities’ Medicare Payments to Related Parties

Announced on  | Last Modified on  | Series Number: W-00-24-35887
Status
Completed
Agency
Centers for Medicare and Medicaid Services

OBJECTIVE

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.

There are 2 projects in this series.

CANCELED PROJECTS IN THIS SERIES (1)

Selected Skilled Nursing Facilities' That Paid More of Their Funds As Profit to Their Related Parties Generally Provided Poorer Quality of Care

Project A-07-24-00639 • Canceled on Oct 8, 2025

COMPLETED PROJECTS IN THIS SERIES (1)

Skilled Nursing Facilities' Medicare Payments to Related Parties

Project A-07-21-02836 • Completed on December 18, 2024

TIMELINE

  • February 16, 2021
    Series Number W-00-24-35887 Assigned
  • February 16, 2021
    Project Announced

    Skilled Nursing Facilities' Medicare Payments to Related Parties - A-07-21-02836

  • December 6, 2023
    Project Announced

    Selected Skilled Nursing Facilities' That Paid More of Their Funds As Profit to Their Related Parties Generally Provided Poorer Quality of Care - A-07-24-00639

  • December 18, 2024
    Project Complete - A-07-21-02836

    Skilled Nursing Facilities' Medicare Payments to Related Parties has been marked as complete. This audit resulted in 3 recommendations.

  • December 18, 2024
    Series Complete

    Skilled Nursing Facilities’ Medicare Payments to Related Parties has been marked as complete.

  • October 8, 2025
    Project Canceled - A-07-24-00639

    Selected Skilled Nursing Facilities' That Paid More of Their Funds As Profit to Their Related Parties Generally Provided Poorer Quality of Care

1 REPORT PUBLISHED

Some Selected Skilled Nursing Facilities Did Not Comply With Medicare Requirements for Reporting Related-Party Costs (A-07-21-02836)

25-A-07-028.01 to CMS - Open Unimplemented
Update expected on 11/12/2025
We recommend that the Centers for Medicare & Medicaid services require the MACs to include, as part of the normal desk review or audit process, a review of reporting and disclosure of related-party costs.

25-A-07-028.02 to CMS - Open Unimplemented
Update expected on 06/17/2025
We recommend that the Centers for Medicare & Medicaid Services develop and implement guidance for skilled nursing facilities on the appropriate methods for providers to determine their allowable related-party costs.

25-A-07-028.03 to CMS - Open Unimplemented
Update expected on 06/17/2025
We recommend that the Centers for Medicare & Medicaid Services provide guidance to reeducate Medicare Administrative Contractors on the need to review, grant, and document requests from skilled nursing facilities for exceptions to cost reporting requirements in compliance with 42 CFR § 413.17(d).

View in Recommendation Tracker
Work Plan Type
Office of Audit Services
HHS Agencies
Centers for Medicare and Medicaid Services
Issue Areas
COVID-19 Emergency Preparedness and Response Financial Stewardship Public Health Issues
Target Groups
-
Financial Groups
Grants Medicare A Other Funding