Analysis of Selected Nursing Facilities’ Use of Medicaid Reimbursement for Direct Care Compensation

Why OIG Did This Audit

• Nursing facility spending on direct patient care, and the quality of that care, are of critical importance for residents of these facilities, their family members, and the Medicaid program itself.
• Our objectives were to analyze spending for 26 selected nursing facilities in 2018 and in 2021 to determine: (1) the percentage of funds received through Medicaid reimbursement that the facilities spent on direct care compensation, (2) whether the percentage used for direct care compensation at each facility changed between our 2018 and 2021 data snapshots, and (3) whether that change was a result of new ownership.
• We provide this data brief to CMS for its information and review. Information in this data brief may also be of interest to other stakeholders, including other policymakers, State Medicaid agencies, and nursing facilities.

Results of Analysis

• We determined that 17 of the 26 selected nursing facilities increased the percentage of funds received through Medicaid reimbursement that they spent on direct care compensation between 2018 and 2021. In addition, we determined that 9 of the 26 selected nursing facilities decreased the percentage of funds received through Medicaid reimbursement that they spent on direct care compensation between 2018 and 2021.

• Between 2018 and 2021, the percentage of Medicaid reimbursement spent on direct care compensation increased for 17 of the 26 selected nursing facilities. Of these 17 nursing facilities, 12 had decreases in their nursing hours per resident day.
• For our third objective, we identified 2 nursing facilities (of the 26 that we selected) that changed ownership between our 2018 and 2021 data snapshots. We note, though, that as CMS has pointed out, complex ownership structures make it difficult to identify nursing facilities’ owners.
• This data brief is for informational purposes and makes no recommendations.

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