Medicare cost reports submitted by nursing facilities are not audited to determine compliance with related party requirements.
Nursing home owners and operators hide their profits by making inflated payments to companies they own and control, which are called related parties. The diversion of millions of dollars of public reimbursement to excessive private profit through payments to related parties limits the money available for resident care and results in residents’ poor care, suffering, and death. At present, facilities pay 40% of their revenues to related parties. The Centers for Medicare & Medicaid Services (CMS) does not review or audit the Medicare cost reports that skilled nursing facilities (SNFs) submit annually to determine whether SNFs comply with long-standing federal disclosure and other requirements for related parties. In an audit, the HHS Office of Inspector General reports that seven of 14 facilities in its sample “did not properly adjust some of their related-party costs to Medicare-allowable costs as required, which resulted in $1,703,734 in overstated costs.” HHS Office of Inspector General, Some Selected Skilled Nursing Facilities Did Not Comply With Medicare Requirements for Reporting Related-Party Costs, A-07-21-02836, p. 7 (Dec. 2024). The lack of any federal oversight of related party issues in Medicare cost reports is a shocking dereliction of duty that must be corrected to safeguard both resident care and the use of public reimbursement.
- Read the full report at MedicareAdvocacy.org/Report-OIG-Audits-of-Medicare-Cost-Reports
January 2025 – T. Edelman