Creator: Patrick Connole
HHS OIG Issues Report on SNFs and Minimum Spending
HHS OIG has released its audit of how four states implemented different nursing home minimum spending requirements.
A new report by the Dept. of Health and Human Services (HHS) Office of Inspector General (OIG) details how four states implemented different nursing home minimum spending requirements tied to resident care and what they experienced.
The report number is OAS-25-09-086.
HHS OIG said it conducted its audit because according to Medicaid payment transparency reporting requirements, beginning in 2028, states must report to CMS annually, by facility, the percentage of Medicaid payments that are spent on compensation for direct care workers and support staff for services provided by Medicaid-certified nursing homes.
Despite the fact there currently is no federal minimum spending requirement, as of January 2026, four states (Massachusetts, New Jersey, New York, and Pennsylvania) had established minimum spending requirements related to resident care.
What OIG Found
The report said each of the four states implemented its own nursing home minimum spending requirements related to resident care.
“Specifically, each state required nursing homes to spend at least a set percentage of revenues, expenses, or costs on resident care [i.e., minimum spending threshold] and calculated the spending percentage using different financial figures,” HHS OIG said.
Three of the four states identified challenges that they experienced in implementing minimum spending requirements. The report said these challenges focused on collecting data from nursing homes and a lack of audited data to calculate the minimum spending percentages.
The three states recording challenges were Massachusetts, New Jersey, and Pennsylvania. New York did not identify any challenges, HHS OIG said.
“In addition, there were some selected nursing homes in each of the four states that experienced challenges in complying with the requirements, such as staffing shortages and difficulties in gathering and reporting the required data to the state due to time constraints,” the report said.
The report said Massachusetts required nursing homes to spend at least 75 percent of total revenue on direct care expenses; New Jersey required at least 90 percent of Medicaid revenue on Medicaid patient care expenses; New York had three requirements, including one in which nursing homes must spend at least 70 percent of revenue on direct resident care; and Pennsylvania required resident care or other resident-related costs of at least 70 percent of total costs.
OIG Advice to CMS
In its conclusion, HHS OIG said it recommended that CMS consider the information in the report as it implements federal Medicaid payment transparency reporting requirements for nursing homes, and in any future rulemaking, should it decide to implement a minimum spending requirement. CMS concurred with the recommendation, HHS OIG said.
Comments or questions? Contact Patrick Connole at pconnole@parkplacelive.com.
