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

The OIG data brief analyzes 26 nursing facilities across 9 states that were selected to represent both Medicare- and Medicaid-certified facilities. These facilities were categorized as government-owned (9), nonprofit (10), and for-profit (7). The audit examines two data snapshots: 2018 and 2021, with the 2021 period reflecting data collected during the COVID-19 public health emergency. For each facility, the analysis calculates the Medicaid portion of direct care compensation by applying Medicaid utilization to total costs reported on Medicaid cost reports, and compares that to the facility’s total Medicaid reimbursement for that year. Direct care compensation includes compensation for direct care workers and support staff, and is defined per CMS guidance, including salaries, wages, benefits, and employer payroll taxes, but excluding training costs. Staffing levels are assessed via Nursing Hours Per Resident Day (HPRD) calculated using PBJ data. The audit also identifies ownership changes between 2018 and 2021 and discusses CMS reporting requirements and the challenge of identifying complex ownership structures. Appendix A describes scope and methodology, including the reporting periods for facilities with calendar or fiscal years. Present findings are intended for CMS and other stakeholders; the analysis is not a continuous four-year trend, but two separate snapshots.