Problems in Auditing Medicaid Nursing Home Chains

HRD-78-158: Published: Jan 9, 1979. Publicly Released: Jan 9, 1979.

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A group of two or more nursing homes with common ownership is considered a chain. GAO has reviewed these chains to determine if Medicaid reimbursement for nursing home chain headquarters' costs was related to patient care and whether the States effectively audit nursing claims operations.

GAO found three major problems with nursing home chains. The States were not consistently field auditing reimbursement charges from the chain headquarters and when audits were conducted, the results were not shared with other affected States. Because of the complexity of some chain relationships, it is sometimes difficult to discern if chain affiliations exist. With stricter laws governing the disclosure of ownership information, the problem should be minimized. The Department of Health, Education, and Welfare (HEW) has no system by which Medicaid auditors might coordinate audit results. The Medicare system for coordinating audit information has worked in the past and could be adapted to suit the needs of Medicaid auditors.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: To solve the records problem, HEW should direct the Health Care Financing Administration to provide for the exchange of audit results for nursing homes among all affected Medicaid intermediaries and State agencies. To facilitate this system, one agent should be given the responsibility for auditing each nursing home chain headquarters.

    Agency Affected:


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