Audits

HHS Office of Inspector General

OIG (HHS Office of Inspector General) Audit Focus Areas & Process

Published 2026-08-01 · Last reviewed 2026-08-26 · Next review 2026-11-26 · Owner: Compliance · Jurisdiction: US federal SNF / CMS, MAC, RAC, OIG, and state survey programs · Change log: 2026-08-26 added last-reviewed, next-review, owner, and jurisdiction notes

Primary Sources: Annual OIG Work Plan, OIG Audit Reports on SNFs, False Claims Act patterns, Corporate Integrity Agreements (CIAs).

Step-by-Step OIG-Style Audit Process

1. Identify current Work Plan priorities relevant to SNFs (examples historically include: unnecessary therapy, MDS upcoding, staffing adequacy vs. claims, infection control, antipsychotic use, hospice in SNF, etc.).
2. Map facility claims data (UB-04 / 837I) to MDS assessments, therapy minutes, physician orders, and progress notes for the review period.
3. Sample selection: High-dollar claims, high case-mix, outliers in RUG/PDPM categories, therapy intensity outliers, short-stay high-cost cases.
4. Medical necessity review: Does documentation support skilled level of care, therapy intensity, and specific services billed?
5. Upcoding / incorrect coding review: Compare MDS coding of ADLs, diagnoses, treatments to source documentation.
6. Staffing and quality correlation: Cross-check PBJ staffing hours against claims volume and quality indicators (falls, pressure ulcers, hospitalizations).
7. Kickback / inducement review (if applicable): Therapy arrangements, pharmacy, DME, physician relationships.
8. Documentation integrity: Timeliness, authorship, late entries, copy-forward patterns.
9. Exit findings with potential overpayment calculation methodology and recommended corrective actions.

OIG Checklist Highlights

• Claims matched to MDS and clinical documentation
• Medical necessity for skilled services documented
• Therapy minutes and modalities justified and delivered as billed
• No patterns of identical or near-identical notes across residents
• Staffing levels sufficient relative to acuity and billed services
• No evidence of improper financial relationships

Recovery Audit Contractor

RAC (Recovery Audit Contractor) Audit Process

Published 2026-08-01 · Last reviewed 2026-08-26 · Next review 2026-11-26 · Owner: Compliance · Jurisdiction: US federal SNF / CMS, MAC, RAC, OIG, and state survey programs · Change log: 2026-08-26 added last-reviewed, next-review, owner, and jurisdiction notes

Focus: Improper payments (overpayments and underpayments).

Step-by-Step

1. Monitor RAC approved issues list for your region/MAC jurisdiction.
2. Upon Additional Documentation Request (ADR) or automated review notice:
   • Log receipt date and due date.
   • Assemble complete medical record (orders, progress notes, MDS, therapy logs, medication administration record (MAR), labs, imaging, care plans).
3. Internal pre-submission review against the specific RAC issue criteria.
4. Submit within timeline; track status in RAC portal.
5. For complex reviews: Prepare for discussion period / discussion & education if offered.
6. Appeal process readiness (redetermination → reconsideration → ALJ → further levels).
7. Root-cause analysis of any upheld denials; implement process changes.

Common SNF RAC Issues (historical patterns)

Therapy medical necessity / intensity, skilled level of care, incorrect PDPM coding, overlapping hospice, etc. Always check current approved issues.

RAC Checklist

• Complete record assembled before submission
• Documentation supports every billed day / service
• MDS coding accuracy verified against clinical notes
• Appeal rights and timelines tracked

Medicare Administrative Contractor

MAC (Medicare Administrative Contractor) Reviews & TPE (Targeted Probe and Educate)

Published 2026-08-01 · Last reviewed 2026-08-26 · Next review 2026-11-26 · Owner: Compliance · Jurisdiction: US federal SNF / CMS, MAC, RAC, OIG, and state survey programs · Change log: 2026-08-26 added last-reviewed, next-review, owner, and jurisdiction notes

TPE Process (CMS established)

1. MAC selects provider based on data analysis (high error rates, billing outliers, specific topics).
2. Probe review of a sample (typically 20–40 claims).
3. Education provided on findings.
4. Second probe if error rate remains high.
5. Third probe or further action if still elevated.
6. Possible prepayment review, referral, or other administrative action.

Internal Audit Alignment with TPE

• Proactively audit the same topics MAC is targeting in your region.
• Maintain error-rate tracking by topic.
• Document education provided to clinical and billing staff.
• Correct systemic documentation gaps before MAC selection.

MAC/TPE Checklist

• Current MAC LCDs and billing articles reviewed
• Sample claims reviewed for medical necessity and documentation
• Education logs maintained
• Error rate calculated and trending downward

Resident Assessment Instrument

RAI/MDS

Published 2026-08-01 · Last reviewed 2026-08-26 · Next review 2026-11-26 · Owner: Compliance · Jurisdiction: US federal SNF / CMS, MAC, RAC, OIG, and state survey programs · Change log: 2026-08-26 added last-reviewed, next-review, owner, and jurisdiction notes

Founder, PDPM Audit Optimization Group | Source-cited SNF documentation evidence for audit readiness, operating visibility & diligence

Trigger, ARD, look-back, interviews, observation, CAA, and care-plan linkage. Copy-forward scores and ARD clustering are the first red flags a reviewer will test.

• Sample assessments with an ARD in the prior month — OBRA, PPS, SCSA, discharge, corrections.
• Source-document map for GG, BIMS, PHQ, diagnoses, and skilled services in the window.
• Qualified human disposition before any MDS correction or claim action.

Appendix PP · F880–F883+

Infection Control Audit

Published 2026-08-01 · Last reviewed 2026-08-26 · Next review 2026-11-26 · Owner: Compliance · Jurisdiction: US federal SNF / CMS, MAC, RAC, OIG, and state survey programs · Change log: 2026-08-26 added last-reviewed, next-review, owner, and jurisdiction notes

References: CMS Appendix PP (F880–F883+), CDC guidelines, facility IC plan.

Step-by-Step

1. Review written Infection Prevention & Control Program and annual risk assessment.
2. Observe: Hand hygiene compliance (WHO 5 Moments or CDC), PPE use, isolation precautions, environmental cleaning, linen handling, sharps, waste.
3. Review surveillance data: HAIs, MDRO, C. difficile, influenza/COVID outbreaks, antibiotic stewardship metrics.
4. Audit antibiotic orders for indication, duration, culture results, de-escalation.
5. Check employee health: Vaccination records, TB screening, exposure follow-up.
6. Review water management plan (Legionella) if applicable.
7. Interview Infection Preventionist and frontline staff.

Infection Control Checklist

• Written program + risk assessment current
• Hand hygiene compliance ≥ target (observed + data)
• Isolation precautions correctly implemented and discontinued
• Antibiotic stewardship program active with metrics
• Outbreak response documentation complete
• Environmental cleaning logs and competency
• Staff vaccination and screening up to date

Unnecessary drugs · psychotropics

Medication Management Audit

Published 2026-08-01 · Last reviewed 2026-08-26 · Next review 2026-11-26 · Owner: Compliance · Jurisdiction: US federal SNF / CMS, MAC, RAC, OIG, and state survey programs · Change log: 2026-08-26 added last-reviewed, next-review, owner, and jurisdiction notes

Focus: Storage, administration, reconciliation, high-alert meds, controlled substances, psychotropics, antibiotics.

Step-by-Step

1. Trace medications from order → pharmacy → storage → MAR → administration → documentation.
2. Observe medication pass (timed observation).
3. Audit controlled substance counts, waste, reconciliation.
4. Review high-alert medications (insulin, anticoagulants, opioids) for double-checks and monitoring.
5. Psychotropic medication review: Indication, informed consent, gradual dose reduction attempts, behavioral interventions tried first.
6. Medication error reports and near-misses analysis.
7. Pharmacy consultant reports and recommendations follow-up.

Medication Management Checklist

• Orders complete and authenticated
• MAR accuracy vs. orders
• Controlled substances reconciled
• High-alert meds double-checked
• Psychotropic GDR and non-pharmacologic alternatives documented
• Medication errors investigated with root cause
• Storage temperatures, security, and dating compliant

Care plan · Section GG

Fall Risk Audit

Published 2026-08-01 · Last reviewed 2026-08-26 · Next review 2026-11-26 · Owner: Compliance · Jurisdiction: US federal SNF / CMS, MAC, RAC, OIG, and state survey programs · Change log: 2026-08-26 added last-reviewed, next-review, owner, and jurisdiction notes

Step-by-Step

1. Review fall risk assessment tool and frequency (admission, significant change, quarterly, post-fall).
2. Sample residents with falls and high-risk residents without falls.
3. Verify interventions implemented (alarms, low beds, PT/OT, footwear, lighting, toileting schedules, medication review).
4. Post-fall investigation completeness (root cause, neurological checks if indicated, notification, care plan update).
5. Trend analysis: Time of day, location, staffing correlation, repeat fallers.
6. Environmental rounds for hazards.

Fall Risk Checklist

• Risk assessment completed on schedule and accurate
• Interventions individualized and implemented
• Post-fall investigation thorough
• Care plan updated after falls
• Environmental hazards addressed
• Staffing and supervision adequate during high-risk times

Investigations · reportable events

Incident Reports / Event Reporting Audit

Published 2026-08-01 · Last reviewed 2026-08-26 · Next review 2026-11-26 · Owner: Compliance · Jurisdiction: US federal SNF / CMS, MAC, RAC, OIG, and state survey programs · Change log: 2026-08-26 added last-reviewed, next-review, owner, and jurisdiction notes

Step-by-Step

1. Review policy for what must be reported (falls, injuries, abuse/neglect allegations, elopement, medication errors, equipment failures, etc.).
2. Cross-check incident logs against medical records, nurse notes, and 24-hour reports for under-reporting.
3. Evaluate investigation quality: Timeliness, interviews, root cause, corrective actions, notifications (family, physician, state if required).
4. Abuse/neglect/suspicious injury pathway compliance (immediate protection, reporting to state agency and law enforcement as required).
5. Trend analysis and QAPI integration.

Incident Report Checklist

• All required events captured
• Investigations completed within policy timelines
• Root cause identified and addressed
• Required external notifications made
• Patterns escalated to QAPI

PBJ · hours per resident day

Staffing Hours and Ratios Audit

Published 2026-08-01 · Last reviewed 2026-08-26 · Next review 2026-11-26 · Owner: Compliance · Jurisdiction: US federal SNF / CMS, MAC, RAC, OIG, and state survey programs · Change log: 2026-08-26 added last-reviewed, next-review, owner, and jurisdiction notes

Key Data Sources: Payroll-Based Journal (PBJ) data submitted to CMS, internal timekeeping, census, acuity.

Step-by-Step

1. Pull PBJ reports for the audit period; compare to internal payroll and schedules.
2. Calculate hours per resident day (HPRD) by discipline (RN, LPN, CNA) and total nurse staffing.
3. Compare to CMS staffing star rating thresholds and any state minimum staffing ratios.
4. Correlate staffing levels with quality indicators (falls, pressure ulcers, hospitalizations, complaints).
5. Review weekend/holiday/night staffing vs. weekday.
6. Check for agency use patterns, overtime, and competency of temporary staff.
7. Verify director of nursing and other key positions coverage.

Staffing Checklist

• PBJ data accurate and timely submitted
• HPRD meets or exceeds applicable requirements
• No significant understaffing relative to acuity
• Weekend and night coverage adequate
• Staff competency and orientation documented

Standard · complaint · licensing

State Health Inspection / Survey Readiness (Federal Baseline + State Approach)

Published 2026-08-01 · Last reviewed 2026-08-26 · Next review 2026-11-26 · Owner: Compliance · Jurisdiction: US federal SNF / CMS, MAC, RAC, OIG, and state survey programs · Change log: 2026-08-26 added last-reviewed, next-review, owner, and jurisdiction notes

Federal Framework: CMS State Operations Manual Appendix PP (Long-Term Care), survey process (offsite preparation, entrance, sample selection, observations, interviews, record review, exit).

Step-by-Step Survey Readiness Audit

1. Maintain continuous readiness (not just pre-survey).
2. Review most recent 2567 and plan of correction (POC) implementation and effectiveness.
3. Conduct mock surveys using current surveyor tools and critical element pathways.
4. Focus high-citation areas historically: infection control, medication management, accidents/falls, quality of care, resident rights, staffing, food safety, etc.
5. Prepare staff for interviews (know policies, resident-specific care).
6. Ensure all required postings, licenses, policies, and QAPI documentation are current and accessible.

State-Specific Approach

1. Locate your state’s survey agency (usually Department of Health or equivalent).
2. Obtain state-specific regulations that are stricter than federal (many states have higher staffing minimums, specific infection control rules, different reporting timelines, etc.).
3. Review state survey protocols, focus areas, and recent citation patterns for your state.
4. Monitor state websites and provider bulletins for updates.
5. Maintain a matrix of federal F-tags + state equivalents.

Because requirements differ by state, create a living document that maps:

Federal tag → State regulation citation → Facility policy → Evidence of compliance.

Concurrent · retrospective

Internal Clinical Chart Reviews & QA Checklists

Published 2026-08-01 · Last reviewed 2026-08-26 · Next review 2026-11-26 · Owner: Compliance · Jurisdiction: US federal SNF / CMS, MAC, RAC, OIG, and state survey programs · Change log: 2026-08-26 added last-reviewed, next-review, owner, and jurisdiction notes

Structure a Tiered Review Program

1. Concurrent (real-time or near real-time) reviews by unit managers / MDS coordinators.
2. Retrospective focused reviews by QA / Compliance.
3. Interdisciplinary chart audits.
4. Closed-record audits for discharged residents.

Core Clinical Chart Review Checklist (Adapt by focus)

Identification & Demographics

• Accurate face sheet, advance directives, consents

Orders & Care Planning

• Physician orders current and authenticated
• Care plan individualized, interdisciplinary, updated with changes
• Goals measurable and resident-centered

Assessments

• Admission comprehensive assessment complete
• MDS accuracy (link to Section 4)
• Fall risk, skin, pain, nutrition, cognition, mood assessed on schedule

Daily Documentation

• Nursing notes reflect condition and interventions
• ADLs, vitals, intake/output as ordered
• Therapy notes support skilled need and progress

Medications & Treatments

• MAR matches orders; administration documented
• Treatments (wound, respiratory, etc.) documented with response

High-Risk Areas

• Pressure ulcer staging, measurements, treatments accurate
• Weight loss investigated and addressed
• Behavioral symptoms with non-pharmacologic interventions first
• Hospitalization / transfer documentation complete

Discharge / Transition

• Summary complete; medications reconciled; follow-up arranged

QA / QAPI Integration Checklist

• Findings entered into tracking system
• Trends identified (by unit, shift, diagnosis, staff)
• PIPs developed for systemic issues
• Effectiveness of corrective actions measured
• Governing body / QAPI committee oversight documented

Cadence · sample · owner

Audit Schedule

Published 2026-08-01 · Last reviewed 2026-08-26 · Next review 2026-11-26 · Owner: Compliance · Jurisdiction: US federal SNF / CMS, MAC, RAC, OIG, and state survey programs · Change log: 2026-08-26 added last-reviewed, next-review, owner, and jurisdiction notes

A standing calendar beats a scramble when the letter arrives. Align this example annual cycle to your RAI calendar, QAPI, and state survey window — then apply the evidence standards above to every review.

Recommended Audit Schedule (Example Annual Cycle)