History of MDS 3.0 Audits
The Centers for Medicare and Medicaid (CMS) audits of skilled nursing facility (SNF) Minimum Data Set (MDS) data are nothing new. The MDS is a Resident Assessment Instrument (RAI) that CMS has created and mandated to provide each resident with a standardized, comprehensive and reproducible assessment. This tool assesses a resident’s ability to perform daily life functions, identifies significant impairments in a resident’s functional capacity, and provides opportunities for direct resident interview. The MDS 3.0 was implemented in 2010, and in 2014 CMS piloted MDS Focused Surveys in five states to evaluate facilities’ ability to code the MDS correctly. Since 2017, CMS has instituted a different approach to reviewing MDS accuracy, and SNFs are now subject to a variety of audits designed to ensure compliance with regulatory oversight, maintain program integrity, and monitor for improper payments in the SNF setting. These various audits include:
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- Recovery Audit Contractor (RAC) audits that identify overpayment and underpayment on Medicare claims
- Comprehensive Error Rate Testing (CERT) audits that measure improper payment rates in the Medicare and Medicaid programs
- Unified Program Integrity Contractor (UPIC) audits that investigate fraud, waste, and abuse
- Medicare Administrative Contractor (MAC) audits that oversee claims processing, provider education, and local audits
- Supplemental Claim Review Contractor (SMRC) audits that review Medicaid, Medicare A/B, and durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) provider claims as well as other special projects as directed by CMS
- Office of Inspector General (OIG) audits that detect fraud and program abuse
- Skilled Nursing Facility Data Validation Audits assess the accuracy of Minimum Data Set (MDS)-based quality measures used in the SNF Value Based Purchasing (VBP) and Quality Reporting Programs (QRPs)
Supporting MDS Accuracy – Is it Reproducible?
Since CMS expects that the coding on any MDS is “reproducible,” maintaining accurate and robust data collection processes in the resident’s health record is imperative – any auditor should be able to compare the resident’s health record to what is captured on the MDS and come to the same coding conclusion. The old standard, “if it wasn’t documented, it wasn’t done” is being put to the test with MDS validation audits. This concept is reaffirmed in the Skilled Nursing Facility Validation Program Frequently Asked Questions (FAQ) released in Sept 2026. Question #33 in this release states, “Validation activities involve reviewing the medical record to determine whether sufficient documentation exists to support the MDS assessment values submitted. Validation determinations are based on the presence of evidence within the medical record documentation to substantiate the reported assessment value. General statements indicating that MDS assessment values were derived from observations, interviews, or record review, without corresponding supporting documentation in the medical record, are not sufficient to support MDS coding or validation findings.”
This documentation standard set by CMS requires an MDS coordinator and Interdisciplinary Team (IDT) well-trained in and accountable for the following:
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- knowledge and understanding of the correct look-back and observation periods each MDS covers
- MDS scheduling and completion requirements
- use of facility tools that are utilized during the look-back period to capture the required data for MDS completion
- scripted resident interview requirements for each MDS
- accurate MDS coding utilizing RAI manual updates effective each October 1
- understanding of MDS item rationale, planning for care, steps for assessment, and coding instructions
- application of RAI manual coding tips and special populations
Administrative Support
Each year – typically mid-September – CMS releases RAI manual updates that will be effective October 1. These updates can include changes to MDS data elements and/or coding instructions that will be implemented on October 1; missing or overlooking RAI manual updates can impact MDS data integrity, quality measures, and reimbursement. Administrative staff can support MDS accuracy in a variety of ways, including:
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- Ensure each IDT member who has responsibility for MDS-required data collection and MDS completion is collecting that data and completing the MDS timely.
- Confirm that your organization has an ongoing process of auditing MDS completion to verify accuracy. Integrate audit findings into the organization’s QAPI/QAA system if data collection and MDS completion are not meeting the thresholds to ensure MDS accuracy.
- Review all MDS updates that are normally expected to occur each October 1. Begin with competency-based training and continue training throughout the year with a focus on the MDS changes. Audit the implemented changes and report audit findings to QAPI/QAA.
- Review facility policies and procedures related to the organization’s RAI system and revise them as needed to support accurate MDS coding and compliance.
- Update data collection tools (in the electronic health record and/or on paper) to reflect expected October 1 MDS changes and support collection of accurate and correct MDS data items.
- Designate alternate IDT members to set MDS Assessment Reference Dates, complete interviews, complete data collection, and/or sign for completion, ensuring that crucial MDS items are not missed when the normal staff responsible takes time off.
More Resources
- Fiscal Year (FY) 2015 Minimum Data Set (MDS) Focused Survey Summary
- Skilled Nursing Facility Data Validation Process: Frequently Asked Questions (FAQs)
- Navigating CMS Audits: Understanding the Different Types
- Long-Term Care Facility Resident Assessment Instrument 3.0 User’s Manual Version 1.20.11 (October 2026)