The Centers for Medicare and Medicaid (CMS) audits of skilled nursing facility (SNF) Minimum Data Set (MDS) data are nothing new. The MDS 3.0 was implemented in 2010, and in 2014 CMS piloted MDS Focused Surveys in 5 states. The results of the pilot study prompted full implementation of MDS Focused Surveys nationwide, and these surveys continued through Fiscal Year (FY) 2017.
Since then, 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 have included:
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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
MDS Regulatory Oversight
MDS data elements are standardized and intended to be utilized to create an accurate assessment of each resident in facilities that are Medicare and/or Medicaid certified. A review of F641 Accuracy of Assessment and guidance § 483.20 in the State Operations Manual indicates that facilities are responsible for ensuring that the data coded into the MDS is correct, indicating that “the appropriate, qualified health professionals correctly document the resident’s medical, functional, and psychosocial problems and identify resident strengths to maintain or improve medical status, functional abilities, and psychosocial status using the appropriate Resident Assessment Instrument (RAI)….” (p 244) The guidance in the SOM for F641 goes on to state, “A pattern within a nursing home of clinical documentation or of MDS assessment or reporting practices that result in higher Patient Driven Payment Model (PDPM) scores, untriggering Care Area Assessments (CAAs) or unflagging Quality Measures (QMs), where the information does not accurately reflect the resident’s status, may be indicative of payment fraud or attempts to avoid reporting negative quality measures.” (p 247) Several examples of questionable practices follow in this guidance in the SOM.
The Latest Audit
In April of 2025 CMS released a document detailing the Skilled Nursing Facility Validation Program Frequently Asked Questions, intended to help providers prepare for an additional audit that will be implemented in fall of 2025. This audit is a validation process for the SNF Value Based Purchasing (VBP) and Quality Reporting Program (QRP) measures reported on the MDS. The authority to implement this audit was initially reviewed in the SNF Prospective Payment System (PPS) fiscal year (FY) 2024 final rule (CMS-1779-F) and again reviewed in the SNF PPS FY 2025 final rule (CMS-1802-F). With this audit, CMS specified that the validation process for MDS-based measures will be implemented to ensure accurate quality data beginning with the FY 2027 program year/FY 2025 performance data, which was collected starting 10/1/2024 and ending 9/30/2025. Eligible SNFs can only be selected once within a fiscal year.
CMS has contracted with Healthcare Management Solutions, LLC (HMS) to conduct the validation audits. Eligible SNFs will receive the audit notification for 10 MDS records through the Internet Quality Improvement and Evaluation System (iQIES) in the MDS 3.0 Provider Preview Reports folder. The request will include:
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- The list of sampled residents for which medical charts are being requested
- Detailed instructions on the specific date range to be covered in the medical records requested
- Detailed instructions on how to prepare the medical chart documentation for submission
- Instructions for document submission
- Contact information for the contractor performing the audit
A notification of audit and request for records through iQIES is a notable change from prior and other record requests. Facilities will need to have access to iQIES and check the site regularly to avoid missing the request for records. Providers will have 45 calendar days from the date of audit notification to upload and submit the requested documentation in PDF format to remain in compliance with the program requirements.
Failure to submit the requested data in the allotted time frame will result in a finding of noncompliance, which may result in a 2% reduction of a SNF’s Annual Payment Update (APU) to the FY2027 SNF QRP program year. Selected SNFs will receive a Summary Audit Scoring Report that will include information if they were noncompliant with the Validation Program. In the case of non-compliance, SNFs will also receive a non-compliance notification from their MAC. There is an appeal process for SNFs that disagree with the validation program’s finding of noncompliance.
Getting Ready
Although we do not have a great amount of detail about additional implications of the new Validation Audit outcomes, SNFs can be proactive in the Validation Audit process. Currently there is no defined time frame for the start of audits, but CMS has indicated audits are scheduled to start this fall. To prepare, facilities should:
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- Confirm your organization has an ongoing process of auditing MDS completion to verify accuracy, and integrate audit findings into the organization’s QAPI/QAA system.
- Review MDS updates that occur October 1st annually. Begin with competency-based training and continue training throughout the year. Audit the implemented changes and report audit findings to QAPI/QAA.
- Review and revise as needed policies and procedures related to the organization’s RAI system.
- Update data collection tools (in the electronic health record and/or on paper) to reflect October 1 changes to support collection of accurate and correct MDS data items.
- Designate alternate interdisciplinary team (IDT) members to 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.
- Utilize the Long Term Care Survey Process (LTCSP) Procedure Guide and the Critical Elements Pathways as tools for preparing for surveys, reviewing internal policies, and training staff.
More Resources
- Fiscal Year (FY) 2015 Minimum Data Set (MDS) Focused Survey Summary Memo (Ref: S&C: 17-06-NH )
- Skilled Nursing Facility Validation Program: Frequently Asked Questions (April 2025)
- Navigating CMS Audits: Understanding the Different Types
- Long-Term Care Facility Resident Assessment Instrument 3.0 User’s Manual Version 1.20.1
- State Operations Manual Appendix PP – Guidance to Surveyors for Long Term Care Facilities (Rev. 232; Issued: 07-23-25)