OIG Report on Medicaid and Staffing

Skilled Nursing News reported on a new report from the U.S. Department of Health and Human Services Office of Inspector General (OIG) confirms what families, advocates, and nursing home litigators have known for years: many facilities will take federal money meant for care and spend it in ways that do little — if anything — to improve residents’ lives.  Ownership patterns tell a big part of the story. For-profit chains, particularly those churning through ownership changes and relying heavily on contract labor, were some of the worst offenders. These corporate operators know how to move money around — but not necessarily in ways that keep residents safe. The result? Frail, vulnerable adults left waiting for help to the bathroom, for someone to answer a call light, or for assistance to prevent a fall.

Medicaid reimbursement for direct care is supposed to mean exactly that: care that is hands-on, personal, and timely. The OIG’s findings show that without strict oversight and meaningful consequences, corporate nursing home owners will keep treating these funds as just another revenue stream.  Between 2018 and 2021, 65% of nursing homes in the study increased the share of Medicaid dollars allocated to direct care compensation. On paper, that sounds like progress. In reality, staffing hours — the actual time caregivers spend with residents — went down in many facilities.

The OIG’s findings reveal why: much of the so-called “increase” in spending went toward inflated labor costs, like retention bonuses, overtime, and pricey temporary agency staff, instead of simply putting more trained hands on the floor. In other words, facilities found ways to burn through Medicaid dollars without providing more care. And this wasn’t during ordinary times — this was the height of the COVID-19 pandemic, when nursing homes were ground zero for one of the deadliest public health crises in American history. Instead of seizing the moment to rebuild and stabilize the workforce, too many operators doubled down on short-term fixes that did nothing to address chronic understaffing.

Families deserve to know exactly where their loved one’s care dollars are going — and if those dollars aren’t resulting in more care, regulators should make sure the operators responsible are held accountable. This research reinforces what we see repeatedly in litigation: without strict oversight and real consequences, some nursing homes will continue to treat Medicaid funds as a revenue stream rather than a lifeline for vulnerable adults.