Health Law Daily Wrap Up, AUDITS AND MONITORING—OIG REPORTS: Nursing facilities found to have used COVID-19 relief funds for unallowable purposes, (Jun 17, 2025)

By Patricia K. Ruiz, J.D.

The OIG determined that the deficiencies occurred because the facilities did not always maintain documentation to support reported expenditures.

An audit by the HHS Office of Inspector General (OIG) found that eight out of 30 nursing facilities used Provider Relief Fund (PRF) funds for unallowable expenses or lost revenues and that three of the 30 used the funds for expenditures that may not have been allowable. The OIG recommended that the Health Resources & Service Administration (HRSA) require the facilities to properly account for or to return the funds used for unallowable purposes (OIG Report, A-05-22-00012, June 12, 2025).

Provider Relief Fund. In 2020, Congress appropriated $178 billion to HHS for the PRF, to provide reimbursement to eligible providers for health care-related expenses or lost revenue attributable to COVID-19. The HRSA administered the PRF program, while HHS was responsible for initial PRF program oversight and policy decisions. Providers receiving PRF payments were required to ensure payments were: (1) used to prevent, prepare for, or respond to COVID-19; (2) used for health care-related expenses or lost revenues attributable to COVID-19; (3) not used to cover expenses or losses reimbursed by other funding sources; and (4) not used to pay salaries in excess of a certain threshold or to pay for certain prohibited activities.

OIG audit. The OIG assessed in its audit whether 30 selected nursing facilities properly taxpayer funds in compliance with federal and program requirements. The OIG found that eight of the 30 nursing facilities used $2.3 million in PRF payments for unallowable expenditures or lost revenues. Three nursing facilities used $333,000 in PRF payments for expenditures that may not have been allowed. In total, the facilities received $178 million in PRF payments. The remaining facilities reviewed used PRF payments for allowable expenditures and lost revenues. The OIG found that these deficiencies occurred because the facilities did not always maintain documentation to support reported expenditures. Additionally, they may have misinterpreted HRSA’s guidance, made clerical errors, or did not effectively track expenses funded by PRF payments.

Recommendations. The OIG recommended that HRSA require the selected nursing facilities to return any unallowable expenditures and lost revenue amounts to the federal government or to ensure that the nursing facilities properly account for the expenditures and lost revenues. HRSA concurred with the OIG’s recommendations.

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