Health Law Daily Wrap Up, SKILLED NURSING FACILITIES—OIG REPORTS: CMS concurs that it could improve oversight of states’ contract surveyors for nursing homes, (Sep 14, 2026)

By Erick Jorgenson

CMS stated it did not consider oversight of state survey agencies’ use of contract surveyors as part of its responsibilities.

Due to ongoing staffing shortages and survey backlogs, CMS and the states have been increasingly reliant on contractors to conduct nursing home surveys. Federal law requires nursing homes to protect residents and comply with Medicare and Medicaid, and CMS relies on the states to monitor and enforce compliance. The HHS Office of Inspector General (OIG) found CMS did not provide adequate oversight of states’ usage of contract surveyors, and the OIG found that all 14 states included in the audit that used contract surveyors could have improved their policies and procedures to ensure that CMS guidelines were met. The OIG recommended including worker classification in its required entry to improve evaluations systems and confirm that states put in place policies and procedures to meet federal requirements. CMS concurred (OIG Report, No. A-04-24-08105, Sept. 2, 2026).

Background. CMS is responsible for the certification and oversight of the nation’s 15,000 nursing homes that house approximately 1.2 million residents. Sections 1819 and 1919 of the Social Security Act establish requirements for CMS and states to perform surveys of nursing homes to ensure federal requirements are met. The federal government funds 100% of reasonable Medicare survey costs and 75% of Medicaid survey costs per Sections 1864(b) and 1903(a)(2)(D)(iv) of the Social Security Act.

In July 2025, CMS transitioned its nursing home survey and certification data infrastructure to the Internet Quality Improvement and Evaluation System (iQIES) as part of its consolidation efforts. It also created a training and support plan to help states and CMS staff prepare for the launch and transition to the iQIES platform.

Findings. The audit found CMS provided inadequate oversight of the states’ use of contract surveyors to conduct nursing home surveys. Although CMS issued an April 2024 memo outlining contracting practices that the states could use to meet federal requirements, CMS did not monitor whether the states were implementing those practices to achieve the underlying objectives. CMS stated it did not consider oversight of states use of contract surveyors as part of its responsibilities. CMS also stated it lacked staff and resources to conduct such oversight, and CMS did not include procedures during its annual assessment to evaluate states’ use of contractors.

These actions, the OIG found, violated GAO-14-704G (Green Book) and the Federal Managers’ Financial Integrity Act of 1982 as it found CMS is responsible to evaluate whether the states fulfilled their requirements under the Section 1864 Agreements under the Social Security Act. CMS was required to monitor the states’ efforts to ensure that that contractors and state employees complied with federal requirements. Further, under the Green Book standards CMS needed a process to determine whether state employees or contractors conducted nursing home surveys effectively. Due to the lack of monitoring and oversight, the OIG concluded that there is an increased risk that states have not implemented sufficient controls and are not meeting the Green Book standards.

Recommendations. The OIG recommended that CMS include worker classification in its required entry to improve evaluations systems and confirm that states put in place policies and procedures to meet federal requirements. CMS in its concurrence letter advised that CMS is continuously looking for ways to improve oversight of its Medicare and Medicaid certified nursing homes to ensure compliance. While supplemental funding was provided in the COVID years, CMS stated that the current budget does not support long-term state staffing increases which leads to states relying on contract surveyors.

Despite the resource constraints, CMS has looked for ways to improve oversight stating that CMS redesigned the State Performance Standards System (SPSS) in 2006 to emphasize the timeliness and quality of the surveys. Moreover, in 2017, CMS assessed whether revisions were needed to improve performance metrics and implemented a new-long term survey process. In 2018, CMS launched an initiative evaluating the SPSS process and how it could be improved to how the agency monitors and evaluate states’ performances.

CMS stated it would include worker classification and add appropriate fields to ensure there is no conflict of interest. Further, CMS stated it would make sure that states have the appropriate policies and procedures to ensure federal requirements are being met.

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