Skilled Nursing Facility Fraud: Assessments, Staffing and the Money Behind the Claim

Skilled nursing facility fraud uses false assessments, inflated service records, kickbacks or misleading financial reports to obtain Medicare or Medicaid money. A therapist may know the treatment never happened. An MDS coordinator may know who changed the Minimum Data Set assessment. An accountant may know where the care money went. Residents get care bent to a billing target, and taxpayers get the bill. The case connects what those people know to what the nursing home told the government, who controlled that decision and what the government paid.

What Medicare and Medicaid Pay a Nursing Facility For

A nursing home can provide a short Medicare skilled stay and a long Medicaid-funded residence in the same building. Skilled nursing facility is the Medicare participation category. Nursing facility is the Medicaid category. A resident can remain in the same room while the payer and the basis for payment change.

Original Medicare pays for qualifying skilled care. Medicaid pays for eligible nursing-facility care under state rules, often with a contribution from the resident’s income. Medicare Advantage adds a health plan’s network, contract and authorization process. The facility’s brand tells you less about a disputed bill than the certified provider, the payer and the service date.

For Medicare Part A, the skilled nursing benefit ordinarily follows a qualifying three-day inpatient hospital stay and requires daily skilled nursing or rehabilitation. It covers up to 100 days per benefit period while coverage requirements remain satisfied.

The facility receives a bundled payment covering room, board, nursing, therapy and many drugs, supplies and outside services. It then pays its contractors. That division matters: the company delivering treatment and the company sending Medicare the claim may be different businesses.

Why the Payer and the Owner’s Other Companies Matter

Medicare’s payment can be much more profitable than the nursing home’s overall accounts suggest. The Medicare Payment Advisory Commission’s March 2026 report put the 2024 Medicare fee-for-service margin for freestanding facilities at 24.4%, compared with a 2.1% all-payer total margin. The Medicare measure allocates costs to those patients. The total includes the facility’s other payers and business income.

That difference helps explain the attraction of a Medicare-covered bed. The payment classification, the length of the covered stay and the decision to move a resident between payers all affect revenue.

The facility’s accounts also stop short of the owner’s other businesses. Rent leaves the operating company and reaches the property company. Management fees reach another company. When the same owners control both sides, an expense at the nursing home can be income elsewhere in the enterprise. A thin facility margin can coexist with money reaching an owner through rent and fees.

Leases, management agreements, supplier accounts and ownership records show where those payments land. An accountant who knows those relationships may see a part of the healthcare business that the clinical staff never sees.

How an Assessment Becomes a Medicare Claim

The clinical record feeds the resident assessment, the assessment produces a payment classification, and that classification reaches the Medicare bill as a HIPPS code. Comparing the original observations, the submitted assessment and the paid claim shows where the account of the resident changed.

The Patient Driven Payment Model replaced RUG therapy-minute classification for covered Part A stays on October 1, 2019. It uses resident characteristics to classify physical therapy, occupational therapy, speech-language pathology, nursing and nontherapy ancillary needs, then adds a non-case-mix component.

The MDS-to-HIPPS payment path therefore runs through five resident-specific components. Diagnosis, cognition, depression, swallowing and function can affect the classification. Section GG records usual self-care and mobility performance.

A billing employee may see the final code. The nurse or therapist may know which input became inaccurate and who insisted on using it. Connecting those accounts is how a payment discrepancy becomes a case about a knowing falsehood.

Who Controls the Records and the Money

Facility operators, chain managers, therapy contractors, referring physicians and owner-controlled service companies can each influence a claim. The person submitting the bill may be following a target set elsewhere. Contracts, internal instructions and record changes can show who made the decision.

Clinicians, financial employees, managers, a competing therapy provider and an analytics company have brought nursing-home qui tam cases. The skilled nursing facility fraud cases include separate proceedings over the therapy contractor’s conduct and the facility customer’s claims. Both sides of that relationship can matter.

Skilled Nursing Facility Fraud Patterns Behind the Bills

The recurring patterns change the care represented, the payer charged, the business receiving referrals or the costs reported. Each leaves a different mismatch for an insider to recognize.

SNF Therapy Billing Fraud and the Treatment Target

SNF therapy billing fraud allegations led to Kindred and RehabCare‘s $125 million settlement in 2016. The Justice Department alleged that the contractor inflated therapy, counted evaluation or unskilled time as treatment and reported services never delivered. Separate settlements reached facility customers that allegedly failed to prevent those practices.

The government’s amended complaint quotes the contractor’s scheduling instructions:

Those instructions tied the rollover to the payment assessment window. A former manager, the complaint says, acknowledged that this selective practice was improper.

Life Care Centers of America separately agreed to pay $145 million over alleged therapy targets and prolonged stays. Those cases concern the historical RUG system. The treatment note, actual encounter, assessment period and discharge recommendation explain what the billing target did to the resident’s care.

A nurse’s case involving Salus Rehabilitation and LaVie produced a reinstated Medicare verdict over upcoding.

MDS and PDPM Fraud Through Unsupported Assessments

MDS and PDPM fraud concerns false inputs to the five resident-specific payment components. A changed diagnosis, assistance level or ancillary condition has to be followed through to the classification and payment it produced.

In its audit of claims from 2020 and 2021, HHS-OIG found unsupported HIPPS codes in 95 of 100 sampled claims at Pinnacle Multicare. The audit identified overlapping errors in nursing, speech-language, therapy and nontherapy ancillary classifications.

For an MDS coordinator, the useful comparison is concrete: what the chart supported, what changed on the assessment and which payment component changed with it.

Nursing Home Staffing Fraud and Unsupported Hours

Nursing home staffing fraud inquiries can draw on the kind of payroll comparison behind the Office of Inspector General’s June 2026 estimate of approximately 938,000 unsupported RN hours for March 2024 in the population it studied.

Payroll-Based Journal submissions include employee and contractor worked hours. Payroll, timecards, agency invoices, staff licenses, census and care records show who could actually have been on the floor.

The federal staffing requirements changed again when the numerical mandates were removed effective February 2, 2026. Federal rules still require sufficient nursing staff for residents’ needs.

Poor Care and the Claim for Payment

Nursing home poor care and False Claims Act allegations were part of SavaSeniorCare‘s approximately $11.2 million settlement in 2021. The Justice Department alleged staffing failures, missed medication and failures in pressure-ulcer and falls protocols, alongside separate therapy and delayed-discharge allegations.

Nursing Home Kickbacks Behind Referrals and Contracts

Nursing home kickback allegations produced a $17 million settlement with Hebrew Homes in 2015. The government alleged that medical-director positions paid physicians for referrals while the stated duties went largely unperformed.

The contract calls it a job. The referral history and actual work can tell a different story. Discharge-planner payments, free clinical labor offered for therapy business and pharmacy discounts exchanged for separately reimbursable resident business follow other routes to the same commercial prize: access to patients and their claims.

False Cost Reports and Related-Party Payments

False nursing home cost reports led to Centers Healthcare‘s $6,063,500 federal settlement in 2025. Centers admitted false statements or material omissions about related-organization transactions in reports associated with 44 homes. Management reviewed the reports and knew or reasonably should have known of the false statements.

Related-organization cost rules look to the supplier’s cost. An invoice between companies under common control can show the facility’s expense while concealing the supplier’s underlying cost.

At Hammonton and Deptford Centers, New Jersey’s comptroller alleged undisclosed related transfers, loans and rents alongside inadequate staffing. The owner-company relationships, the cost reports and the floor staffing belong in the same account of where the care money went.

Payer Switching Without Resident Consent

Citadel and Plaza Rehab agreed to a $7.85 million settlement over residents’ coverage changes in 2022. Their admissions included switching residents out of the Medicare Advantage plans they had chosen, without their consent, to obtain higher payments from Original Medicare.

Here, the changed record was the resident’s coverage. Enrollment records, consent and the resulting Original Medicare claims explain how the facility obtained a better-paying stay.

Duplicate Benefit Billing and Medicaid Certifications

Therapy already covered by hospice was the subject of a $5,591,045 settlement with American Senior Communities in 2022. The government alleged separate Medicare billing for therapy that belonged within residents’ hospice benefit. The treatment and the benefit responsible for paying it have to travel together.

Medicaid nursing-facility fraud can also start before the bill. The government alleged that Signature HealthCARE used forged preadmission certifications concerning skilled need for Tennessee Medicaid. Other cases alleged inflated state care-need assessments. The signature, assessment and state payment record explain a different mechanism from Medicare’s PDPM classification.

What Evidence Is Needed to Prove Fraud?

We work through the evidence with you, connecting the care or transaction to the claim and the people behind it. For proving nursing home fraud, an original MDS assessment and its changed version can be as revealing as a billing spreadsheet.

The workforce record includes payroll, schedules, time records and agency invoices. The financial record includes leases, management contracts and cost reports. The authorization record includes plan requests, coverage decisions and continued-stay reviews. Each can explain a different part of the same health care payment.

How Much Is a Whistleblower Claim Worth?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. We assess the conduct, payment connection and evidence with you when discussing how to report skilled nursing facility fraud.

You Know What Changed Before the Bill Went Out

If you know who changed an assessment, supplied the staffing hours or directed the payments between owner-controlled companies, speak with our whistleblower experts about your nursing-home fraud case. We connect that inside knowledge to the public money, build the case strategy with you and find nursing-home fraud whistleblower lawyers who understand the clinical and financial records. We stay beside you throughout the case.