A newly released federal audit shows how the private company that processes Medicare’s paperwork across much of the country let millions of dollars in incorrect nursing-home billing go through unchecked for a full year. Investigators reviewed a sample of the specific kind of Medicare Part B claims filed on behalf of people living in nursing homes and found that most of them did not meet Medicare’s own coding and documentation standards. The contractor named in the findings, Novitas Solutions, Inc., is one of the companies the federal government relies on nationwide to keep Medicare’s claims system running day to day. The audit puts an exact dollar figure on what happens when that oversight comes up short.
Novitas Solutions Is the Contractor Medicare Pays to Handle These Claims
Most people picture “Medicare” as a single government office that reviews and pays every medical bill. In practice, the Centers for Medicare & Medicaid Services does not process the claims itself. It hands that work to private insurers called Medicare Administrative Contractors, or MACs, each awarded a multi-state jurisdiction to process Part A and Part B claims, pay the providers who submit them, handle first-round appeals, and train the clinics and physicians who bill Medicare on its rules.
Twelve of these A/B contractors currently split the country between them. In fiscal year 2024, the network collectively processed more than 1.1 billion Medicare fee-for-service claims and paid out roughly $459.7 billion in benefits, according to CMS’s own description of what a MAC does.
Novitas Solutions, Inc. is one of the twelve. The HHS Office of Inspector General audit, report number A-06-21-04002 and issued July 15, 2026, examined claims paid in one of Novitas’s two jurisdictions specifically for services delivered to patients living in nursing homes.
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How 91 of 150 Sampled Claims Missed Medicare’s Rules
Investigators pulled a random sample of 150 Part B claims Novitas paid between October 1, 2018, and September 30, 2019, for patients residing in nursing homes. Measured against Medicare’s documentation and coding standards, 91 of those 150 items, well over half, did not hold up. The report does not describe fraud. It points instead to a gap in oversight: Novitas’s review of provider billing and its education of providers on coding and documentation requirements were not sufficient to make sure the claims actually met Medicare’s guidance.
Extrapolating the sample results across the full population of claims it represented, the OIG calculated that Novitas improperly paid an estimated $19,480,109 for the reviewed services during that one-year audit period alone.
Evaluation Visits, Psychotherapy, and Podiatry Billed Apart From the Nursing Home Stay
When someone lives in a nursing home, the facility itself bills separately for room, board, and custodial care, while outside providers, including physicians making evaluation and management visits, psychotherapists, and podiatrists, bill Medicare Part B directly for the care they deliver to individual residents. The OIG’s own data analysis found that evaluation and management visits, psychotherapy, podiatry, and wound care were the most common Part B services billed this way for nursing-home residents during the audit period, and the failed claims in the sample came from among the first three of those categories.
That separation is part of what makes the billing hard to police. A nursing home’s own bill and a visiting physician’s Part B claim travel through different review processes and land on different statements, even though both cover the same resident during the same stretch of time.
This Is Not the First Time OIG Has Flagged Novitas’s Oversight
The nursing-home billing findings are not an isolated case. A separate 2019 OIG audit examined travel allowances Novitas paid to providers for trips to draw blood from nursing-home and homebound patients between January 2015 and December 2016. Of a 93-claim sample, 76 lines failed to comply with Medicare’s requirements, mostly over incorrectly calculated mileage, the wrong fee-schedule rate, and missing documentation, and OIG estimated $2.4 million in noncompliant travel-allowance payments during that period.
That earlier case moved faster. CMS marked all four resulting recommendations “Closed Implemented” within about four months, by April 22, 2020. The nursing-home billing recommendations from the newer audit carry no such closing date yet.
CMS’s Two Fixes Are Still Listed as Open Into Next Year
The nursing-home audit closes with two formal recommendations, directed to CMS and to Novitas as the contractor responsible for acting on them. The first calls for additional oversight, such as documentation and billing guidance, medical reviews, and provider internal audits, to stop improper payments before they happen. The second calls for annual training for providers and their billing staff, specific to the Medicare rules for billing evaluation, psychotherapy, and podiatry services delivered to nursing-home patients. Novitas agreed with both.
As of this writing, the OIG’s public recommendation tracker lists both items as “Open Unimplemented,” with the next status update expected January 14, 2027, more than seven years after the claims in the sample were originally paid.
Between an Audit Finding and a Household’s Own Medicare Paperwork
An OIG audit can catch a contractor’s coding gaps years after the fact, long after any single household ever sees the claim that was paid on its behalf. Nobody sends a nursing-home resident’s family a notice explaining which visits were billed correctly, which drug costs are shifting under a new rule, or which prior-authorization step a provider skipped. That gap between what CMS eventually finds and what a household actually tracks month to month is where most of the confusion around Medicare bills tends to live.
The Medicare Cost & Coverage Protection Kit pairs a 10-page kit on Medicare’s cost rules with a medication and cost tracker for logging what a household is actually being charged each month.
Compare a monthly bill against the medication and cost tracker in The Medicare Cost & Coverage Protection Kit.
AI-assisted research and drafting; reviewed by an editor.
