Every state has the job of inspecting its nursing homes for Medicare and Medicaid compliance, but a growing number hand part of that work to outside contractors instead of using state employees. A federal audit released this month checked how well the agency in charge of the whole system, the Centers for Medicare & Medicaid Services, keeps tabs on those contractors. The answer: not well enough in any of the 14 states auditors reviewed.
Why States Hire Outside Surveyors in the First Place
State survey agencies are required to inspect nursing homes on a regular schedule to keep their Medicare and Medicaid certification, but a persistent backlog of overdue surveys has pushed many states to bring in third-party contractors to help get through the workload. Federal rules require each survey agency to inspect a certified nursing home at least once every 15 months, with a statewide average closer to 12, and it’s that recurring workload, multiplied across roughly 15,000 facilities nationwide, that contractors are increasingly being brought in to help states meet.
The Department of Health and Human Services Office of Inspector General had flagged this shift as a risk area, opening an audit in January 2024 specifically to check whether CMS was making sure those contractors met federal standards.
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Fourteen States, Zero Passing Grades
Auditors reviewed the 14 states that were using contract surveyors and found that every single one could have improved its policies and procedures for making sure those contractors met CMS’s requirements. The report doesn’t allege that any specific inspection was falsified or that a nursing home passed a survey it should have failed. It found something more structural: the systems states use to vet, assign, and check on contract surveyors weren’t solid enough to guarantee the surveys meet federal standards.
The Memo CMS Sent and Never Followed Up On
CMS wasn’t entirely absent from the picture. During the audit period, the agency issued a memo to state survey agencies laying out contracting practices meant to keep contract surveyors accountable to federal requirements. What CMS didn’t do, according to the audit, was check whether states actually put those practices into effect. Auditors also found that iQIES, the federal system used to track survey activity, has no field recording whether a given nursing home survey was performed by a state employee or an outside contractor, making it harder for CMS to even see where the risk is concentrated. That blind spot isn’t new to iQIES: ASPEN, the system iQIES replaced, had the identical limitation, so CMS has now gone through two generations of its own survey-tracking software without ever adding a field for who actually performed a given inspection.
The audit covered survey work performed from October 2022 through July 2025, and it followed years of separate OIG reviews flagging a backlog of overdue nursing home surveys nationwide, the same backlog that pushed states toward contractors in the first place. Auditors frame the lack of monitoring as a byproduct of that pressure: CMS leaned on contractors to work through the backlog faster, without building the oversight layer to match.
What CMS Said in Its Own Defense
CMS’s written comments on the draft report frame the oversight gap as a byproduct of stretched resources rather than indifference. The agency told OIG that nursing home complaint investigations, the more urgent category of survey work, have climbed by more than 20 percent, and that its survey and certification budget hasn’t grown to match, even with a pandemic-driven backlog of overdue standard surveys still being worked down years later. CMS added that state agencies had eliminated or nearly eliminated their backlogs of the most serious complaint investigations by fiscal year 2025, the tier CMS says is generally investigated on-site within three days, with less urgent complaints handled within 15 to 45 days. None of that response changes OIG’s finding that all 14 states could have done more to vet their contract surveyors; it explains why CMS leaned on contractors in the first place without building matching oversight to go with it.
What a Weaker Inspection System Means for About 15,000 Nursing Homes
Roughly 15,000 nursing homes nationwide operate under the Medicare and Medicaid certification system this audit examined, and the survey process is the main outside check on whether any of them are meeting basic health and safety standards. A family choosing a nursing home, or trying to hold one accountable after a bad experience, is relying on the assumption that the underlying survey was conducted to federal standard, regardless of who was holding the clipboard. This audit doesn’t say that assumption failed in any specific case, but it does say CMS can’t currently prove it held everywhere contractors were used.
The 14 states in this review aren’t named individually in the summary findings, and the audit doesn’t rank them against each other; the headline finding is that the shortfall was universal across every state sampled, not concentrated in a handful of weak performers. That’s part of why OIG frames the fix as a national system change rather than a state-by-state cleanup.
What CMS Agreed to Fix
CMS concurred with both of OIG’s recommendations: adding a worker-classification field to iQIES so surveys by contractors are identifiable, and confirming that state agencies actually have adequate policies and procedures in place, potentially checking during CMS’s own annual assessments of those agencies. Both fixes are listed as open and unimplemented, with an update due by March 1, 2027, according to the OIG recommendation tracker. Neither recommendation requires new legislation or new funding; both are internal CMS process changes, which is part of why OIG frames this as fixable well before the 2027 deadline it set.
Where the help is written down
The programs that lower Medicare costs each run on a different form and a different office, and no single notice lists them together.
The Medicare Cost & Coverage Protection Kit includes a 10-page kit, 51 state Medicare cost-help packs and the new Part D out-of-pocket cap.
See the state cost-help packs in The Medicare Cost & Coverage Protection Kit.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources; where a claim could not be verified from the public record, we say so.
