As of 2014, 70 percent of SNFs were  for-profit, 24 percent were nonprofit, and 5 percent were operated by  government agencies. Because of their advanced training and ability  to provide skilled nursing care, RNs are paid more than other  nursing staff. Finally, the act  required CMS to make information on SNFs’ expenditures “readily  available to interested parties upon request.”

	CMS Has Not Made SNF Expenditure Data Readily Accessible and Does Not Adequately Ensure Data Reliability

		CMS Has Not Taken Steps Needed to Make SNF Expenditure Data Posted on Its Website Readily Accessible

CMS collects detailed SNF expenditure data in Medicare cost reports and  posts the raw data on its website for the public. Second, CMS has not provided the expenditure data in a place that  is easy to find on its website. In making data accessible to public stakeholders, federal internal control  standards related to external communication suggest that agencies  consider the audience, nature of information, availability, cost, and legal  or regulatory requirements to ensure that information is communicated in  a quality manner. Until CMS takes steps to make SNF expenditure data  easier to use and locate, public stakeholders will have difficulty accessing  the only publicly available source of financial data for many SNFs. CMS Does Not Adequately Ensure the Reliability of SNF Expenditure Data

Despite CMS’s statement that it has made a reasonable effort to ensure  the accuracy of SNF cost report data, we found that the agency performs  minimal quality control of the SNF expenditure data in the Medicare cost  reports to ensure data reliability. CMS requires SNFs to self-certify to the accuracy  and completeness of their cost report data. For-Profit SNFs Generally Had Lower Direct and Indirect Care Costs as a Percentage of Revenue and Higher Margins than Did Nonprofit and Government SNFs

Our analysis found that, for each fiscal year from 2011 through 2014,  direct and indirect care costs were lower as a percentage of revenue, on  average, at for-profit SNFs compared with nonprofit and government  SNFs. Costs were similarly lower at chain SNFs compared with  independent SNFs. 1.) For for-profit and nonprofit SNFs, both overall costs and total revenues  increased, on average, in each of the 4 years we examined. Both overall costs and direct care  costs decreased, on average, at government SNFs in each fiscal year  from 2011 through 2014. In addition, median margins were higher for for-profit and chain SNFs  than for other SNFs. 2.) After  our adjustment for resident case-mix, we continued to observe the same  trends. Examining each fiscal year separately, we estimated that a SNF’s margin  generally had a small, but statistically significant, effect on its nursing time  per resident day. In each of the 3 fiscal years, which we examined separately, the  relationship between SNF nursing time and margins varied by ownership  type. For example, we  estimated that for each percentage point increase in a SNF’s margin, the  case-mix adjusted total nurse time per resident day decreased by 6.9  minutes at chain-affiliated SNFs and by 4.3 minutes at independent SNFs  in fiscal year 2014. However, public stakeholders have experienced difficulty accessing the  data—including locating and using the data—and CMS efforts to ensure  data accessibility and reliability have been limited. 2. HHS disagreed with our  recommendation that it take steps to ensure the accuracy and  completeness of the SNF expenditure data. Officials from the  Centers for Medicare & Medicaid Services (CMS) said the categories we  used included the appropriate expenses listed on the cost reports. Examining How SNF Nurse Staffing Levels Vary by Facility Characteristics and the Relationship between SNF Nurse Staffing Levels and Margins

To examine how SNF nurse staffing levels vary by facility characteristics  and the relationship between SNF nurse staffing levels and margins, we  performed statistical analyses to identify factors associated with each  SNF’s total nurse and registered nurse (RN) staffing levels.
Why GAO Did This Study

Medicare paid $28.6 billion to SNFs for nearly 1.7 million beneficiaries in 2014. About 15,000 SNFs provide short-term skilled nursing and rehabilitative care after an acute care hospital stay. As of 2014, 70 percent of SNFs were for-profit, 24 percent were nonprofit, and 5 percent were government-operated. About three-fifths of the SNFs were affiliated with chains. The average SNF Medicare margin was 12.5 percent. Some researchers have questioned whether SNF margins come at the expense of patient care in the form of low nurse staffing levels.
GAO was asked to provide information on how SNFs spend their Medicare and other revenues. GAO examined (1) the extent to which the expenditure data CMS collects from SNFs and provides to the public are accessible and reliable, (2) how SNF costs and margins vary by facility characteristics, and (3) how SNF nurse staffing levels vary by facility characteristics and the relationship between SNF nurse staffing levels and margins. GAO analyzed Medicare cost report data for fiscal years 2011 through 2014, the most recent years with complete data available. GAO also interviewed CMS officials, researchers, and beneficiary advocates.

What GAO Found

The Centers for Medicare & Medicaid Services (CMS)—the agency within the Department of Health and Human Services (HHS) that administers Medicare—collects and reports expenditure data from skilled nursing facilities (SNF), but it has not taken key steps to make the data readily accessible to public stakeholders or to ensure their reliability. SNFs are required to self-report their expenditures in annual financial cost reports, and CMS posts the raw data on its website. However, CMS has not provided the data in a readily accessible format and has not posted the data in a place that is easy to find on its website, according to public stakeholders and GAO's observations. In addition, CMS does little to ensure the accuracy and completeness of the data. Federal internal control standards suggest that agencies should make data accessible to the public and ensure data reliability. Until CMS takes steps to make reliable SNF expenditure data easier to use and locate, public stakeholders will have difficulty accessing and placing confidence in the only publicly available source of financial data for many SNFs.
GAO found that, for each fiscal year from 2011 through 2014, direct and indirect care costs were lower as a percentage of revenue, on average, at for-profit SNFs compared with nonprofit and government SNFs. Direct and indirect care costs were similarly lower at chain SNFs compared with independent SNFs. In addition, the median margin, which measures revenue relative to costs, was higher for for-profit and chain SNFs than for other SNFs in each of the 4 years.
The relationship between SNFs' nurse staffing levels (hours per resident day) and their margins varied by ownership type in each fiscal year from 2012 through 2014, the 3 years with complete staffing data. For-profit SNFs generally had lower nurse staffing ratios than did nonprofit and government SNFs. Examining each fiscal year separately, GAO estimated that a SNF's margin had a small, but statistically significant, effect on its case-mix adjusted (that is, adjusted for residents' health care needs) nurse staffing ratios. For example, for each percentage point increase in a for-profit SNF's margin in fiscal year 2014, GAO estimated that the SNF's total nurse staffing ratio (including registered nurses, licensed practical nurses, and certified nursing assistants) decreased by 4.1 minutes per resident day after controlling for other factors. However, in GAO's analyses, these other factors, such as geographic location, were more important predictors of a SNF's case-mix adjusted nurse staffing ratios.

What GAO Recommends

GAO recommends that CMS (1) improve public stakeholders' ability to locate and use SNF expenditure data and (2) ensure the accuracy and completeness of the data. HHS concurred with the first but not the second recommendation, citing resource considerations. GAO continues to believe that CMS should provide reliable SNF expenditure data.