Medicare cost reports are the backbone of hospital, skilled nursing facility, home health agencies, and Federally Qualified Health Center (FQHC) reimbursements—yet errors can slip through, leading to costly corrections. Audit results released in August 2025 by the Health and Human Services Office of Inspector General (HHS-OIG) uncovered exactly that: cost reports settled by Novitas Solutions, Inc. via their desk review process were later reopened due to “obvious errors,” resulting in nearly $9.4 million in corrective adjustments—$5.0 million in overpayments and $4.40 million in underpayments. That means there were obvious errors submitted by the providers that were not caught in the MAC desk review.

Key Lessons from the OIG Audit:

  • The audit underscored the importance of rigorous preparation and management review by providers for these critical reports.
  • All 122 cost report reopenings found errors missed in desk reviews, including omissions, miscalculations, misreporting, or duplications.
  • The issues spanned 11 distinct categories—from improper settlement data and misreported graduate medical education figures, to mistakes in disproportionate share hospital (DSH) payments, hospital-acquired condition data, and HITECH incentive factors.
  • The OIG recommended enhanced training for desk reviewers and supervisors and strengthened supervisory procedures. Novitas has since acknowledged the findings and elevated its training and quality-control practices.

How LW Consulting, Inc. Can Help with SNF Cost Reports

At LW Consulting, Inc. (LWCI), we specialize in Skilled Nursing Facility (SNF) Cost Reporting. Our deep functional knowledge of this setting sets us apart from other providers. We offer a meticulous Cost Report Preparation Process to ensure accuracy and compliance from start to finish. Our team carefully reviews each report to flag potential omissions, duplications, or misclassifications before submission. With targeted expertise across error types, we’re equipped to identify issues before submission that could otherwise lead to costly audit findings.

Building on the OIG’s emphasis on oversight, our preparers conduct a second-layer quality check, ensuring cost reports are accurate, consistent, and compliant with Medicare regulations. To maintain this high standard, our preparers receive continuous training on evolving Medicare rules and audit risk areas, participate in internal quality-control reviews, and follow structured “quality checklists” that reflect industry best practices.

The OIG’s findings reinforce a vital truth: cost reports submitted by providers frequently include obvious errors. LWCI’s Cost Report Services are designed to protect your organization from these pitfalls through:

  • Deep domain knowledge across major error vectors
  • Rigorous multi-tier review processes
  • Continuous education and procedural robustness
  • Clear, accurate, and timely Medicare cost reports

Choose LWCI for SNF cost report accuracy you can trust—and peace of mind you’ll truly feel.

LW Consulting, Inc. (LWCI) offers a comprehensive range of services to assist your organization in maintaining compliance, identifying trends, providing education and training,  or conducting documentation and coding audits. For more information, contact LWCI to connect with one of our experts!