FROM: Darius Kirstein, Senior Policy Analyst

DATE: January 15, 2012

SUBJECT: Nursing Home MDS Audits 

ROUTE TO: Administrator, CFO, MDS Coordinator, DON 

ABSTRACT: The state has developed an MDS audit process that is scheduled to begin this week.
 

In Brief

DOH and the OMIG have finalized a framework for MDS audits and OMIG is preparing to perform 

audits at four facilities in the Albany area.  Although OMIG audits seldom involve good news, we are 

pleased that consistent with our strong advocacy, extrapolation will not be used. Instead, OMIG will 

audit all “high risk” MDS records. “High risk” is defined as an MDS record of a resident whose RUG 

assignment would change if one or two errors were found and corrected. If an error is found that 

would affect the resident’s RUG assignment, the correct RUG would be assigned and the home’s case 

mix index (CMI) recalculated. 

All 304 homes whose CMI increased by more than five percent will have an audit of their “high risk” 

MDS assessments associated with their January 2012 roster submission:  the first 90 homes by mid­

March (at which time DOH will make a determination about releasing the balance of the rate 

adjustment for case mix), the remaining 214 homes by July 2013.

Please note that the timelines and other information may change as the audits are rolled out.

Background

For homes whose CMI changed by more than five percent from the Jan. 2011 roster submission to the 

Jan. 2012 roster submission, the CMI incorporated into Medicaid rates effective 7/1/12 was

constrained to a five percent change relative to the CMI used in the 1/1/12 rates. DOH intends to2 

finalize the 7/1/12 rates to reflect the full value of the CMI pending MDS audits showing that the 

increases are valid. The speed with which these first audits must be conducted combined with the slow 

pace of the state procurement process made hiring an outside contractor impossible. As a result, DOH

and OMIG have been working on audit protocols for several months. LeadingAge NY has been part of

the discussion and has supplied materials and information regarding effective audit processes in other 

states. We have also urged the state to avoid extrapolation, to consult with firms with experience in 

developing MDS audit protocols, and to provide latitude during audit for items requiring interpretation 

until detailed standards are established and communicated. The state has accepted these three

recommendations and plans to secure the input of Myers and Stauffer, a firm providing MDS audit 

services in a number of states.

DOH Audit Activity Schedule

OMIG intends to audit the MDS assessments associated with the January 2012 roster for all 304 homes

whose CMI increased by more than five percent. Starting with four pilot audits in the Albany area, 

they hope to complete 90 homes by mid­March so that DOH would have indicative data to make a 

decision on releasing final 7/1/12 rates reflecting unconstrained CMI. Audits of the remaining 214 

homes would be completed by July 2013. OMIG would audit MDS assessments associated with the 

July 2012 roster submission during the second half of 2013.

At the same time the state would develop a request for proposals and seek to hire outside contractors to 

perform MDS audits beginning with assessments associated with the January 2013 roster submission.

Draft Audit Process

As DOH and OMIG currently envision it, 3­5 days prior to the audit a home would receive a 

notification of the audit start date along with a listing of the records to be audited. A hundred percent 

of assessments that OMIG considers “high risk” would be audited. Any assessment where a resident’s

RUG assignment would change if one or two MDS items were changed is considered “high risk”.

ADL counts would be the primary data used to identify “high risk” assessments. Non­“high risk” 

assessments would not be audited. 

If an error is found in the selected records suggesting that a resident is in an inappropriate RUG, the 

resident would be re­categorized into a different RUG. When all “high risk” records were audited and 

all re­categorizations were complete, the home’s CMI would be recalculated, as would the Medicaid 

rate for the period of time that the CMI was in effect.

Please note that these draft processes are specific to audits of assessments associated with the January 

2012 roster submission and may evolve as DOH receives input from outside consultants. While OMIG 

has agreed that the MDS 3.0 manual guidelines will be the standard for initial audits, there remain 

many issues that will require auditor interpretation. We will be tracking these and other issues as the 

audits roll out and will provide additional information as it becomes available.

If you have questions, please contact me at (518) 867­8383, ext. 104 or dkirstein@leadingageny.org or

Dan Heim at ext. 128 or dheim@leadingageny.org.