State Nursing Home Quality Improvement Programs: Site Visit and Synthesis Report. Medicaid Civil Monetary Penalty (CMP) Funding--Section 1919(h)(2)(A)(ii)


States collect CMP funds from Medicaid nursing facilities and from the Medicaid part of dually certified skilled nursing facilities (SNFs) not in compliance with federal conditions of participation. Federal CMP funds are collected from Medicare-only facilities and the Medicare portion of dually participating nursing facilities. The Social Security Act (Section 1919(h)(2)(A)(ii)) provides that CMP funds collected by a state from nursing homes19 must be applied to the protection of the health or property of residents of nursing facilities that the state finds to be deficient.20 CMS has given states flexibility in determining the appropriate uses of CMP funds as long as those funds are used "in accordance with the law and in a consistent manner." (Source: August 8, 2002 Memorandum from Steve Pelovitz, Director of CMS Survey and Certification Group, to State Survey Agency Directors, see Appendix G).21

Some states have used CMP funds for their technical assistance or other quality improvement programs. CMP funds must be applied to residents in facilities that have been found deficient. CMS has given states flexibility in determining when a facility must have been deficient to be eligible for a CMP-funded program. According to the August 2002 program memorandum:

"The law does not specify when a facility must have been determined to be deficient to qualify for benefits under a state project funded by CMPs. Most nursing facilities have had one or more deficiencies either recently or in the past. Rather than setting forth rigid criteria on when it is that a facility must have been deficient to be an eligible target for the application of CMP revenues, we believe that the best course is to offer states maximum flexibility to make this determination. Apart from this, we believe that projects funded by CMP collections should be limited to funding on hand and should be relatively short-term projects."

These CMP funds are state, not federal, funds. States may use the state-share of CMP collected from Medicaid-only certified nursing facilities and from the Medicaid part of dually participating facilities for any project that directly benefits facility residents in facilities that have been found deficient.

These CMP funds could be used to prevent continued noncompliance by nursing facilities through educational or other means including the development and dissemination of videos, pamphlets, or other publications providing best practices. Other uses could include the use of consultants to provide expert training to deficient facilities.

CMP funds collected from Medicare-only facilities, the Medicare part of dually-participating facilities, and the federal share of state collected CMPs are returned to the Treasury.

  1. This includes CMPs assessed against nursing facilities for non-compliance with federal requirements, individuals who make false statements in a resident assessment (or who cause another person to make such false statements, and individuals who notify a nursing facility of when a standard survey is scheduled to be conducted.

  2. This includes payment for the costs of relocation of residents to other facilities, maintenance of operation of a facility pending correction of deficiencies or closure, and reimbursement of residents for personal funds lost."

  3. This memorandum is available on-line at

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