By: Paul Mason, Director of Strategic Partnerships at LTCPro
For: Business office managers, controllers, and administrators at U.S. skilled nursing and assisted living facilities who manage vendor payments and want accounts payable to protect the facility financially and legally, not just process invoices.
Key Takeaway: Federal law prohibits payment for any item or service, including administrative, billing, and vendor services, furnished directly or indirectly by an individual or entity on the OIG’s List of Excluded Individuals and Entities, with penalties reaching $10,000 per claimed item plus an assessment of up to three times the amount at stake. Most accounts payable teams in skilled nursing and assisted living facilities screen new hires against that list but never extend the same check to vendors, contractors, and staffing agencies, which is exactly where OIG guidance says the compliance exposure actually sits.
Table of Contents
- Accounts Payable Is a Compliance Function, Not Just a Cost Center
- The Vendor Screening Requirement Most AP Teams Miss
- Where AP Actually Loses Money
- Group Purchasing as a Legitimate Cost Lever
- Building an AP Process That Protects Compliance and Cash
- How LTCPro Supports Compliant, Cost-Controlled AP
- FAQ
Accounts payable gets treated as the least glamorous function in a skilled nursing facility’s back office, invoices come in, get matched, get paid, move on. That framing misses what AP actually is in a federally regulated healthcare setting: the last checkpoint before facility money leaves the building, and one of the few places positioned to catch a specific, expensive compliance risk before it becomes a federal penalty.
Accounts Payable Is a Compliance Function, Not Just a Cost Center
Every vendor, contractor, and staffing agency a facility pays touches, directly or indirectly, services that get billed to Medicare or Medicaid. That connection is exactly what triggers federal exclusion screening obligations, and it is why a facility’s AP process is not purely a bookkeeping function. It is one of the last places a facility can catch a compliance problem before payment goes out the door and the exposure becomes real.
Most administrators know their HR department screens new hires against the OIG’s List of Excluded Individuals and Entities. Far fewer extend that same discipline to the vendor side of the ledger, even though OIG’s own guidance draws no meaningful distinction between an excluded employee and an excluded contractor when it comes to payment liability.
The Vendor Screening Requirement Most AP Teams Miss
OIG exclusion is not limited to clinicians providing direct patient care. Federal guidance is explicit that the payment prohibition extends to administrative and management services, billing and accounting, staffing agency personnel, and any other item or service furnished by an excluded person that is payable, directly or indirectly, by a Federal health care program (HHS-OIG, The Effect of Exclusion From Participation in Federal Health Care Programs).
A facility that pays a staffing agency for a per diem nurse, a billing vendor for coding support, or a contractor for administrative work is exposed to the same liability as if it had employed an excluded individual directly.
The financial exposure is specific and significant. Providers that knowingly employ or contract with an excluded person can face civil monetary penalties of up to $10,000 for each item or service furnished during the exclusion period. Plus, an assessment of up to three times the amount claimed, and the facility remains liable for the resulting overpayment even if it relied on the vendor’s own internal screening (HHS-OIG, Special Advisory Bulletin). OIG is direct on this point: if a facility contracts with a staffing agency and that agency sends an excluded nurse, the facility, not just the agency, carries the liability.
Anonymized case scenario: A facility’s business office renewed its relationship with a per diem staffing agency annually, based on the agency’s general reputation and its own internal attestation that all staff were properly credentialed.
No one at the facility independently checked the agency’s roster against the LEIE. When a routine internal audit finally cross-referenced staffing agency invoices against the exclusion list, one contracted CNA had appeared on the list months earlier. The facility, not the agency, held the overpayment exposure for every claim connected to that individual’s shifts.
Because OIG updates the LEIE monthly, checking monthly is the standard the agency itself points to as the practice that best limits exposure, even though it is not a hard statutory mandate for every provider type (HHS-OIG, Special Advisory Bulletin). For AP specifically, that means screening should happen before a new vendor or staffing agency is onboarded, and on a recurring monthly cadence for active vendors afterward, not just once at the start of the relationship.
Not sure whether your current vendor roster has ever been screened against the LEIE? LTCPro can run that check against your active AP vendor list.
Where AP Actually Loses Money
Compliance risk sits alongside a more familiar problem: AP is one of the easiest places for a facility to quietly lose money without anyone noticing until a review turns it up.
Duplicate invoices, missed early-payment discount windows, and late payment penalties are the most common leaks, and all three tend to grow specifically because invoice approval routes through multiple people without a single system of record.
A three-way match discipline, comparing the purchase order, the receiving confirmation, and the invoice before payment, is the standard control that catches duplicate and inflated invoices before they’re paid, not after.
Related-party vendor relationships deserve a separate level of scrutiny in long-term care specifically. Facilities that lease space, purchase management services, or buy supplies from an entity under common ownership need documentation showing those transactions are priced at fair market value, since related-party costs get scrutinized differently on a Medicaid cost report than arm’s-length vendor payments. Treating a related-party vendor with the same casual invoice-and-pay process used for an unrelated supplier creates cost report exposure that has nothing to do with exclusion screening but carries its own financial risk. Maintaining accurate general ledger records is also important because vendor transactions need to be properly recorded, reconciled, and reflected in the financial records used for reporting and review
Group Purchasing as a Legitimate Cost Lever
Beyond process discipline, group purchasing organizations remain one of the more concrete ways skilled nursing and assisted living facilities reduce vendor costs without individually renegotiating every supply contract.
GPOs pool purchasing volume across many facilities to negotiate pricing that an individual operator, particularly a single-site facility, could not secure independently, covering categories from medical supplies and pharmaceuticals to food service and facility maintenance products.
Independent industry reporting confirms this is not a marginal benefit. The Healthcare Group Purchasing Industry Initiative’s 20th Annual Report, an independent survey of GPO practices conducted by outside counsel, found that healthcare group purchasing organizations continue to provide measurable market savings to hospitals, nursing homes, and medical practices nationwide, even amid ongoing supply chain volatility and shifting trade policy (HGPII, 20th Annual Report). For a facility managing its own AP process, GPO participation shifts part of the cost-control work upstream, into negotiated pricing, rather than relying entirely on invoice-level scrutiny after the fact.
If your AP process routes invoices through more than one disconnected approval step, that’s usually where both duplicate payments and screening gaps live at the same time.
Building an AP Process That Protects Compliance and Cash
A well-run AP function for a U.S. skilled nursing or assisted living facility needs to run compliance and cost control as the same process, not two separate ones.The same discipline should extend beyond vendor payments to audit-ready Medicaid billing practices, where accurate documentation and consistent workflows help facilities support what was billed and reduce compliance risk
Screen every new vendor and staffing agency against the LEIE before onboarding, and monthly afterward. This applies to any entity whose services touch, directly or indirectly, care or billing connected to Medicare or Medicaid, which in practice covers most of a facility’s vendor list.
Require a three-way match before payment. Purchase order, receiving confirmation, and invoice should agree before a check goes out, catching duplicate and inflated invoices at the source rather than after the fact.
Flag related-party vendors for separate documentation. Fair-market-value support for any related-party lease, management fee, or supply arrangement protects the facility on the next Medicaid cost report review, independent of exclusion screening.
Evaluate group purchasing participation as a standing cost lever, not a one-time project. GPO pricing and category coverage change over time, which means participation should be reviewed periodically against current spend, not set once and left alone.
Keep AP screening and enrollment screening connected, but distinct. Vendor exclusion screening against the LEIE is a different process from provider enrollment with Medicare, Medicaid, and commercial payers, though both protect the facility’s ability to bill and get paid. Our provider enrollment guide covers the enrollment side in depth; this piece focuses specifically on the vendor payment and exclusion screening side of compliance.
How LTCPro Supports Compliant, Cost-Controlled AP
LTCPro provides healthcare accounts payable outsourcing for skilled nursing and assisted living facilities, with compliance and cost control built into the same workflow: LEIE screening for new and active vendors, three-way match invoice processing, related-party transaction documentation support, and purchase order tracking that keeps unauthorized spend from entering the payables process in the first place.
Want AP that catches compliance risk and cost leaks in the same review? Bring LTCPro your current vendor list and invoice process for a direct assessment.
Frequently Asked Questions
Does a nursing facility have to screen vendors against the OIG exclusion list?
There is no single statutory mandate requiring every provider type to screen vendors on a specific schedule, but OIG’s own guidance states that a facility can face civil monetary penalties of up to $10,000 per item or service. Plus, an assessment of up to three times the amount claimed for paying an excluded vendor, contractor, or staffing agency whose services touch federally reimbursed care. Because of that exposure, OIG recommends monthly screening as the practice that best limits liability, and many states require it of enrolled Medicaid providers.
What is the difference between provider enrollment screening and vendor exclusion screening?
Provider enrollment establishes a clinician’s or facility’s ability to bill Medicare, Medicaid, or commercial payers directly through systems like PECOS and CAQH. Vendor exclusion screening checks whether a vendor, contractor, or staffing agency appears on the OIG’s List of Excluded Individuals and Entities, which determines whether payments connected to that vendor’s services are prohibited entirely, regardless of enrollment status.
Can a facility be penalized for an excluded vendor’s actions even if the facility didn’t know?
Yes, with some nuance. A facility is subject to overpayment liability for any Federal health care program payment connected to an excluded person’s services, regardless of knowledge, and can face civil monetary penalties specifically if it knew or should have known the vendor was excluded. Documented, regular LEIE screening is the primary way facilities demonstrate they exercised appropriate diligence.
How much can group purchasing organizations actually save a skilled nursing facility?
Independent industry surveys, including HGPII’s annual report on the group purchasing industry, confirm GPOs deliver measurable, ongoing cost savings across supply categories for nursing homes and other healthcare providers nationwide. The specific savings percentage varies by category and by GPO, which is why periodic review of GPO participation against current spend matters more than a single point-in-time comparison.
Do accounts payable compliance requirements differ across U.S. states?
Federal exclusion screening rules apply consistently nationwide, since they stem from federal law and OIG guidance. Some states go further, with their own Medicaid provider agreements or state Medicaid director guidance requiring monthly screening of enrolled providers and, in some cases, their contractors, which means a multi-state operator should confirm each state’s specific requirement rather than assuming the federal baseline is the only obligation.
LTCPro provides revenue cycle management, medical billing and accounts receivable, prior authorization, accounts payable, payroll, and bookkeeping services for skilled nursing and assisted living facilities across the United States, backed by proprietary long-term care financial software.
