For most of the 50 years they’ve been required to guide nursing homes, medical directors have been alternatively viewed as a true leader for care and compliance — or someone whose occasional presence checks a regulatory box.

But a shift from historic norms taking place over the last decade gets added emphasis this year, as the nation’s top health watchdog takes direct aim at hours worked by directors, their ability to fulfill expanding duties, and how regulators might further monitor their engagement with skilled nursing facilities.

The Department of Health and Human Services Office of Inspector General is currently evaluating all three of those areas — and whether there’s a better funding mechanism for their involvement. Its report is due in 2027, and findings could drive the Centers for Medicare & Medicaid Services to add to responsibilities to a list that already grew significantly in 2025.

Concerns about nursing homes’ reporting of medical directors’ hours using the Payroll-Based Journal system have raised questions about whether they are actually integral to implementing resident care policies, coordinating medical care, and participating in quality assessment and assurance activities, the OIG said.

Kirsten Taylor-Billups, owner of Legal Healthcare Consulting, notes that the OIG and the Department of Justice have recently been “aggressively” pursuing nursing homes for sham medical director arrangements or those that violated the Anti-Kickback Statute and False Claims Act.

“Sham arrangements typically involve payments for referrals rather than bona fide administrative or clinical services, with little or no documentation of actual work performed,” she wrote in a recent blog for the American Institute of Healthcare Compliance.

“Across these and similar nursing home cases, the government tends to focus on a fairly consistent pattern,” she added. “Little or no documented services: Medical director agreements exist on paper, but there are few agendas, minutes, work product, QAPI deliverables, or time records to back up the payments.”

She also said the government has been aggressive in cases where medical directors receive flat monthly fees that don’t match any reasonable estimate of hours or complexity, or in those that appear to indicate the use of kickbacks. Among those convicted over related allegations was Phillip Esformes, whose nursing home and assisted living facilities infamously paid medical directors and consultants to refer patients.

An Industry Segment-Specific Compliance Program Guidance for Skilled Nursing Facilities issued by OIG in late 2024 also warned providers against using arrangements to disguise kickbacks, and Taylor-Billups urged providers to “rigorously scrutinize” contracts to make sure they outline the expected scope of work, align with fair market value and ensure services can be documented.

New guidance carries weight

The federal government created its first supervisory requirements calling for a medical director in 1974, according to PALTmed. Over the years, legislation and regulations — including the landmark Nursing Home Reform Act of 1987, led the post-acute specialty organization to flesh out roles and responsibilities. As the makeup of nursing home patients has become more complex, PALTmed has advocated for better oversight and professional standards.

“We have long believed that transparency around the medical director role is very important and that’s why we have fought hard and introduced legislation to have the name and credentials of the medical director easily available for the public,” Alex Bardakh, senior director of advocacy and strategic partnership, told McKnight’s Long-Term Care News after the OIG announced its review plans last June. “CMS agreed with us and started collecting that information, but unfortunately the way they are presenting it at this point is not very useful. We are hoping CMS takes steps to make it far more user friendly.”

CMS also will increasingly focus on the medical director’s ability to direct and monitor care, especially in areas of heightened concern, such as the use of antipsychotics. It’s one such added duty they were given with updated survey guidance in 2025.

“You have to be able to show that the medical director was involved in development, review and approval of resident care policies,” Zimmet Healthcare Services Group’s Alicia Cantinieri said in a recent webinar on increased OIG oversight.

“Their job is to ensure physicians and providers adhere to facility policies on diagnosing and prescribing,” she added. “They are responsible to intervene with a provider if medical care is not consistent with current professional standards of care, for example, assigning new diagnoses of schizophrenia, where a resident has never had that diagnosis before and doesn’t meet the criteria, or prescribing psychotropic meds without following professional standards of practice.”

Other responsibilities include coordinating medical care and implementing policies through the quality improvement committee and playing an active role in conducting the facility assessment. Cantinieri said providers should have an audit process to track medical director compliance with expanded responsibilities, as CMS surveyors will look for that and interview staff and the director about compliance, too.

With added audit and review pressure, keeping track of the work will be nearly as important as ensuring the work is performed by the facility’s medical director.

“The facility must identify how the medical director will fulfill those responsibilities, and if that person is also an attending physician in the facility, there needs to be a process to ensure there’s no concerns with the medical director monitoring their own performance,” Cantinieri said. “It’s very difficult to audit yourself.