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Read this article if you are a renewable energy developer or investor.

Enacted as part of the One Big Beautiful Bill Act (OBBBA), the foreign entity of concern (FEOC) requirements are designed to reduce US reliance on certain foreign suppliers in the renewable energy sector. These rules bar projects with prohibited foreign entity (PFE) ties from claiming clean energy tax credits and take effect for projects initiated after December 31, 2025. 

PFEs include entities with direct or indirect ties to the covered nations that include China, North Korea, Russia, and Iran, with a particular focus on China due to its dominant role in renewable energy supply chains.

Limits on material assistance from PFEs 

Projects must now meet minimum sourcing requirements for components from non-prohibited foreign entities. Central to this is the material assistance cost ratio, with increasing thresholds over time for the proportion of project costs that must be sourced from non-prohibited foreign entities.  

US-based suppliers may be classified as PFEs if they rely heavily on PFE capital, components, raw materials, or intellectual property. 

Restrictions on ownership, debt, and management involvement 

An entity cannot claim tax credits if it has excessive PFE equity, debt, or management involvement. Both specified foreign entities (SFEs) and foreign influenced entities (FIEs) are considered PFEs and are not entitled to tax credits. SFEs are entities controlled by foreign individuals or governments from the covered nations, while FIEs are entities influenced by the covered nations. 

Contracts with PFEs 

Existing contracts and technology licenses with PFEs need to be identified and scrubbed of any provisions that grant the counterparty effective control over the taxpayer or project. New contracts with PFEs are high-risk and should be structured carefully so that they clearly do not grant control or influence. New technology licenses with PFEs are automatically treated as giving the licensor effective control and the related project will not be eligible for tax credits.  

Additional guidance from the IRS is expected before December 31, 2026. 

Penalties for non-compliance with FEOC 

The IRS has six years to challenge whether a project improperly benefited from material assistance from PFEs. The penalties for failing to comply with the FEOC requirements are severe: 

• There is a 100% disallowance of tax credits if the requirements are not met. 
• Investors face a 20% penalty based on the underpayment of their tax liability if violations are found. 

Navigating FEOC requirements  

To navigate these new rules, entities should: 

• Obtain clear representations from equipment vendors and EPC contractors confirming they are not PFEs. 
• Secure certificates from suppliers stating that products were not made by PFEs and that the supplier does not know or have reason to know of any such entities in their supply chain. 
• Evaluate ownership, debt, and management each year to ensure the company is not controlled or influenced by the covered nations.  
• Avoid embedded technology licenses in equipment procurement contracts, which could create indirect foreign control. 
• Be aware of the 10-year recapture provision. For projects placed in service in 2028 or later, the full Investment Tax Credit (ITC) must be repaid if any contractual arrangements give PFEs effective control.

While further IRS guidance is expected in 2026, the intent of the new FEOC requirements is to reduce US dependence on foreign suppliers from covered nations and to prevent prohibited foreign individuals and entities from controlling or benefiting from clean energy tax credits. Early identification of affected contracts and proactive compliance will be essential for developers and investors. Berry Dunn’s renewable energy team has a deep understanding of the FEOC requirements and can assist with navigating these changes. Learn more about our team and services. 

Read this article if you are a member of an accounting/finance department or executive team and want to ensure your accounting firm is keeping pace with the latest Artificial Intelligence (AI) and automation technologies. 

The accounting profession is undergoing one of the most significant transformations in its history. Advances in AI, automation, data analytics, and enhanced cloud-based platforms are reshaping not only how accounting work is performed, but also the value that CPAs deliver to their clients. The critical question is no longer whether technology is changing accounting—but whether your CPA is continuing to invest in education, innovation, and forward-thinking strategies to keep pace. This article outlines key questions you need to ask your CPA firm about AI and automation.

1. How are you responsibly adopting new technologies to keep pace with your clients? 

It's no longer optional for a CPA firm to merely stay attuned to emerging technologies—it is essential. Adopting innovative solutions allows a firm to operate more efficiently. More importantly, it enables a CPA firm to deliver timely compliance, deeper insight, and proactive advisory services that help clients make faster, better-informed decisions.   

Is your CPA firm doing the following on an ongoing basis?: 

• Evaluating new and emerging technologies 
• Enhancing internal processes through automation and optimization 
• Training its professionals and educating clients 
• Ensuring technology is adopted responsibly, securely, and with purpose 

You want a firm that is positioned to not only adapt to change, but to lead you through it. This requires a commitment to investing in digital transformation, supporting continuous learning for team members, and strengthening innovation governance.

2. How are you using automation and AI to improve speed, accuracy, and insight? 

The accounting profession is rapidly evolving due to technologies such as AI, intelligent automation, advanced analytics, and integrated digital platforms. 

"What if you could close your books in a day instead of weeks due to innovation?" —David Stone, BerryDunn Senior Manager

Let’s say innovation enables you to close your books in a day instead of weeks. Can your CPA firm keep up while also delivering compliance services faster and providing elevated, forward-looking insight?  

“Technology alone doesn’t improve speed or accuracy—people do,” said Dan Bednarski, BerryDunn Senior Manager. “Automation and AI are only effective when professionals are trained to use them thoughtfully and responsibly. Without proper education, these tools are simply underutilized software." 

3. How does technology enhance your compliance services beyond meeting deadlines? 

Automation and integrated systems improve accuracy by reducing manual data entry, while analytics help identify anomalies and risks earlier in the process. Standardized digital workflows strengthen consistency and documentation, and real-time access to data enables more proactive planning and issue resolution. 

4. How are your professionals embracing change and new technologies in a rapidly evolving profession? 

Confirm that innovation is a core part of your CPA firm’s culture. When it is intentionally integrated in the daily lives of team members, it gives them the ability to explore how technology like AI can improve workflows, processes, and more.  

“For technology to have real impact, innovation has to be embedded in everyday work—not treated as a side initiative,” said Marc Scribi, BerryDunn Manager. 

This type of culture promotes openness to change and exploration. 

“When professionals are given the time and support to explore how tools like AI can improve workflows and processes, it encourages curiosity, strengthens judgment, and drives meaningful efficiency,” noted Danielle Bedard, BerryDunn Senior Manager. 

Ultimately, a commitment to innovation ensures that technology enhances professional judgment, strengthens quality, and elevates the client experience.

Preparing for the next five years—and beyond

Five years ago, the accounting profession looked vastly different than it does today. Cloud adoption was still gaining momentum, automation was limited, and artificial intelligence had yet to make a meaningful impact on day-to-day accounting operations. What will it look like five years from now? 

BerryDunn can help

If you are looking for a CPA firm that views innovation as a strategic differentiator, not simply a tool for efficiency, reach out. Learn more about our team and services. 

The BerryDunn Assurance, Tax, & Advisory Team’s Innovation Solutions Committee is dedicated to exploring, evaluating, and implementing new technologies and innovative solutions to enhance the audit, tax, and advisory processes. The committee’s mission is to support excellent client service, maximize productivity through technology, and implement processes and procedures that align with overall firm goals and resources. This includes integrating the tax and advisory teams within the innovation focus and renaming the committee to reflect this broader scope.  

David Stone, Marc Scribi, Danielle Bedard, and Dan Bednarski contributed to this article and are members of the committee. 

When CMS previewed its streamlined Medicaid Enterprise System (MES) templates at the Medicaid Enterprise Systems Conference (MESC) in August 2025, the message was clear: change is coming. And guess what? Change arrived with the start of the new year when CMS officially released eight new templates to standardize processes, improve oversight, and accelerate federal reviews. States and territories now have six months to adopt these templates, with full compliance required by July 1, 2026.

The clock is ticking! Early adoption isn’t just encouraged, it’s strategic. Here’s what these templates are, why they matter, and how you can confidently prepare for the required adoption of these templates and related processes.

What’s new? The eight CMS templates at a glance

CMS’ new artifacts support the full MES lifecycle, from planning and procurement to operations and certification. Here’s a quick overview:

1. MES APD Template
A standardized structure for Planning, Implementation, Update, and As-Needed APD submissions, supporting MMIS and E&E individually or combined.

Why it matters: Prescribes updated and uniform expectations for APD sections, including reducing or eliminating non-essential content.

2. MES Operational APD (OAPD) Template
A uniform format for operational APDs used to maintain and enhance existing modules.

Why it matters: Enhances transparency into operational activities by clearly defining scope, funding needs, and timelines, improving predictability for Medicaid agencies and CMS while supporting continuous system improvement.

3. Medicaid Detailed Budget Table (MDBT)
A common budget layout that simplifies federal review by organizing costs predictably.

Why it matters: Integrates MES and E&E funding into a single consolidated MDBT, promoting greater alignment across the Medicaid program and providing a more holistic perspective on SMAs' budgets and expenditures.

4. Operational Report Workbook (ORW)
Monthly operational reporting aligned to maintain enhanced federal match and improve data consistency.

Why it matters: Creates a consistent, module-based reporting structure across states, improving data quality, aggregation, and CMS visibility into Medicaid operations.

5. Analysis of Alternatives (AoA) Template
A structured approach to document solution options, risks, costs, and reuse opportunities.

Why it matters: Supports sound procurement decision-making and compliance with 45 CFR §95.610.

6. Project Status Report
A monthly summary of milestones, risks, funding request status, and progress.

Why it matters: Improves oversight and accountability by offering a concise, repeatable snapshot of progress, risks, and financial posture, enabling Medicaid agency leadership and CMS to make informed decisions.

7. MES Procurement Document Checklist
Aligns solicitations (RFPs/RFQs) with CMS expectations and federal regulations.

Why it matters: Helps ensure procurement packages fully align with CMS expectations, meets or includes citations for Conditions for Enhanced Funding, minimizing rework, reducing procurement delays, and setting Medicaid agencies up for smoother system certification.

8. Streamlined Modular Certification (SMC) Intake Form
The intake form for MES module certification, replacing prior EVV intake.

Why it matters: Clarifies certification evidence requirements early in the lifecycle, reducing ambiguity for vendors and states/territories and paving the way for efficient, timely CMS certification.

Why the change—and why now?

CMS’ goal is clear: reduce administrative burden, improve consistency, and accelerate federal review cycles. These templates create a common language for Medicaid agencies, vendors, and CMS—making compliance easier and oversight stronger.

Six months may sound like plenty of time, but consider the following as a sampling of what’s needed:

• Active and upcoming MES deliverables (ORWs, project status reporting, APDs, and procurements) will need to transition to new templates before July 1
• Procurements submitted to CMS must include a completed CMS Procurement Document Checklist demonstrating that the Medicaid Agency has addressed each CMS expectation within the procurement.
• Operational reporting will require new data pipelines and project governance to help ensure accuracy of outcomes and metrics reporting.

Waiting will compress your compliance window and increase risks for non-compliance. Those who collaborate early and often with their CMS State Officer will benefit from smoother adoption and fewer surprises.

Your action plan

Here’s a practical roadmap to hit the July 1 deadline:

1. Mobilize now, develop your plan, and align with your State Officer

• Form a cross-functional team (program, IT, finance, procurement, PMO/PgMO) and establish a shared understanding of the requirements, the team’s roles, and the frequency with which the group connects to stay aligned in your compliance efforts.
• Create an inventory of APDs, active and planned procurements, forthcoming certifications, and status reports.
• Develop your proposed timeline for transitioning to the new templates. More specifically, identify the APD Packages (i.e., APDs, MDBTs), Procurements, Project Status Reports, and Templates the agency believes can be transitioned in the very near term versus a future update.
• Discuss your proposed plan for compliance with your Medicaid Agency’s CMS State Officer and align with their expectations. Lean into them as your partner for success.

2. Start small and stay aligned with your CMS State Officer

• Consider strategies for implementation, such as:
  • Converting one APD and MDBT as a “pathfinder” to set the standard, before fully implementing your plan for adoption of the new APD and MDBT templates.
  • Piloting the ORW and Status Report templates internally for one to two projects to validate data sources and reporting cadence.
• Align internally on how the AoA fits into your existing strategic planning and procurement processes, and draft an AoA for an upcoming decision to exercise the new format.
• Regularly discuss your compliance efforts with your CMS State Officer, soliciting their feedback and guidance along the way.

3. Ensure alignment across templates

• Map dependencies across templates (e.g., ORW ↔ APDs, AoAs within APDs ↔ procurements) to help ensure data, assumptions, and timelines remain consistent as templates are adopted.
• Coordinate rollout sequencing so related templates are implemented together or in a logical order, reducing rework and misalignment across planning, reporting, and procurement activities.
• Establish shared governance and review checkpoints to validate cross-template consistency before submission to CMS.

4. Scale and train

• Expand beyond initial pilots to full-scale implementation of the new templates across APDs, ORWs, procurements, status reports, and related artifacts well in advance of the July 1 deadline.
• Work across the enterprise, including program, IT, finance, procurement, PMO, and vendors, to ensure shared understanding, consistent data, and aligned execution as adoption scales.
• Provide targeted, role-based training for agency staff and supporting vendors to reinforce expectations, clarify template interdependencies, and support consistent, high-quality submissions.
• Continue proactive engagement with CMS throughout implementation by seeking clarifications, validating interpretations, and offering feedback to inform ongoing refinement and successful compliance.

Common pitfalls to avoid

• Treating templates as a simple “copy‑paste” exercise, assuming that legacy content transfers over directly without evaluating whether requirements, processes, or context have changed and what new information needs to be added.
• Underestimating the effort to stand up ORW reporting; ORW and SMC Intake Forms typically require multi-vendor engagement and adoption, as well as discussions with SMA team members.
• Fragmenting ownership of adoption without a core team driving compliance with CMS expectations for template adoption, results in consistency issues.
• Limiting early engagement with your CMS State Officer without ongoing conversations to review your plan, ask questions, and gather feedback.

How BerryDunn can help

We’ve been tracking these changes and are ready to help Medicaid agencies and vendors move quickly toward adoption by:

• Conducting template walkthroughs and conversion sprints for APDs, MDBTs, status reporting, ORWs, and related artifacts.
• Facilitating AoA development and reuse analysis to support informed decision-making.
• Reviewing procurement materials to help ensure alignment with federal regulations and related APDs.
• Supporting certification readiness through SMC Intake Form preparation and evidence mapping.
• Delivering tailored training and practical playbooks aligned to agency staff and vendors.
• Providing a portfolio management solution capable of supporting your strategic planning, procurement, implementation, and certification activities—as well as the critical reporting needed to support federal compliance (i.e., AoA, APDs, Status Reporting, ORW)

July 1, 2026, will be here before we know it! Medicaid agencies acting now have a higher likelihood of compliance success and will also achieve stronger governance and clearer outcomes. The clock’s ticking and we’re here to help!

Reach out to Amber Davis or Brennan Pouliot to learn more about BerryDunn can help you implement the CMS’ new MES templates.

Resources

• CMS Streamlining Medicaid Enterprise Systems Templates
• SHO #25-003
• tHHS: Medicaid and HHS agency’s Portfolio Management Solution

As BerryDunn’s Healthcare Practice Group lead, Lisa Trundy-Whitten is closely attuned to the healthcare industry. From challenges faced by healthcare organizations to the solutions BerryDunn’s experts can provide, Lisa shares thoughtful insights for healthcare leaders.  

As we begin 2026, healthcare organizations have an opportunity to reset. Several years of sustained disruption have created a transformational moment for both operational and strategic realignment. Many organizations are transitioning from a period of reactive decision-making and are now better positioned to take a more intentional, proactive approach. As healthcare leaders, you’re beginning to see opportunities to restore margin, build resiliency, and boost strategic growth.

Positive signs in the industry 

While you continue to face ongoing challenges, there are encouraging signs across the healthcare continuum. Here are some examples: 

• Volume stabilization is occurring in many sectors. 
• Workforce shortages have declined. 
• Providers and payers are strengthening financial discipline with innovation. 
• Value-based pilots are growing. 
• Creative employee retention programs are being implemented. 
• Telehealth and Artificial Intelligence (AI) are on the rise. 

Pursue near-term wins 

Now is the time to re-align your clinical priorities with financial realities by: 

• Reassessing your service lines 
• Renegotiating payer contracts using better data 
• Improving cost transparency

Instead of pursuing major changes, consider making small, intentional adjustments such as:  

• Recalibrating productivity benchmarks 
• Using better revenue cycle processes to reduce denials 
• Improving forecasting 

All of these adjustments can create near-term wins that you can leverage to build momentum early in the year.  

Be intentional with your progress in 2026 

The trends that have challenged the industry continue to shape what we are seeing today: 

• Continued pressure on labor costs 
• Regulatory uncertainty and complexity 
• Ongoing scrutiny from lenders, regulators, and boards 

At the same time, there is a shift toward value-based care, outpatient migration, and greater reliance on data in decision-making. 

So, how do you respond to these challenges and changes? Our advice is to apply focus and discipline. By clearly defining your strategic priorities and directing funds accordingly, you can make the most of limited resources. 

Harness emerging technologies 

Rather than view emerging technologies like AI as optional experiments, thoughtfully embrace them as tools to boost efficiency, reduce costs, and improve care. AI can speed up revenue recovery, lower administrative burdens, improve clinical decisions, and enhance the patient experience.  

Are you wondering where to start? Identify the pain points where technology can deliver value for your organization. Consider focusing on specific initiatives like optimizing your revenue cycle, forecasting, compliance monitoring, or analytics, rather than leaping into broad, less focused initiatives. Keep it simple and small when beginning. Form an AI governance committee to prioritize use cases, manage risk, and scale what works.  

Sustainability often depends on making the right investments. A strategic investment in technology can lower long-term costs, mitigate risk, and enhance decision-making—all in support of your organization’s mission.

BerryDunn can help 

As you look ahead in 2026, there will be challenges. Rather than letting these obstacles define you, view them as opportunities to respond with more clarity, stronger discipline, and renewed confidence. The path to your organization’s success is recognizing and understanding the financial and regulatory landscape while thoughtfully adapting and investing in your future. 

If you need support, reach out to us to discuss ways we can guide you and help you improve outcomes. I encourage you to explore our comprehensive breadth of services and learn about our team of experts across healthcare practices. 

Best,

Lisa Trundy-Whitten

Read this article if you are a leader in the construction industry.

As the construction industry faces mounting pressure to reduce its environmental footprint, artificial intelligence (AI) is emerging as a powerful driver of change. From optimizing material usage to monitoring energy consumption, AI is helping companies build smarter, greener, and more efficiently than ever. 

The challenge of sustainability in construction 

Construction is responsible for nearly 40% of global carbon emissions, much of which results from inefficient design, material waste, and energy-intensive operations. As clients and regulators demand more sustainable practices, companies are turning to AI to meet these expectations without compromising quality or profitability. 

How AI can help 

1. Material optimization: AI algorithms can analyze building plans and recommend more sustainable or locally sourced materials. They also help reduce waste by predicting exact quantities needed, minimizing over-ordering and excess inventory. 
2. Energy modeling and monitoring: AI-powered tools simulate energy usage across different design scenarios, helping architects and engineers choose layouts that maximize efficiency. On job sites, AI can monitor real-time energy usage, identifying opportunities for efficiency gains and cost savings. 
3. Predictive maintenance: By continuously monitoring equipment and building systems, AI can anticipate failures before they occur. This proactive approach reduces downtime, extends asset life, and minimizes unnecessary replacements. 
4. Smart scheduling: AI analyzes weather patterns, labor availability, and supply chain data to optimize project schedules. This reduces idle time, avoids delays, and limits resource waste. 
5. Carbon tracking: AI platforms calculate a project’s carbon footprint from start to finish, offering insights into how design choices, transportation, and materials impact emissions, as well as how to reduce them. 

Real-world impact of AI 

Forward-thinking companies are already seeing results. Projects that integrate AI into their sustainability workflows report: 

• Up to 30% reduction in material waste 
• Around 20% improvement in energy efficiency 
• Faster compliance with green building certification requirements 

What’s next for AI in construction? 

As AI continues to advance, we expect to see deeper integration with the management of buildings and infrastructure, autonomous construction equipment, and even AI-assisted design. The future of sustainable construction isn’t just about building better; it’s about building smarter. 

BerryDunn’s construction team partners with clients to provide meaningful insights on best practices in building capacity, stabilizing cash flow in growth, reducing tax liabilities, capturing reimbursable local taxes, and navigating state nexus. Learn more about our team and services.  

Bonus depreciation is officially back at 100%, and the rules for 2026 look very different from what many taxpayers had been planning for. After years of preparing for the gradual phase-down under the Tax Cuts and Jobs Act (TCJA), the One Big Beautiful Bill Act (OBBBA) of 2025—along with new IRS guidance in Notice 2026-11—restores full expensing for most qualified property and establishes a clearer long-term framework.

BerryDunn's tax experts have compiled a comprehensive summary of what changed, how the rules work now, and what businesses need to know as they plan for upcoming capital investments.

Notice 2026-11: Key updates driving the 2026 bonus depreciation rules

Notice 2026-11 serves as the IRS's bridge between the old TCJA regulations and the new OBBBA system. Rather than issuing a complete rewrite of §1.168(k)-2, the IRS introduced a "date substitution" approach to quickly align existing regulations with the new law.

New effective dates for determining 100% bonus depreciation

To determine whether property qualifies for the renewed 100% bonus rate, taxpayers must now:

• Use January 19, 2025, in place of September 27, 2017

• Use January 20, 2025, in place of September 28, 2017

What this means in practice: If a business acquires and places property in service after January 19, 2025, the property generally qualifies for 100% bonus depreciation under the updated rules.

Bonus depreciation requirements for 2026: Understanding the four tests

Even with the OBBBA changes, property must still satisfy four primary requirements under §1.168(k)-2 to be considered "qualified property."

1. Qualified Property Type (MACRS, QIP, Software, and More)

Eligible property includes:

• MACRS property with a recovery period of 20 years or less
• Computer software
• Qualified Improvement Property (QIP)
• Qualified sound recording productions (added by the OBBBA, new for 2025/2026)

This expansion makes the property type test more favorable for entertainment, technology, and capital-intensive industries.

2. Acquisition test: Binding contract rules matter

To qualify for the 100% deduction, the property must be acquired after January 19, 2025, based on the written binding contract date. If a binding contract existed before January 20, 2025, the property generally falls under the old 40% bonus depreciation rate, not the new 100% rate.

This distinction is critical for taxpayers evaluating bonus depreciation contract date rules for 2026.

3. Original use or used property requirements

The TCJA rules for original use and used property remain in effect:

Original-use property: The first use must begin with the taxpayer.

Used property: Still qualifies if the taxpayer (or a predecessor) did not previously use it, and it was not acquired from a related party.

4. Placed-in-service test: Why the January 19, 2025, date matters

To qualify for the 100% rate, property must be acquired and placed in service after January 19, 2025.

This rule is especially relevant for taxpayers with fiscal year ends in mid-2025 or early 2026, where assets cross the legislative changeover date.

The 40% bonus depreciation election: A strategic tax planning option

While 100% bonus depreciation is now the default, the OBBBA and Notice 2026-11 preserve the important 40% bonus depreciation election (and 60% for long-production-period property).

Why elect less than 100%?

1. Managing Net Operating Losses (NOLs)

Electing 40% can help businesses avoid creating NOLs limited by the 80% taxable income cap, preserving deductions for potentially higher-tax-rate years.

2. Preventing wasted credits

Some nonrefundable tax credits are lost if taxable income drops to zero. Using the 40% rate gives businesses more precision in aligning deductions and credits.

The election applies to the first taxable year ending after January 19, 2025, and covers all qualified property placed in service during that year.

What 100% bonus depreciation means for 2026 capital planning

With Notice 2026-11 in place, businesses now have clarity as they model 2026 capital spending. Companies with heavy investment in equipment, real estate improvements, or cost segregation studies stand to benefit the most.

The return of full expensing—combined with the new flexibility provided by the 40% election—creates a more stable and planning-friendly environment than taxpayers have seen since the early TCJA years.

About BerryDunn

Our seasoned tax professionals partner with you to offer practical, accessible guidance and develop detailed strategies that support your unique needs. We excel at tax strategy and solutions, placing an emphasis on building long-term relationships. Our deep expertise spans a full range of tax concerns, tax services, and consulting to support individuals, businesses, and nonprofit organizations. Our tax consultants are specialists in their industry, working closely with colleagues across the firm to deliver integrated, comprehensive solutions. Learn more about our services and team.

Disclaimer

This article provides a general overview of tax law changes. For advice addressing your specific situation, please consult a qualified tax professional.

Read this article if you are a town, city or county administrator, CFO, controller, finance director, accounting manager, selectman, or councilor at a governmental entity or nonprofit.   

Does every audit feel like a rescue mission? Do you often feel like each year is the same as the last? You’re not alone. Many nonprofit and governmental agencies experience turbulence along the way; no audit is perfect. In this article, we’ll outline a strategic approach to help your audit journey progress to planned readiness. 

Audit rescue mission  

Every mission, whether it's rescue or readiness, starts with a plan. If you’re feeling the heat from what seems like everything being on fire, that’s okay. No amount of ‘doing more’ is going to get you closer to success. The best first step is to stop, pause, and take stock of where you’re at, what you’re working with, and where you’re headed. Look no further than your next audit cycle—whether that means the current audit you’re in, the one that just won’t end, or the one up ahead. 

Step 1: Get a lay of the audit land 

• Rearview perspective: What worked, what didn’t 
• Critical issues: Prior year and recurring findings, internal control deficiencies, issues of non-compliance 
• Operational pitfalls and inefficiencies: Staffing shortages, technical skills gap, lag times from external departments, technology limitations 
• Known obstacles: New standards, new software implementations, turnover in auditors or internal organizational structure

Getting a lay of the land can be a simple first step to alleviate some weight from your back and lighten the mental load, putting you on the path forward. 

Now that you know what you’re working with (and not!), it’s time to put pen to paper. 

Step 2: Make an audit plan 

• Deadlines: Know the end goal you’re working toward. 
• Phases and milestones: Consider time needed for review and revisions, and the availability of resources along the way, include regular checkpoints to keep the momentum going, and adjust as needed. 
• Know your cutoffs and when information is available: Prioritize areas based on when the information will or can be ready to work with. 
• Get the word out: Identify key stakeholders in your plan and inform them of their role and key dates in support of the overall objective. 

Step 3: Get started 

• Don’t wait: Do what you can today. 
• Organize as you go: Set aside copies of source documents as you become aware of them. 
• Address things as they arise: Set up subaccounts for better tracking. 

Every good plan is best executed with a team committed and aligned to success. Next, we’ll discuss how to champion your audit approach and make progress even when the going gets tough. 

Run and refine your audit plan 

Resources and recon, deploying your plan, checklists, technology, and champions—don't be afraid to work with your auditors throughout the year. 

Step 4: Think outside the box 

• Collaborate: Recruit internal and external department team members, organize an audit task force of champions, consider keeping seasonal employees, and create an internship program. 
• Touch base with auditors: Call or meet regularly to keep them informed or ask for guidance. 
• Network with other agencies: Inquire with peer agencies, share resources, and support each other. 
• Connect with member organizations: Join listservs, research sample policies and procedures, and attend local chapter meetings and trainings for additional resources and insights. 
• Leverage technology: Partner with IT to set up custom reports, create templates, set alerts and reminders, explore project management tools, or create calendars. 

Step 5: Simplify for success 

• Break down complex areas into bite-sized tasks: Consider reviewing and maintaining details for capital assets, grants, leases, and SBITA during mid-year or on a quarterly basis. 
• Transition away from annual and manual: Transition from one-time year-end to multi-period reconciliations and adjustments, including budgeted transfers, indirect cost allocations, accruals, and fund balance maintenance and reporting.
• The balance sheet can be your best friend: Expand period-end procedures to include reconciliation and monitoring of all balance sheet accounts, track grant reimbursements through deferred revenue to cut down on time spent reviewing expense and revenue account details, make sure AP and AR tie out every month, and track down payroll liability discrepancies as they occur. 

Shift to audit readiness 

Progress, not perfection, is the mindset to have when preparing your agency for an audit. Having a system in place that catches 90% of the heavy lift during the year sets you up to address the outliers as they surface, with more capacity and ease to adapt under pressure.  

For more tools in your toolbox, here are some additional tips to maintain progress toward a successful audit:

• Beginning balances: Tick and tie the balance sheet to the financial statements both before and after the year has been closed in your accounting system, including reconciling the beginning fund balance. 
• Just another month: Do as much as you can throughout the year so that year-end tasks feel like just another month within your operations. 
• Period 13 and 14: Track year-end financial statement adjustments in period 13 and audit adjustments in period 14 to keep things more organized and report appropriately for budgetary purposes. 
• Government-wide statement tracking: Setting up General Long-term Debt Group (GLTDG) and General Fixed Asset Account Group (GFAAG) funds and accounts to better manage the tracking and reporting of long-range elements of year-end and the financial statements that would otherwise live in a subsidiary module or system. 
• Pooled cash: Rely on pooled cash to ensure transactions and funds are balancing properly. 
• Pre-audit pseudo-internal audit: Set an internal materiality threshold and review for internal control compliance, set revenue and expenditure materiality thresholds at the budget level, and review for inconsistencies throughout the year to get ahead of questions at year-end from the auditor’s analytics.

If you’d like to discuss what working with a consultant could look like for your organization, reach out to our Governmental Accounting team. We’ll walk with you through the process, help ease the burden, and set you up for long-term success. 

Read this article if your role includes hiring or contracting with physicians, dentists, behavioral health clinicians, advanced practice providers, non-patient facing staff, engaging with temporary employment agencies, or conducting exclusion screening. 

In a changing healthcare landscape, ensuring that all members of your organization—from administrative to clinical—meet federal eligibility requirements is imperative. Exclusion screening goes beyond regulatory compliance, protecting against costly penalties. Recent enforcement actions highlight the consequences of noncompliance. This article explores the essentials of exclusion screening, common mistakes, and practical insights to help your organization remain compliant.

What is exclusion screening? 

The US Department of Health & Human Services Office of the Inspector General (OIG) has the authority to exclude individuals and entities from federally funded healthcare programs, such as Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and TRICARE, for a variety of reasons. No federal healthcare program payment may be made for any items or services furnished by: 

• An excluded person, or 
• At the medical direction or the prescription of an excluded person. 

The exclusion and the payment prohibition continue to apply to an individual even if he or she changes from one healthcare profession to another while excluded.

Exclusion screening: Don’t forget non-clinicians 

This prohibition extends beyond direct patient care. Excluded individuals are also barred from performing administrative or management services that may be reimbursed by federal healthcare programs, even if administrative or management services aren’t billed separately.  

For example, an excluded person cannot hold executive or leadership roles at any healthcare entity that provides items or services covered by federal healthcare programs. Also, excluded individuals cannot provide administrative or management services—including health IT, strategic planning, billing, accounting, staff training, or human resources—unless these activities are entirely unrelated to federal healthcare programs. 

Penalties for employing/contracting with excluded persons or entities 

If a provider or entity arranges or contracts (by employment or otherwise) with a person, contractor, or vendor that the provider or entity knows or should know is excluded, they may be subject to a civil monetary penalty (CMP) liability of up to $10,000 for each item or service furnished by the excluded person for which federal program payment is sought, as well as an assessment of up to three times the amount claimed, and program exclusion. 

CMP liability could result even if the excluded person is a volunteer or does not receive payments from the provider for his or her services (e.g., a non-employed excluded physician who is a member of a hospital’s medical staff; or an excluded healthcare professional who works at a hospital or nursing home as a volunteer). 

For example, if a hospital contracts with a staffing agency for temporary or per diem nurses, the hospital will be subject to overpayment liability if an excluded nurse from that agency furnishes items or services. 

How and when to conduct exclusion screening 

To reduce CMP liability risk, organizations should check the OIG’s online List of Excluded Individuals and Entities (LEIE) before hiring or contracting, and periodically review it for current staff, contractors, and vendors. 

In addition to the LEIE, there are other important exclusion screening databases that should be monitored regularly: 

• The System for Award Management (SAM): Administered by the federal General Services Administration (GSA). The SAM includes debarment actions taken by multiple federal agencies. 
• State Medicaid exclusions: Most states have their own Medicaid exclusion lists and must notify the OIG. Due to possible timing delays, it is important to check state lists, as well as the LEIE and SAM.  

OIG exclusion screening enforcement actions in 2025 

Between January 1 and December 31, 2025, the OIG reported 10 enforcement actions against healthcare organizations that hired or contracted excluded individuals.  

These enforcement actions resulted in a total of $2,500,000 in penalties with 90% of the penalties focused on home healthcare and skilled nursing facilities.

BerryDunn can help 

Do you have questions about your healthcare organization’s exclusion screening policies, procedures, and workflows? If your organization outsources its exclusion screening functions, how do you monitor your contractor’s performance? 

Our healthcare compliance team can help. We incorporate deep, hands-on knowledge with industry best practices to help your organization manage compliance and revenue integrity risks. Learn more about BerryDunn’s healthcare compliance consulting team and services.

Additional healthcare exclusion screening resources: 

• Search the OIG Exclusions Database 
• Special advisory bulletin and guidance on exclusion  
• Applying for reinstatement after exclusion

Read this article if you are an owner/operator, director, administrator, director of nursing or admissions, business office manager, or board member at a Skilled Nursing Facility or a Nursing Facility.

Across the United States, 2025 proved to be a pivotal year for nursing facilities (NFs). Fast-paced changes in the regulatory environment, significant shifts in payer mix, including growth of Medicare Advantage plans, and ongoing financial and workforce challenges, have reshaped the landscape. This article summarizes the most impactful trends and issues facing Skilled Nursing Facilities (SNF) and NFs in 2026, as well as strategies for providers to consider adapting. 

Regulatory changes: The repeal of the CMS staffing mandate 

One of the most significant regulatory developments in 2025 was the repeal of the Centers for Medicare & Medicaid Services (CMS) staffing mandate for SNFs and NFs. This change removes federally mandated minimum staffing levels, which had previously been a point of contention among providers. While the repeal offers facilities more flexibility in managing their workforce, CMS continues to require a minimum of eight hours of RN services per dy, and staffing levels reporting via payroll-based journal (PBJ) and the new CMS Medicare cost reporting form 2540-24. Some states have state-specific staffing requirements that facilities should understand and comply with.

Medicare Advantage expansion and its consequences 

The expansion of Medicare Advantage—often referred to as "Medicare replacement" managed care plans—has continued throughout 2025. CMS emphasizes that these plans are intended to provide greater choice and cost savings for beneficiaries. However, providers are increasingly choosing not to accept certain Medicare Advantage plans. The driving factors include high administrative burden, frequent claim denials, and non-payment rates, which collectively threaten the financial sustainability of providers. Additionally, facilities may experience specific insurance carrier concentration in their area, impacting cash flows, days in accounts receivables, and potential bad debts.

Anticipated Medicaid cuts and financial pressures

Nursing facilities (NFs) are bracing for anticipated Medicaid cuts associated with implementation of the OBBBA, including shorter periods of retroactive coverage. These changes are expected to present substantial financial challenges for facilities, as Medicaid remains a major payer for long-term care services. 

Ongoing financial pressures, stemming from labor and supply costs, delays and denials of Medicare Advantage reimbursement, and continuing occupancy struggles, contributed to facility closures and notable bankruptcies, such as the contested Genesis Healthcare case. 

Growth in REITs, related parties, and ownership transparency 

The influence of Real Estate Investment Trusts (REITs) in the nursing facility sector has grown considerably. By late 2023, approximately 9–10% of US nursing homes were owned by REITs, with major players including Omega Healthcare, CareTrust REIT, Sabra Health Care REIT, Welltower, Healthpeak Properties, and Ventas. These companies own hundreds of facilities nationwide, often through joint ventures with nursing home operators.

The industry is experiencing significant shifts in facility ownership and how facilities operate. CMS noted an increase in related party transactions. In response, CMS is taking steps to increase transparency around SNF and NF ownership structures and their associated quality of care. The provider community questioned how meaningful the program was. The expanded reporting requirement presented a significant administrative burden for providers as many could not complete recertification through PECOS or paper-based forms with multiple technical difficulties and lack of Medicare Administrative Contractors’ education or assistance. In December, CMS indefinitely suspended mandatory SNF recertifications that originally were due by January 1, 2026. While the due date is on hold, CMS did not remove its requirement for reporting of related parties (those with common ownership of 5% or more). 

Occupancy rates and challenges to Medicare-covered short stays 

Nation-wide, SNF/NF occupancy continues to increase. Between 2020 and 2025, 503 facilities were closed, resulting in a loss of 57,987 beds.

Several factors continue to threaten SNFs’ ability to admit short-stay or rehabilitation patients, which have traditionally been covered by Medicare—a preferred payer due to strong PDPM reimbursement rates and providers’ ability to master PDPM patient need documentation. The SNF Medicare benefit requires a minimum three-midnight inpatient hospital stay. However, ongoing hospital capacity issues, prior authorization requirements under Medicare Advantage, and CMS’s expansion of the outpatient list of procedures are reducing the flow of eligible admissions. Industry associations, including AHCA and LeadingAge, are advocating for the removal of the three-midnight requirement to help sustain SNF census. 

SNF PBJ and new CMS audits: VBP/QRP data validation 

Retrospective PBJ audits impact facilities’ CMS Star Ratings for staffing and turnover measures. By the second quarter of 2025, about 4.3% of facilities nationwide were unable to properly support PBJ submissions or had missed submissions, resulting in suppressed data reporting.

New CMS Value-Based Purchasing (VBP) and Quality Reporting Program (QRP) data audits are expected to start in January 2026. Healthcare Management Solutions, LLC (HMS) will perform audits of up to 1,500 randomly selected SNFs, or about 10% of certified providers. Each provider will have to provide medical records in PDF format (electronically via a link to a portal) for up to 10 Minimum Data Set (MDS) assessments. Facilities will be notified via Internet Quality Improvement and Evaluation System (iQIES) of the selection and will have five business days to respond to a point-of-contact (POC) request, and 45 calendar days from notification to provide the requested records. Non-response or non-compliance may result in a 2% reduction of the facility’s Medicare annual payment update.  

Workforce and labor cost pressures 

Despite improving gradually, workforce shortages remain a persistent challenge for SNFs and NFs nationwide. While some markets have seen a decrease in reliance on agency labor, rising labor costs continue to impact the bottom line. In response, CMS requires greater transparency into outsourced labor arrangements. The new Medicare cost report form (CMS 2540-24) now mandates disclosures of labor costs and the related hours worked for all outsourced facility labor, aiming to shine a light on staffing practices.

Recommendations for SNFs/NFs in 2026 

Adapting to the industry trends in 2026 will require proactive advocacy and operational flexibility. Some suggestions for SNFs and NFs to consider going into 2026: 

1. Reevaluate your facility’s payer mix, occupancy, and current reimbursement rates to adjust budgets as necessary. 
2. Evaluate MDS nurses’ education needs as they relate to state Medicaid reimbursement drivers. Many states have been implementing a subset of PDPM methodology to use for Case Mix Index (CMI) or patient needs complexity adjustment. State-specific methodologies may vary significantly from Medicare PDPM. Mastering your state-specific MDS process may contribute to a stronger bottom line. 
3. Reevaluate your facility’s staffing plan. While the staffing mandate has been repealed, many states have their state-specific staffing requirements. Facilities are required to staff according to patient needs, so tracking of CMI, occupancy, and understanding your state nursing facility licensing rules is key.  
4. Review your regulatory compliance checklist—from annual facility assessment, to PBJ, MDS, and various CMS and CDC quality reporting needs, maintain access to the iQIES portal, regularly review communications, and verify submission acceptance to report to QAPI. 
5. Review the MDS 3.0 Provider Preview Reports folder in the iQIES portal at least weekly for potential notifications of upcoming SNF VBP and QRP FY25 data validation audit. Remember that facilities have five business days to respond to the main and secondary POC requests. Prepare your medical records team to respond to the medical records request within 45 days, allowing quality assurance review time prior to submission, to prevent loss of up to 2% of Medicare revenue.  
6. Verify that at least two persons in the organization maintain access to CMS, Medicare Administrative Contractor (MAC), state Medicaid, and other portals to help ensure access to remittance advice documents, claims submission review, claim appeals, claim review requests, and other reporting. Remember that MACs and some state Medicaid agencies will suspend payments to a facility if the cost reports are not filed timely and with sufficient support. 
7. If your facility is enrolled in Medicaid, consider upskilling social workers and the revenue cycle team’s assistance with Medicaid application approval process. With the anticipated decrease in “retro eligibility,” this area of operations presents an impactful opportunity.  
8. If your facility accepts patients with Medicare Advantage plans, update plan information, such as pre-authorization, case management, and progress updates requirements, as well as in- and out-of-network copays transferred to patients. Make sure that patient rehab goals are realistic and patient-specific to help prevent denial of services or notices of Medicare non-coverage (NOMNC). Review progress notes and consider adjusting goals based on the patient’s status. CMS has implemented Health Plan Management System (HPMS) Complaints Tracking Module Updates for managing provider complaints, which you can access here. 

BerryDunn can help

For nursing facilities seeking to improve financial operations, BerryDunn’s industry experts can assist with operations and revenue cycle assessment, process optimization, and benchmarking by analyzing data on a wide variety of quality, operational, and financial performance indicators to guide you to better understand how your cost and revenue drivers can lead to outcomes. Learn how to access our self-service Senior Living Benchmarking Portal for a carefully curated, comprehensive set of financial benchmarking reports. Learn more about our Senior Living consulting team and services.