How Does Skilled Nursing Facility Billing Work?

by Staff

Skilled nursing facilities (SNFs) offer rehabilitation services to patients requiring continued care after a hospital stay. They play a critical role in the healthcare system by facilitating patient recovery and transition back to the community. 

However, operating an SNF involves a complex billing process to receive payment for services. This article will provide an in-depth overview of SNF billing and coding and other essential insights into managing the SNF revenue cycle effectively. 

Overview of Skilled Nursing Facility Services

SNFs offer intermittent care, physical therapy, occupational therapy, speech-language pathology services, and other specialized rehabilitative and medical services. The goal is to help patients regain function after an injury, surgery, or illness so they can return home rather than remain in a hospital.

Some common conditions treated in SNFs include:

  • recovery after joint replacement, fractures, or amputation;
  • regaining mobility and strength after a stroke or neurological condition;
  • short-term pain management and intravenous medication administration;
  • post-operative rehabilitation after an acute hospitalization;
  • management of chronic conditions like diabetes, respiratory disease, or heart failure;
  • cognitive and speech therapy after a brain injury or dementia.

Medicare Part A and private insurers cover SNF care. To ensure that the patient has coverage, the admissions or billing teams need to conduct eligibility verification healthcare

Revenue Sources for Skilled Nursing Facilities

SNFs have various revenue streams to compensate for the skilled medical care provided. The primary payers include:

  1. Medicare. Covers short-term rehabilitation services provided by SNFs for eligible Medicare Part A recipients. Medicare fully covers days 1-20, with coinsurance charges applicable from day 21 to day 100.
  2. Medicaid. Medicaid serves individuals with low income levels. Benefits and reimbursement rates vary by state.
  3. Managed Medicare/managed Medicaid plans. Private insurers administer customized Medicare and Medicaid plans under contract with the government, including Medicare Advantage and Medicaid managed care plans.
  4. Private/commercial insurance. Policies dictate covered services, facility credentials, and reimbursement rates.
  5. Private pay. Uninsured or long-term care patients pay out-of-pocket according to the SNF’s fee schedule.

Check these critical skilled nursing billing and documentation processes involved in capturing revenue from these sources.

Skilled Nursing Facility Medicare Billing and Documentation

The majority of SNF reimbursement comes from Medicare for short-term skilled nursing and rehabilitation stays. However, securing Medicare payment involves rigorous eligibility verification, billing protocols, and documentation requirements.

Medicare Skilled Nursing Facility Eligibility

For Medicare to cover an SNF stay, the following criteria must be met:

  1. Qualifying 3-day hospital stay. Patients must be formally admitted to an acute care hospital for medically necessary treatment for at least 3 consecutive days, not counting discharge date. Observation status does not qualify.
  2. SNF admission within 30 days. SNF admission must occur within 30 days of hospital discharge. There are exceptions if the patient’s condition makes SNF care necessary for the same illness or injury.
  3. Skilled care requirement. Physicians must order treatments that only trained clinical professionals can provide and are deemed medically necessary. Examples include wound care, intravenous medications, ventilator management, occupational therapy, etc.
  4. Medical necessity. Services must be essential for illness or injury diagnosis or treatment, consistent with symptoms, not for convenience or custodial in nature. There must be an expectation that the patient’s condition will improve over a predictable period.

Determining eligibility upfront prevents payment delays or denials. 

Medicare Parts A and B Billing in Skilled Nursing Facilities

Medicare Part A is the primary coverage in skilled nursing homes. When the beneficiary in a Medicare-certified SNF is not entitled to Part A benefits, limited benefits are provided under Part B. More info on that here:

Part A coverage: skilled nursing services, physical therapy, occupational therapy, speech therapy, social services, dietary counseling, medical supplies and equipment used in the facility.

Part B coverage: when no Part A payment is possible, some services may be medically necessary and can be covered as ancillary services under Part B. Such services include diagnostic x-rays, prosthetic devices, surgical dressings, etc.

Submitting accurate claims and linking Part A and B services with proper coding is vital for proper reimbursement.

Accurate PDPM Coding

The Patient-Driven Payment Model (PDPM) is crucial in Medicare SNF billing. Coders need to document all comorbidities and complications thoroughly, as these elements affect the classification and payment.

Accurate completion of the Minimum Data Set (MDS) is particularly important, as it reflects the patient’s clinical status and care needs. 

Undercoding with PDPM can result in reduced reimbursement or denied claims for the facility. Conversely, overcoding may prompt Medicare audits and require repayment.

Skilled Nursing Facility Documentation Requirements

Key documentation components that may be required to support the billing claims include:

  1. Nursing notes. Describe patient response to treatments, pertinent medical updates, education provided, medication effects, and progress towards stated goals.
  2. Rehabilitation therapy notes. The detailed modalities used for the patient’s response, functional outcomes achieved, duration of treatment, and education are given.
  3. MDS assessments. Comprehensive clinical, functional, and psychosocial snapshots are administered on a fixed schedule using CMS guidelines.
  4. Discharge summary. Recaps hospital diagnosis, skilled interventions performed, outcomes achieved, discharge condition, instructions provided, and care plan for next setting.

Final Thoughts

As shown, SNF billing and documentation is a complex, high-stakes process. Facilities must remain constantly vigilant to capture all billable charges while demonstrating medical necessity. Otherwise, shortfalls can quickly accumulate through denied claims, underbilling, and regulatory noncompliance.

With sound data infrastructure and clinical teams focused on patient goals, SNFs can continue providing their unique transitional care services while remaining financially viable.

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