Medical billing and coding for skilled nursing facilities (SNFs) seems complicated at first. Reimbursement for services received in an SNF are subject to an increasing number of regulatory restrictions, beginning with the Balanced Budget Act of 1997. In an effort to reduce potential fraud and abuse due to double billing by healthcare providers, SNFs currently bill Medicare under a Prospective Payment System (PPS) similar to the way inpatient facilities are reimbursed for medically necessary care to patients.

The PPS that governs SNF reimbursement is a set amount based on a Resource Utilization Group (RUG) rate. Medicare Part A covers SNF services for a set period of time, after which Part A benefits are exhausted. SNFs can continue to bill Part A for some covered services, while others are billed to Medicare Part B. Some medical services are exempt from consolidated billing, and these services are billed by individual providers.

Consolidated Billing

Prior to 1998, when the Balanced Budget Act of 1997 went into effect, SNFs were allowed to unbundle services that were provided by contracted healthcare entities. Since 1998, most services provided to a Medicare beneficiary are required to be bundled together and billed by the SNF under the PPS in one consolidated healthcare claim. The SNF is then responsible to pay for contracted services out of the per diem rate that it receives for caring for a patient.

Services that are billed by an SNF include durable medical equipment, screenings, many tests, transportation to and from routine medical appointments, and services that are required by a physician’s care plan that are performed by nurse practitioners and physician assistants incident to the that plan. Speech therapy, occupational therapy, and physical therapy are required to be billed directly by an SNF in a consolidate bill, rather than by individual therapists.

Consolidated billing is required only under Medicare Part A. If an SNF is not a certified Part A SNF, then services are billed to Medicare Part B, except for therapy services, which are a covered Part A benefit when received in an SNF setting regardless of the SNF’s certification status.

Understanding which Medicare agency to bill is the responsibility of professional medical billers who specialize in sending the right bills to the right payers in medical code that accurately reflects the services provided.

Skilled Nursing Facility Payments

The consolidated billing requirements instituted after 1998 have expanded since its implementation, while other services have been excluded. Under Medicare Part A, SNFs receive a set per diem rate for each patient. This rate is considered reasonable reimbursement for meeting the needs of the average SNF resident. Out of this payment, SNFs are expected to provide all the medically necessary services a covered patient requires to heal, and to be able to resume activities of daily living after discharge from the SNF.

Certified medical coders assign the codes used to describe the services Medicare beneficiaries receive during their stay in an SNF. They use diagnostic codes from the International Classification of Diseases, 9th Revision, Clinical Modification (ICD-9-CM) and the Healthcare Common Procedural Coding System (HCPCS) with includes Current Procedural Terminology (CPT) and HCPCS Level II codes. Professional medical billers then assemble these codes into a consolidated bill when those services are applicable, or they submit claims separately, when applicable, for services not subject to consolidated billing requirements.

Professional physician services are not subject to consolidated billing, the physician or other licensed health care provider who provides evaluation and management services to an SNF resident bills for these services independently to Medicare Part B. Some CPT codes carry both a professional and a technical component. For instance, there are laboratory and radiology procedures that are split into a technical component, which accounts for the performance of a particular procedure described by CPT, and the interpretation of the procedures results. An SNF is responsible for the charges incurred by the technical aspect of a service, while the provider bills Medicare directly for the professional aspect. The provider then bills the SNF for the technical expense out of its per diem rate received from Medicare Part A.

Determining What is Subject to SNF Consolidated Billing

Professionally trained medical billers are aware of which codes qualify for consolidated billing, and which codes do not. The Centers for Medicare and Medicaid Services (CMS), the federal agency that oversees payments under the Part A PPS and the Part B fee-for-service (FFS) schedule, publishes lists of codes that are subject to consolidated billing, and which codes are exempt. All accredited programs of study include an introduction to the rules and issues that surround SNF billing. Medical billing professionals who enter the SNF environment, soon learn to use their baseline knowledge, then they build off it to perform effectively.

Field experience takes the foundation of knowledge learned in the classroom setting and focuses it on the job at hand. SNF billing is an intricate tangle of regulations and statutes. Employers looking for SNF medical billers and certified medical coders appreciate applicants who have completed a formal program of study at a university, community college, or online school. Professionals who have received this formal education understand the relevant issues before they tackle the job on a daily basis, and they use their knowledge to navigate the complex SNF reimbursement system.

Part A SNF Benefits

Medicare Part A limits benefits to patients who are prescribed a stay in a skilled nursing facility. Part A benefits include the cost of room and board in addition to nursing and therapy services provided to improve a patient’s current state of health. After Part A benefits are exhausted, Medicare Part B is billed for provided, medically necessary services under FFS, without covering the cost of room and board, which are the patient’s fiscal responsibility. While Medicare Part A is in effect, the SNF is paid a regular, inflexible rate for most of the services provided to its patients.

Knowing which codes are applicable for consolidated billing requirements, which codes are not covered, and to which payer to submit SNF claims is the responsibility of professional medical billers. Several laws have been enacted since the Balanced Budget Act of 1997 that govern consolidated billing and SNF billing to Medicare Part B. Trained medical billers, who bring a solid understanding of the applicable requirements, provide a valuable service to their employers, protecting them from charges of healthcare fraud and abuse.

Other SNF Billing

While Medicare Part A and Part B are the most common third-party payers for SNF services, Medicaid is also an important component of the typical SNF’s payer mix. Each state administers its own Medicaid program, and professional SNF billers are familiar with their state’s billing protocols and methodologies, Medicare is directly administered by CMS. Medicaid programs are guided by CMS decisions, but each state pays SNFs differently, though most have adopted the PPS model to a greater or lesser extent.

Commercial health insurance plans devise their own methods of SNF reimbursement. As with many things in healthcare reimbursement, CMS sets a standard, and eventually, other third-party payers follow suit. Professional medical billers who are cognizant of Medicare’s rules regarding SNF billing will be able to apply that knowledge in other situations. With an education based on correct coding, and an understanding of contractual obligations regarding how to submit clean claims appropriately, medical billers who have received accredited training and have earned certification are preferred over people who have no training. A proper eduction in medical billing and medical coding is an asset when seeking a job in an SNF’s billing department. It is a specialized aspect of medical billing, but it so is any aspect of medical coding. Many SNF medical billers find rewarding careers after finishing their education.