Skilled Nursing Facility Services

Affected Providers

Physicians and non-physician practitioners who bill for services related to patients in skilled nursing facilities (SNFs).

Background

According to the 2024 Medicare Fee-for-Service Supplemental Improper Payment Data, the improper payment rate for SNF inpatient claims is 17.9%, with a projected improper payment amount of $5.6 billion.

The Medicare SNF benefit pays for certain skilled services in various skilled nursing settings, including swing-bed hospitals, nursing homes, and other freestanding facilities. Covered SNF services require skills of qualified technical or professional health personnel. The SNF benefit doesn’t cover custodial services alone (for example, help with bathing, dressing, and using the bathroom).

Denial Reasons

Insufficient documentation accounted for 75.5% of improper payment rates for SNF inpatient services during the 2024 reporting period, while no documentation (3.8%), incorrect coding (0.3%), and other errors (20.4%) also caused improper payments. “Other” errors include duplicate payment, non-covered or unallowable service, or ineligible Medicare patient errors.

Preventing Denials

Initial Nursing Facility Evaluation & Management

The facility must conduct, initially and periodically, a comprehensive, exact, standardized, reproducible assessment of each resident’s functional capacity. The requirements for initial initial evaluation and management (E/M) include:

• Admission orders: At the time the facility admits the resident, the facility must have physician orders for the resident’s immediate care.
• Comprehensive assessments: A facility must make a comprehensive assessment of a resident’s needs, strengths, goals, life history, and preferences using the Minimum Data Set (MDS) Resident Assessment Instrument CMS specifies. The assessment must include at least these:
  • Identification and demographic information
  • Customary routine
  • Cognitive patterns
  • Communication
  • Vision
  • Mood and behavior patterns
  • Psychosocial well-being
  • Physical functioning and structural problems
  • Continence
  • Disease diagnoses and health conditions
  • Dental and nutritional status
  • Skin condition
  • Activity pursuit
  • Medications
  • Special treatments and procedures
  • Discharge planning
  • Documentation of summary information about the other assessment done on the care areas triggered by the completion of the MDS
• Documentation of assessment participation: The assessment process must include direct observation and communication with the resident as well as communication with licensed and non-licensed direct care staff members on all shifts.

For more information on the initial nurse facility E/M, see 42 CFR 483.20.

Claims for skilled care coverage must include enough documentation to determine if the services:

• Require skills of qualified technical or professional health personnel to perform them safely and effectively.
• Are reasonable and necessary to treat the illness or injury and are consistent with the illness or injury severity, patient’s medical needs, and accepted medical practice standards. Documentation must also show services are proper in duration and quantity and promote therapeutic goals.

• The patient’s medical history and physical exams, including responses or changes in behavior
• Skilled services provided
• The patient’s response to skilled services during a visit
• A plan for future care based on prior results
• A detailed rationale explaining the need for skilled service
• The complexity of service
• Other patient characteristics

Verify the patient’s information in the medical record is correct, and avoid vague or subjective descriptions that don’t sufficiently show the need for skilled care.

Medical records must also support the medical necessity of SNF services provided. They should include:

• Certification the patient needed daily skilled care that could only be provided in a SNF setting
• An authenticated plan of care
• Time (in minutes) for therapy service provided

Medicare Benefit Policy Manual, Chapter 8, section 30.2.2.1 has more information on documentation requirements.

Case Mix Prospective Payment for SNFs: History & Updates

Section 4432(a) of the Balanced Budget Act of 1997 changed how Medicare pays for SNF services. Skilled Nursing Facility Prospective Payment System has more information on how we adjust the payment rates.

See SNF PPS: Patient Driven Payment Model for more information.