How Medicare Reimbursement Works in Skilled Nursing Facilities SLPs and other rehab professionals feel squeezed by a system that reimburses skilled nursing facilities only for face-to-face time with patients. Bottom Line
Bottom Line  |   June 01, 2014
How Medicare Reimbursement Works in Skilled Nursing Facilities
Author Notes
  • Mark Kander is ASHA director of health care regulatory analysis.
    Mark Kander is ASHA director of health care regulatory analysis.×
Article Information
Special Populations / Older Adults & Aging / Healthcare Settings / Practice Management / Bottom Line
Bottom Line   |   June 01, 2014
How Medicare Reimbursement Works in Skilled Nursing Facilities
The ASHA Leader, June 2014, Vol. 19, 26-27. doi:10.1044/leader.BML.19062014.26
The ASHA Leader, June 2014, Vol. 19, 26-27. doi:10.1044/leader.BML.19062014.26
Many speech-language pathologists who work in skilled nursing facilities express concerns about “productivity”—that is, how much time their employers require them to provide face-to-face treatment with patients (see “Under Pressure”). Productivity requirements, which in some facilities may approach 100 percent, leave little time for SLPs to complete other tasks that are important to patient care.
To understand the issue, it’s helpful to understand the Medicare rules for skilled nursing facility reimbursement.
What is the basis for SNF reimbursement?
SNFs are reimbursed by Medicare Part A (hospital or inpatient) or Medicare Part B (medical or outpatient), depending on the status of the patient. To qualify for a SNF stay under Part A, the Medicare beneficiary must have had a qualifying hospital inpatient stay of at least three days.
Part A services are reimbursed under a prospective payment system that pays facilities a daily rate that covers all patient-related expenses, including nursing services, therapy services—calculated in minutes—and a daily room charge. The predetermined rate for each patient is based on the type and quantity of skilled services the patient will need.
Depending on this mix of services, the patient is classified into a “resource utilization group”—or RUG—that determines the facility’s daily reimbursement for that patient. The more skilled services a patient needs, the higher the RUG, and the greater the reimbursement to the facility for inpatient services.
In contrast, Medicare Part B pays for each therapy service provided, using Current Procedural Terminology (CPT, © American Medical Association) procedure codes. If the Part B patient is staying in the facility, charges for room, board and other services may be paid by the patient, Medicaid or other insurance.
Even though Part A does not use CPT codes, many SNFs require therapists to document and use CPT codes for Part A patients as a means of internal accounting for treatment time.
How does Medicare determine payment levels under Part A?
Each Part A patient’s RUG is based on an overall assessment of the patient, which includes the amount of rehabilitation therapy minutes (occupational, physical and speech combined) the patient needs per week.
The highest of the five rehabilitation RUG levels—“ultra high”—requires at least 720 therapy minutes per week, followed by “very high,” at least 500 minutes.
These thresholds are minimum requirements, and Medicare rules clearly state that if the rehabilitation professional and attending physician agree that the patient needs additional minutes, the facility must arrange and pay for them. The facility, however, does not receive additional payment unless the increase in minutes bumps the patient to a higher RUG.
According to Part A regulations, what clinician activities can be counted as part of therapy minutes and what cannot be included?
Only face-to-face treatment time is included in therapy minutes, which are recorded in one-minute increments (not 15 or 30 minutes, as with some outpatient codes). Rules for co-treatment—that is, two clinicians from different disciplines treating one patient at the same time—allow both providers to count a portion of the session.
Under group treatment—one clinician treating up to four patients who are performing the same or similar activities—each patient’s received minutes is equal to the total length of the session divided by four, regardless of the number of patients participating. This rule also applies to concurrent treatment, defined as one clinician treating two patients (regardless of payer source of the second resident) who are not performing the same or similar activities.
Family education, with the patient present, can be counted in therapy minutes and must be documented in the record. Also, re-evaluations conducted as a part of the patient’s plan of care are counted in therapy minutes.
Activities that cannot be counted as therapy minutes include initial evaluations, documentation and family education without the patient present. They are considered a part of the base rate for the inpatient stay.
What distinguishes a SNF level of care from other long-term care facilities?
SNFs require a three-day qualifying hospital stay and the patient’s need for skilled nursing and/or rehabilitation services at least five days a week. The need for skilled care must be related to the same diagnosis that triggered the hospital stay (or, if applicable, to an additional condition that developed in the SNF during a stay for the original hospital-related condition).
Freestanding rehabilitation hospitals and certified rehab units in acute hospitals are for patients who require more intense care, usually a minimum of three hours of daily therapy and other medical needs.
Do patients in skilled nursing facilities ever qualify for Part B (outpatient) services without an inpatient stay?
If the patient does not have a qualifying hospital stay, or if the hospital stay is subsequently denied, therapy services may be billed to Part B (outpatient) services if the patient has Part B coverage.
Therapy services can also be covered under Part B if the patient has exhausted the Part A benefit (100 days per episode of illness) or if skilled nursing and/or rehabilitation services are no longer needed at least five days per week. In these situations, the daily room and board is paid by the patient, Medicaid or another third party; Medicare B reimburses only for therapy services.
Some SNFs offer outpatient services to non-residents, which would always be considered Part B.
Are the Part B therapy rules in a SNF the same as for other Medicare outpatients?
The rules that govern coverage, documentation and payment requirements for these patients are the same as for other Part B patients, including functional outcome reporting requirements with G-codes and Medicare Part B documentation requirements.
Under what circumstances may SLPs or audiologists bill Medicare directly for services provided to SNF patients?
SLPs may never bill Medicare directly for SNF patient services, regardless of whether the patient is covered by Part A or Part B. The facility—or the company contracted to provide rehabilitation services to the facility’s patients—pays the SLPs.
Audiologists may bill Medicare directly for services provided to Part B patients in SNFs. The facility pays audiologists for services provided to Part A patients.
Does Medicare issue guidelines for payment levels of health care professionals in skilled nursing facilities?
Medicare does not issue guidelines for the payment of SNF employees or contractors. Payment to a facility’s nursing and rehabilitation staff is fully negotiable.
Does Medicare have guidelines related to productivity—that is, the number of reimbursable minutes a clinician is expected to provide relative to the total amount of time the practitioner spends “on the clock”?
Medicare establishes no such guidelines. Productivity requirements are established by individual facilities or the rehabilitation companies with whom they contract to provide services.
Where can I get more information about the Medicare SNF rules?
ASHA has the Medicare rules for SNFs, with the resources, available at
June 1, 2014
Denise Rogers
Revenue vs. expenses in a SNF
One of the ways therapy companies who staff SNF rehab depts can meet their budgets and turn a profit is not to employ more help than they actually need. Example: if you hire a full time SLP in a small to medium sized SNF facility, it may turn out that every Part A patient who is admitted and most of the Part B (LTC residents) will not require speech therapy services and therefore the SLP will not be generating revenue for 75% or more hours they are in work. The rehab company will lose money. If instead, the rehab company employed that same SLP for a guaranteed salary of 24 hours per week, and paid an hourly rate when the census increased or the case mix had more patients requiring speech therapy, the clinician could be paid hourly for any hours worked above/beyond their salaried hours (essentially part time + PRN). For smaller SNFs, there might only be a need for a PRN therapist most of the time. However, when we are hired as a full time salaried employee in a given facility and see that the there is not enough patients who would benefit from our services to keep us "productive" for 40 hrs/week, we are either told we must leave and use our vacation/sick days, go home without pay or encouraged to "build a caseload" (essentially, get people on caseload to fill their workweek, regardless of the need for SLP services). Having been a manager in a previous career, I learned that you keep your salaried staff lean and pull in per diem help in busy times to keep expenses low and productivity high. You keep good records and watch trends so that you can forecast your staffing needs based on the past. You don't over staff and then expect your clinicians to treat patients/residents for which SLP services are neither warranted nor will improve functional outcomes to justify their salary. If the therapy companies who staff SNF rehab departments simply wanted to maintain a good profit margin, they would do so from the "top down" - with good planning for staffing, not "bottom up" with staffers expected to generate revenue when the need for skilled services is not there. In my opinion, what we are seeing represents either poor management, greed or both.
June 10, 2014
Kathryn Dowd
SNF hearing concerns
I would like to see ASHA support SLP hearing screening before therapy takes place in the SNF. According to ASHA's paper on audiology in nursing homes, up to 80% of nursing home residents are affected by hearing loss. Speech therapy should not be initiated until the hearing status is known. Diabetes, stroke, and other major illnesses and medications are affecting hearing of these patients. Screening for hearing problems and referrals to audiologists for diagnostic hearing evaluations and hearing correction will improve speech outcomes for the SLP.
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June 2014
Volume 19, Issue 6